One‑Leg Out extends EU payments influence beyond the Single European Payments Area (SEPA), but implementation concerns show the scheme remains immature. In this Paylume blog, analyst Jarosław Kolasa highlights emerging benefits, ongoing challenges, and the considerations shaping its development going forward today.
The OLO scheme was created to modernise international payments by extending the speed and efficiency of domestic euro transfers to a global scale.
What is SEPA OLO?
SEPA OLO is a scheme for cross-border and cross-currency payments where only one payment service provider (PSP) is in SEPA.
The scheme supports the handling of OLO instant credit transfers in any possible currency, including non-euro SEPA currencies, under the condition that at least one of the two legs of the OLO instant credit transfer concerned is denominated in euro.
The first rulebook took effect on 28 November 2023, with Version 1.1 of the 2025 cycle updating rules on 5 October 2025 to align with the EU Instant Payments Regulation (IPR).
Early adopters include Santander, Iberpay, and EBA Clearing.
Low numbers have joined – so far
Participation in the scheme remains low, and only a handful of banks can use OLO effectively from end-to-end.
This leaves many institutions questioning whether there is a real business need to adopt it now, or whether it should be viewed as a longer-term priority.
Although OLO offers a potential new product, its value is limited by low uptake and an immature market, and practical experience is scarce.
So far, Spanish banks via Iberpay are among the few using it, mostly for euro‑only flows with FX handled beforehand.
Complexities for banks
From a technical standpoint, the OLO scheme enables PSPs to deliver faster and more transparent cross‑border payments by leveraging familiar SEPA instant payment rails and automated infrastructures.
However, the real complexity is found elsewhere, as the scheme is focused almost entirely on the euro leg of the transaction and assumes that this part of the flow can be completed very quickly, often within a minute.
What happens outside that euro leg is far opaquer and as a result, banks are left to interpret how to manage FX, compliance, customer communication, and settlement across jurisdictions with very different rules and infrastructures.
The FX problem
One of the most unsettled areas is FX conversion and charging.
Banks are still grappling with fundamental questions around whether FX should be charged as an entry fee, embedded in the exchange rate, or presented separately to the customer.
Uncertainty also surrounds how much transparency is sufficient and who is responsible for providing that information.
The EPC sets expectations around transparency but does not prescribe how FX should be applied in a one-leg-out context, and this ambiguity leaves banks operating in a grey zone between regulatory intent, commercial reality, and customer expectations, building up subsequent risks.
Who’s who?
Role definition within the OLO model is also unclear, as banks are still uncertain when they are considered an entry PSPs, whether they should apply FX conversion themselves, and whether converting transactions into euro is even permitted.
There is no explicit guidance in the EPC scheme clarifying whether or how non-SEPA banks can perform euro conversion as part of the OLO flow.
This lack of clarity means that the door is left open to inconsistent interpretations and uneven customer outcomes across the market.
Compliance problems
Compliance expectations also mean another layer of complexity.
While the EPC indicates that OLO can be applied when timelines can be met, it provides limited guidance on how much flexibility banks have when conducting compliance requirements such as AML, sanctions screening and fraud checks.
Institutions are instead expected to process payments almost instantly while still performing full compliance controls, whereas in reality, banks want the ability to slow or stop transactions when risk thresholds are triggered. It remains unclear how such flexibility exists within the OLO scheme’s instant payment expectations.
So what now?
OLO should not be seen merely as a technical extension of SEPA Instant, but rather as a strategic decision.
PSPs need to balance the potential advantages of early adoption against the realities of limited current participation and evolving commercial models.
For some institutions, positioning themselves early on may provide a meaningful first‑mover advantage. For others, waiting for clearer guidance and broader market readiness may be the more prudent choice.
The real challenge today is not in implementing the OLO framework, technically, it is relatively straightforward, but in determining whether the ecosystem, rules, and commercial incentives are sufficiently mature to support it at scale. This question is becoming more pressing as multinational banks begin building reach for One‑Leg Out instant credit transfers.
In this context, ten major multi-national banks including HSBC, ING, and Societe Generale have announced their intention to become reachable for OLO in EBA CLEARING’s RT1 system by 2027, in line with the G20 Roadmap for Enhancing Cross‑Border Payments.
Public commitment to this timeline and encouragement of others to follow shows that these institutions want to build traction and accelerate market preparation.
As the landscape evolves, banks across SEPA will need clarity and direction. This is where Paylume can help, allowing our experts to support your team in assessing the opportunity, navigating the uncertainty, and determining whether OLO is the right strategic step for your customer base, now or later.
