As SEPA Instant deadlines approach, nearly half of European banks expect to lose millions in interest income due to increased liquidity requirements for 24/7 payments.
European banks face significant liquidity management challenges as they prepare to meet the next regulatory deadline for SEPA Instant payments, according to new industry research.
The report, published by RedCompass Labs following a survey of 300 senior payments professionals across the EU and UK, highlights growing concern over the practical impact of 24/7 instant payment services, particularly in light of the upcoming removal of the €100,000 transaction limit.
While most banks say they are on track to meet the October 9, 2025 requirement to send instant credit transfers in euro, nearly half (47%) expect to incur substantial losses in interest income due to the need to maintain higher liquidity buffers outside of traditional operating hours.
With central bank money only accessible on weekdays between 07:00 and 18:00 CET, banks may be forced to hold excess funds in non-interest-bearing accounts to accommodate potential high-value transactions during weekends and holidays.
Ninety-three per cent of respondents expressed concern about lifting the cap, and 48% said they were very concerned. Mid-sized institutions reported the highest levels of unease, with nearly all (97%) indicating the removal of the threshold poses a risk.
“The challenge is not just compliance, but operational viability,” the report notes. “Banks are being asked to deliver real-time services around the clock, while the supporting infrastructure still operates on a limited weekday schedule.”
The January 2025 deadline required euro-area banks to be able to receive SEPA Instant payments. Nearly half (46%) reported difficulties meeting the milestone, despite the option to request a regulatory extension. Looking ahead to October, 93% of banks said they are confident they will meet the next phase, with a majority now viewing the timeline as realistic.
Even so, the shift to continuous operations is creating wider challenges. Almost all banks surveyed (99%) have seen an increase in out-of-hours payment activity since January 2025, with 46% reporting a significant impact on operational capacity.
Smaller banks appear to be under the most pressure, particularly in countries such as Spain and France, where 50% or more of banks reported major disruption.
In parallel, many institutions are grappling with rising fraud and compliance risks. The report identifies a notable increase in rejected transactions due to the tighter timeframes associated with instant payments. Roughly one-third of banks have experienced a 41 to 50 per cent rise in rejections since January, largely driven by false positives in sanctions screening.
To address these risks, 66% of banks are implementing AI-driven screening solutions, and 65% are investing in new monitoring technologies to improve detection speed and accuracy.
Verification of Payee (VoP), a key part of the October deadline, is viewed as a critical tool in combating authorised push payment fraud. Nearly half (49%) of respondents believe it will significantly reduce fraud, though challenges remain around delivering a consistent customer experience and managing bulk payments. A large majority (84%) said they are confident they will meet the VoP deadline.
Looking further ahead, structured address migration, due in November 2026, adds another layer of operational complexity. Although 39% of banks say they have completed the transition, many are still in early stages of planning or implementation.
Despite the pressures, sentiment is broadly positive. Eighty-two per cent of banks believe the long-term benefits of SEPA Instant will outweigh the costs of compliance and infrastructure upgrades. Investment is already underway in value-added services such as instant lending, reconciliation, and fraud prevention.
Still, the findings raise questions about the readiness of Europe’s financial infrastructure to support round-the-clock real-time payments at scale. As adoption accelerates, banks will need to reconcile regulatory obligations with economic realities, and ensure that the systems underpinning 24/7 payment flows are as continuous as the services they are expected to support.
