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European Parliament Introduces Instant Credit Transfer Law for Banks and PSPs

Members of the European Parliament (MEPs) have officially adopted new rules to ensure transferred funds arrive immediately into the bank accounts of retail customers and businesses across the EU.

The new regulation looks to ensure that retail clients and businesses, especially SMEs, will not have to wait for their money. The European Parliament also explained that the move should enhance the safety of transfers.

Banks and other payment service providers (PSPs) will now need to ensure credit transfers are affordable and immediately processed. The new rules define ‘instant’ credit transfers as money transfers that arrive into the recipient’s account within 10 seconds, regardless of the time or day. The payer should be also informed within ten seconds of whether or not the funds transferred have been made available to the intended recipient.

PSPs located in the euro area will have nine months to ensure they are ready to receive instant credit transfers in euro and 18 months to send them.

Michiel Hoogeveen
Michiel Hoogeveen

Michiel Hoogeveen, a Dutch member of the European Parliament, discussed the new law: “The Instant Payments Regulation marks the long-awaited modernisation of payments in the European single market.

“Customers can now say goodbye to the inconvenience of waiting two or three working days to access their money. We are delivering on something that people and businesses truly care about: transferring money within 10 seconds at any time of the day.”

Member states which do not use the euro as their primary currency will also need to apply the rules, where the accounts already offer regular transactions in euro, after a longer transition period. There will be a special derogation from making the payment within ten seconds for such accounts outside business hours, given possible concerns about access to liquidity in euro.

Safeguarding customers against fraud

To maximise customer safety, PSPs will need to put robust and up-to-date fraud detection and prevention measures in place, to avoid credit transfers going into the wrong account due to fraud or error. All PSPs operating in the EU should now provide a service to verify the identity of a recipient – without any additional charges or fees.

This means that fees charged by a PSP for instant credit transaction in euro cannot be higher than the fees charged for ‘non-instant’ credit transfers.

As an additional safeguard against fraud, PSPs will also need to enable their clients to set a maximum amount for instant credit transfers in euros, which could be easily modified before the next transfer.

The new rules also outline that if any PSPs do not fulfil their fraud prevention duties to a high enough standard, and this results in financial damage, a client may demand compensation from the service provider, according to the new rules.

PSPs offering instant credit transfers should also verify whether any of their clients are subject to sanctions or other restrictive measures related to money laundering and terrorist financing.


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