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The European payments sector has yet another regulatory deadline to abide by this week with the first of several key dates for the Instant Payments Regulation (IPR) coming into effect on 9 January 2025.

As of the end of this working week, euro area EU member states will be required to comply with the IPR’s standards on receiving instant payments and equality of charges. The next deadline for these countries falls on 9 October, and requires sending instant payments and verification of payee.

IPR was adopted by the European Parliament and European Council on 13 March 2024 with the goal of accelerating the rollout of instant payments across the EU. The trade bloc has likely taken note of the extensive success of instant payments networks in non-European markets, particularly in South America and Asia.

The Central Bank of Brazil’s Pix is arguably the most successful example of an instant payments service in the world. Having gone fully operational in November 2020, Pix has exploded to have over 150 million business and consumer users as of December 2023.

Pix is now expected to take over from debit and credit cards as the dominant payment methods among Brazilians and has been catching overseas interest from fellow Latin American countries, Asian states – and EU member nations like Spain and Italy.

Commenting on the impending IPR deadline, Jan Van Vonno, Head of Industry and Wallets at Tink, a pay-by-bank provider, says: “In recent years, we have seen instant payment services explode in markets such as Brazil, Thailand and India – with these three markets alone accounting for 179 billion transactions in 2023, according to central bank data.

“Meanwhile in the EU, progress has been uneven and fragmented – despite the 2017 SEPA Instant Credit Transfer Scheme promising to usher in a new normal. By levelling the experience across the EU with the arrival of eurozone-wide instant payments, we overcome one of the major barriers to instant A2A payments going mainstream.”

The deadlines for euro member states are followed by two other deadlines, one for non-euro EU countries and another for electronic money institutions (EMIs) and payment institutions active in both areas.

Non-euro member countries will have to guarantee receiving instant payments and equality of chargers on 9 January 2027 and sending instant payments and verification of payee on 9 October 2027.

EMIs active in both euro and non-euro areas need to comply with the receiving requirement by 9 April 2027. Those active in euro area countries need to guarantee sending instant payments by 9 April 2027 and those in non-euro area member states by 9 July 2027.

Is the EU catching up in the A2A race?

With the first and perhaps the most significant of these major deadlines occurring this week – its significance being larger due to 20 EU countries using the euro with the remaining seven using other national currencies – observers like Tink’s Van Vonno believe it will drive demand for pay-by-bank and instant payments in 2025.

“IPR will encourage greater adoption of Pay by Bank – a payment method that is fast, simple, secure, low cost and reliable,” he says. “For merchants, it provides absolute certainty and confidence – they can see the funds arrive in their account in seconds.

“This eliminates the need for any kind of payment guarantee scheme, and helps them manage cashflow and remain liquid in an operating environment when working capital might be squeezed.

“It also provides the necessary certainty to support cross-border commerce as merchants can be completely confident that within seconds they will receive funds from any transaction from anywhere within the eurozone. For consumers, it provides speed, control and simplicity – wherever they shop across the eurozone.”

Europe has had a lot of catching up to do with account-to-account (A2A) payments, certainly in comparison to regions like Latin America – where as noted above, instant payments systems like Brazil’s PIx have found considerable success.

The regulations could also help the EU gain ground on some of its neighbours closer to home. The UK has been striving to push for greater adoption of Open Banking and A2A payments for some time, under both Conservative and Labour Party governments.

Roughly one in 10 Britons now use pay-by-bank for online payments alongside around one in five of the country’s small businesses, significantly driving transaction volume.

This is not to say that the EU is trailing the UK by any means, however, with pay-by-bank a popular method in Germany, the Netherlands and Spain. IPR could prove critical to the EU making even more ground.

Van Vonno concludes: “That’s why the implementation of IPR is a major innovation milestone for payments in Europe – taking us a big step closer to creating a pan-European payment solution that is available to everyone.”