The European Union will require banks to make instant bank transfers free, in order to make money transfers faster and more secure. We now know when this measure will be effective.
Although instant payments have existed in France since 2018 and are very practical, they are not yet popular. In 2022, they represented only 11% of transfers in the European Union and 5.6% in France, according to AFP figures. Same thing in 2023, where they represent only 6% of the total number of transfers issued in the country in the first half of 2023, according to figures from the Banque de France. The reason is simple: banks often charge for this service – generally €1 per transfer – or even do not offer it at all. Currently, only 25 banks out of 128 in France offer instant transfers without fees, such as Banque Postale, Crédit Mutuel or BoursoBank. Result: more than 200 billion euros are blocked, waiting to be transferred, every day in the European Union, according to the European Commission. In comparison, the traditional transfer takes one to three working days – but the money is indeed debited immediately.
With the aim of making money transfers faster and more secure, particularly for small and medium-sized enterprises (SMEs) – which depend on the speed of payments and have limited funds – the European Parliament adopted, on February 7, a new regulation which updates the rules of the Single Euro Payments Area (SEPA) and imposes an obligation on all banks and payment service providers (PSPs) to offer instant transfers in euros at no extra cost. In addition, transactions must be processed within ten seconds, regardless of the time or day, for amounts up to €15,000. This regulation was approved by 599 votes in favor, 7 against and 35 abstentions, and should come into force by the end of 2024. However, it was not known when it would come into force.
Instant transfers: a free process from 2025
Until now, the date of implementation of these measures remained unclear. But publication of the new regulation in the Official Journal of the EU on Monday, April 8 – it must come into force twenty days after its publication – removed the mystery. Thus, all banks in the euro zone will have to allow their customers to receive instant transfers from January 9, 2025. Then, they will have to offer them the possibility of issuing this type of transfer themselves no later than October 9 2025. Note that the pricing of instant transfers in euros must be the same as that of non-instant transfers in euros. Also, banking establishments which do not charge traditional transfers will no longer be able to charge instant transfers.
This regulation applies to all member countries of the European Union, including those that do not use the euro but regularly carry out transactions with this currency, such as Poland or Denmark. A transition period of two years – i.e. 2027 – and a temporary exemption for accounts opened outside business hours then apply to the latter. But in addition to facilitating transactions, the goal is to protect customers against fraud and errors. Indeed, instant transfers present a security risk since they are, by nature, irrevocable, and leave little time to react in the event of fraud or error. Also, to protect against fraud attempts, the European regulation provides for several measures.
Instant transfers: a faster and more secure process
Service providers will be required to implement strict measures to detect and prevent fraud, and to provide identity verification services at no additional cost. Customers will be able to set maximum limits for instant transfers. This limit, however, may be lifted, “at any time, without difficulty and with immediate effect”. Regarding the processing of registering a new IBAN, the identifier of a bank account, to make the transfer, the process will not be faster than today – it takes between twenty-four to forty-eight hours depending on the banks –, in order to prevent transfers from being made to the wrong account, due to fraud or an error. Moreover, a service called IBAN Check, free of charge, should make it possible to check IBANs in order to ensure that the transfer is made to the right person. This system must therefore be active no later than October 9, 2025.
Customers will have the right to seek compensation from payment service providers if they suffer financial losses due to a lack of fraud prevention. The latter will also have to check whether their clients are subject to sanctions or restrictions linked to money laundering and terrorist financing.