European Banks Struggle with SEPA Deadline for Instant Transfers: 58% Consider It Unrealistic
Most European banks are currently facing challenges with the implementation of instant payments. A report from RedCompass Labs found that 58% of the 200 senior payments professionals surveyed felt the timelines were unrealistic.
Challenges in adopting instant payments
The survey shows that there is fundamental uncertainty regarding banks’ willingness to enable SEPA instant payments. Key findings: European banks underestimate the volume of payments they receive, which must be processed per second.
Instant payments speed up the flow of money between businesses and individuals. The average goal is between 101-300. Experts recommend aiming for at least 1,000 payments per second. The size of bulk payment files makes fast processing times imperative.
Source: RedCompass Labs
European banks are facing challenges that are hindering the transition to instant payments. Adapting to new technologies is one of the five biggest challenges. This includes customer channels, implementation of KYC and sanctions screening regulations, scaling throughput, providing value-added services, and ensuring 24/7 availability.
Tom Hewson, CEO and Partner at RedCompass Labs, mentioned: “New legislation in Europe will enable 24/7 service. Instant payments are the norm, which is a great development, but there are deadlines. Banks are already at their limit to implement ISO 20022. By 2025, all users must be able to send and receive instant payments. This presents a significant challenge.”
Advantages of instant payments
Despite these challenges, there is a silver lining for European banks. The survey found that 77% of respondents believe instant payments are beneficial, outweighing the costs. There is also a growing need for instant payments, with 89% of respondents recognizing this trend.
Source: RedCompass Labs
New rules for instant euro transfers The MEPs’ vote marks an important milestone on Europe’s path to instant payments. The legislation is intended to strengthen SEPA and promote integration, reinforcing the role of the euro as an international currency and reducing dependence on foreign payment systems.
Hewson said: “As an institution, you must have secure internal systems to handle the increasing speed and volume of transactions. The rise in transaction volume and speed is a cause for concern. In the past, we’ve discussed hundreds of transactions per second in bank-to-bank systems. Currently, there are several thousand per second, and this must be taken into account. Accurately recording and synchronizing data can reduce downtime and system failures. The payment system must be reliable for real-time accessibility across all components.”
