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Exploring the Obstacles to Widespread Use of SEPA Instant Transfers

SEPA Instant
Exploring the Obstacles to Widespread Use of SEPA Instant Transfers

Time is money. This is not just a cliché, but an established fact. The increased speed of data transfer and cash flow exchange directly affects business productivity. That is why it is extremely important to minimize the time spent on money transfers.

SEPA and SEPA Instant Transfers. Background.

With the creation of the Single Euro Payments Area (SEPA), anyone with a European IBAN can make cashless payments in euros. Since 2008, SEPA has been gradually introducing credit transfers, followed by direct debits that were fully implemented by 2014. Countries outside the euro area were connected to the SEPA system in 2016. The scheme made it possible to make payments in euros across Europe, with the biggest drawback being the 1-2 days transaction execution time.

SEPA Instant Credit Transfers (SCT Inst), a euro payment solution offering users an unparagoned transaction speed of up to 10 seconds, was introduced in the EU in 2017 at financial institutions in eight Eurozone countries. Currently, SEPA Instant payments are available across 36 countries in Europe and the UK.

The European Payments Initiative has initiated the plan to launch a digital wallet solution based on instant account-to-account payments. Today, the Eurosystem actively encourages businesses, as well as governments and public administration bodies to implement instant payments in their daily transactions (e.g., for tax contributions or pension payments, etc.).

Despite significant investments in the development and implementation of this real-time payment method, the penetration of SEPA Instant payments in the euro area is still relatively low. According to the European Central Bank’s May 2023 data, only 14% of all conventional SEPA Transfers were completed via SCT Inst.

Advantages of SEPA Instant Credit Transfers

The advantages of SEPA Instant Credit Transfers include faster transaction speed, no need for engaging a third party for clearing, fewer compliance requirements, and improved security. Such expedited transfers result in higher convenience and improved efficiency for businesses as well as consumers, helping maximize profits. Seize the opportunity to take advantage of instant payments today with and experience the limitless potential of real-time payments!

The reasons for the low penetration of SEPA Instant Transfers

SEPA Instant Transfers have not yet reached their full potential due to a variety of challenges. There is a need for a better understanding of the reasons behind the solution’s low penetration in order to increase its usage. Some of the reasons include:

  1. Lack of Awareness: There is a lack of awareness among European businesses and consumers on the availability of SEPA Instant transfers, and how they can benefit them. Widespread customer and merchant education campaigns should be conducted to address the issue.
  2. Regulatory Issues: The European Central Bank (ECB) currently does not require European banks to support or connect to the SEPA Instant Payment scheme. Banks need to be mandated to do so in order for the payment system to become available to all.
  3. Cost: The cost associated with setting up and routing SEPA Instant payments is usually higher.
  4. Lack of Standardization: SEPA Instant requires banks / EMIs to adhere to different standards and processes for implementation. This is complicated and time-consuming, which discourages direct participation.
  5. Potential Compliance Issues. Since the payments are made in real time, there is no possibility to conduct detailed checks. Therefore, both compliance officers and financial managers are reluctant to implement instant payments.
  6. Security Concerns: Banks and financial institutions are concerned that SEPA Instant Transfers could be vulnerable to potential fraud. However, real-time payments are in fact safer as they have stricter security requirements.

In conclusion

Although there are several factors contributing to the low adoption of SEPA Instant Credit Transfers, the advantages of this instant payment system can no longer be ignored. Faster and more efficient money transfers will deliver major benefits to businesses and consumers alike. By providing quicker and more convenient access to and processing of payments, SEPA Instant Transfers have the potential to revolutionize the way businesses and consumers handle financial transactions in Europe. Join SEPA Instant with

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