October 2025 is a significant milestone for payments in Europe. All Payment Service Providers in the Eurozone are now required to support SEPA Instant Credit Transfers (SCT Inst) at no additional cost, in a move that is monumental for the EU.
The rollout of instant payments, brings further uniformity to Europe’s fragmented payments ecosystem.
The Instant Payments Regulation (IPR) is not simply a case of consumer convenience or payment speed, it is also about upgrading and revolutionising Europe’s payments infrastructure, unlocking new, sovereign payment solutions that can genuinely compete with the non-European players that have long dominated Europe’s payment habits.
There are undoubtedly challenges ahead, but the regulation will create further opportunities for innovation, competition, promotion of open banking, or enhanced fraud protection
Less fragmentation
The IPR stands to significantly reduce the challenges that have existed in the adoption of instant payments across Europe payents. It reduces the fragmentation that has persisted.by creating a common legal, technical and access framework for instant euro payments.
Previously, participation in SEPA Instant Credit Transfers (SCT Inst) was voluntary, meaning that many payment service providers (PSPs) did not invest in instant payments capabilities leaving scalability and reach of products and services sorely lacking.
Adoption of SCT Inst has been considerably sluggish, despite increasing pressure from the European Commission and European Central Bank (ECB) in recent years. In 2021 the European Commission set an objective to make “instant payments the new normal” and that simply did not materialise.
The IPR makes participation mandatory for all PSPs offering SEPA credit transfers, ensuring every euro account in the EU is reachable instantly, 24/7, within a single regulatory framework.
The regulation also tackles the issue of price disparities. Instant payments were often treated as a premium service in some member states, with some PSPs charging up to €12 per transaction while others offered them free of charge. This further discouraged uptake and reinforced national differences.
In comparison, the IPR requires that instant payments cost no more than standard SEPA credit transfers, establishing a level playing field across member states and encouraging more widespread adoption by consumers and merchants alike.
The foundation for European payment solutions
Pan-EU payment initiatives also stand to be the winners from this, as the IPR has the potential to disrupt and enhance the P2P payments market and mobile wallets.
The unified, interoperable framework offered by the IPR is beneficial for Wero and the European Payments Alliance (EuroPA) as it is designed to facilitate real-time, account-to-account transactions. The regulation’s requirements could greatly expand the reachability and availability of these pan-EU options.
Renewed momentum for open banking
The EU’s Instant Payments Regulation (IPR) gives renewed momentum to open banking, as it does away with the patchy and price dependent coverage of SCT Inst that has so far existed in Europe.
This will bring down the barriers that have persisted since PSD2 made way for open banking in the EU in 2018, and could bring about more interest from consumers and merchants alike to embrace alternative payment methods.
Open banking is part of Europe’s payment sovereignty story but has struggled to establish itself as a popular payment method compared to the trusted and entrenched card schemes and has seen most success outside of the EU, in countries like the UK.
Due to IPR, open banking platforms will be able to build features around liquidity, instant settlement, and notifications, and while this was possible prior to the regulation, it has been fragmented and far more difficult for open banking vendors to provide ubiquitous services.
More trust, less fraud
The Verification of Payee (VoP) component of the IPR boosts trust in instant payments by confirming that the account name matches the intended recipient before a transaction is executed. In a system where funds move within seconds, VoP reassures users that payments will reach the correct account, reducing hesitation and building confidence in instant euro transfers.
VoP is an especially effective tool against authorised push payment (APP) scams, where victims are tricked into sending money to fraudsters. The UK’s similar model of Confirmation of Payee (CoP) has demonstrated its impact, preventing misdirected payments and cutting fraud-related losses by up to 40%.
The EU is getting ahead of the fraudsters with VoP, reducing the ability of the “’new normal’”to be taken advantage of by criminals and ensuring that consumers can make these payments with both efficiency and security.
Better liquidity
The IPR also stands to revolutionise liquidity management, ensuring better cash flows, and treasury operations, and delivering more speed, efficiency and transparency into corporate finance in Europe.
For liquidity management, the prospect of instant settlement provides treasurers with real-time visibility of funds, eliminating T+1 and any overnight lags. Cashflows also stand to benefit, with B2B and B2C payments settling within seconds, 24/7/365, which should mean improved predictability and smoothing in-flows.
The IPR overcomes the early cut-off times of traditional automated clearing house (ACH) and high-value payment systems, and by enabling treasury teams to carry out transactions later in the day, instant payments significantly optimises liquidity management, reduces reliance on short-term credit and simplifies cash forecasting for Europe’s banks.
But…the IPR isn’t without its challenges
While there are plenty of reasons to be jubilant about this major shift, it does not come without its challenges for Europe’s banks and PSPs.
Many banks across the continent still rely on legacy core systems and upgrading these will no doubt be costly and complex. What’s more, the expected uptick in instant payments volumes being sent and received may risk overwhelming systems, if sufficient preparation and testing has not been undertaken.
It demands resilient infrastructure, as outages, no matter how brief, risk both non-compliance and customer dissatisfaction, which will erode trust in the systems that banks are now obligated to provide.
Meanwhile, even with gained efficiencies from the new regulation, liquidity management does come with new obstacles. Managing liquidity outside of market hours could turn out to be challenging and unexpected payment spikes risk rapidly depleting balances. Banks and PSPs will need to consider how they can strategise to minimise these risks.
At Paylume, we are excited about the shift in payments that is likely to come from IPR and we are here to help you strategise, implement, and innovate so that you, whether bank or PSP, can grasp the opportunity and boost revenue from the latest transformation in Europe’s payments.
Our experts take
Frederic Barbaix, Paylume’s Head of Digital Transformation:
“Congratulations to all financial institutions and their dedicated project teams for successfully delivering one of the most complex transformations in recent years. Updating the end-to-end payments infrastructure to comply with the Instant Payments Regulation has been a monumental achievement, one that required end-to-end planning, resilience, and collaboration across the European financial ecosystem.
As 24/7 instant payments become the new standard for individuals, SMEs, and corporates alike, this will create new challenges for the European Financial Institutions as we enter a new era of payment convenience, speed, and transparency. This shift redefines customer expectations and demands that financial institutions continue to improve their instant payment architecture to support continuous availability, rapid recovery in the face of any disruption, and scalability as instant payment volumes are expected to grow exponentially in the upcoming years.”
Lauren Jones, Paylume’s Open Banking Lead:
“IPR is a significant triumph for the open banking community. The bleed across from IPR to open banking should not be underestimated. For A2A payments to act as a genuine alternative to cards, the fact that fees are now not permitted to be higher than those for non-instant credit transfers means that A2A payments can become a genuine choice. We have seen some markets charge as high as €12 for an instant payments’ transaction, and A2A has been suffocated because of that. IPR will give A2A the opportunity to thrive and level the playing field.
Whilst IPR has moved the dial positively for open banking payments, there are some significant hurdles. Open banking still suffers from cumbersome consent flows, re-authentication, and limited user control over recurring payments. IPR does nothing to streamline user experience, especially around strong customer authentication (SCA), which is often a barrier. Additionally, as SEPA payments become increasingly instant and low-cost, open banking vendors will need to consider the commercial viability and advantage of their solutions versus bank-led A2A payments.”
