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The EU’s Instant Payments Regulation (IPR) is now in force, requiring eurozone payment service providers (PSPs) to send and receive instant payments at no additional cost. It remains to be seen how significantly this will affect the uptake of instant payments across the EU.
Since January 2025, PSPs that operate in the Eurozone have been required to offer their clients the ability to receive euro instant payments.
As of this month, these requirements have expanded: PSPs are now obligated to enable clients to send instant payments in euros and to provide verification of payee (VoP), with the aim of reducing fraud.
“The Instant Payments Regulation will substantially improve the daily lives of our citizens and businesses by allowing them to send and receive payments instantaneously, round the clock,” said Maria Luís Albuquerque, EU commissioner for financial services and the savings and investments union.
Albuquerque, who was previously Portugal’s finance minister, added that the new rules will make transactions more secure, with PSPs required to verify the intended beneficiary and send an alert to the payer in case of error or suspected fraud.
“We will monitor the concrete implementation in Member States so that everyone can fully benefit from these new rules.”
Industry reception
The payments industry has been broadly welcoming of the new rules, and what they could mean for Europe’s payments ecosystem.
“Payments in Europe are becoming instant by default,” said Santhosh Kumar, senior business analyst at RedCompass Labs. “This marks a complete rewiring of how payments operate.”
Kumar added that instant payments are not just changing the speed of transactions, but may hold the capability to transform the EU’s entire banking ecosystem.
“Cash pooling and treasury functions now have to manage liquidity in real time. End-of-day processing, interest calculations, and core banking systems must remain continuously available,” he said.
“Reporting and reconciliation are no longer end-of-day tasks but 24/7 responsibilities. Even customer channels and applications are expected to stay up and running on weekends and holidays.”
However, there are still questions around how banks and payment firms perceive the new regulatory requirements. For example, whether firms see them as an opportunity for innovation and improved product offerings, or merely as regulatory obligations to tick off.
“Broadening the scope of real-time payments beyond micropayments is excellent news for end users, but presents a significant challenge for banks, payment service providers, and the systems they depend on,” said Mike Walters, CEO at Form3.
“Once every bank and PSP can transfer money within seconds, the true differentiator will be what is built on top – product offerings such as instant refunds for e-commerce, real-time treasury management for corporates or varying access models. A cloud-native and resilient tech stack will be crucial to delivering these customer experiences and unlocking their competitive advantage”, he added
Laurent Descout, CEO and co-founder at Neo, agreed, while acknowledging that the shift will bring challenges.
“Banks and PSPs, long dependent on legacy systems, have faced, and will continue to face, significant hurdles in meeting the 10-second, 24/7 payment expectation, while maintaining reliable customer support and robust fraud and validation controls,” he said.
“With the €100,000 cap removed, firms also need stronger liquidity buffers, but this encourages smarter treasury planning and real-time cash management.”
However, Descout noted that although these demands may seem daunting, they create opportunity.
“Firms that adopt modern infrastructure and partner with innovative fintechs can turn compliance into a competitive advantage, streamlining treasury operations and fully unlocking the potential of instant payments.”
A boon for open banking
Another important question is whether this legislative change could unlock the potential of open banking in the EU. This would be welcomed by fintech players with licenses in the bloc, such as Trustly, Yodlee and TrueLayer.
“PSD2 took away one of our most important capabilities, the ability to establish payment certainty ourselves by checking an account before initiating a transaction,” said Ralf Ohlhausen, chair of the European Third Party Providers Association.
“Without that, there was a higher risk that payments wouldn’t be executed, especially when done in batch processes overnight, which created uncertainty for PIS [payment initiation service] payments,” he said.
Ohlhausen said that in light of this, customers did not accept a second layer of strong customer authentication (SCA), one for getting account data and another for the transaction itself.
“So, the next best step was to push for instant payments, which restores that certainty implicitly. After six years, we’ve finally regained the ability to ensure payment certainty.”
For this reason, he praised the IPR as a “huge step forward for open banking”.
“We’re now just waiting for full implementation. Hopefully, the PSR and PSD3 will address the remaining issues, but that still remains to be seen.”
Meanwhile, Lauren Jones, open banking lead at Paylume, also welcomed the regulation’s implementation, praising it as a “significant triumph for the open banking community”.
“The bleed across from IPR to open banking should not be underestimated. For A2A [account-to-account] 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,” she said.
“We have seen some markets charge as high as €12 for an instant payments’ transaction, and A2A has been suffocated because of that. The IPR will give A2A the opportunity to thrive and level the playing field.”
However, Jones warned that significant hurdles remain. “Open banking still suffers from cumbersome consent flows, re-authentication, and limited user control over recurring payments.”
She added that the IPR does nothing to streamline user experience, especially around 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.”
So, will instant payments become the new normal?
Now that the key deadlines have been cleared, it is plausible that the IPR will make instant payments increasingly prevalent in the euro area (and in the EU more widely over time).
For smaller, domestic payments, especially among retail customers, or in merchant settings, instant payments could indeed become routine.
Cross-border euro payments within the EU are also likely to see increased predictability and use over time, especially with the rise of local mobile payment solutions such as Wero and EuroPA.
In business contexts where cashflow efficiency is critical, instant payments offer considerable benefits, so as they become more of a cultural norm and more affordable, adoption can be expected to be high.
Cost equalisation, whereby instant payments may not exceed regular credit transfer fees, removes a key barrier and encourages uptake. In addition, the enhanced fraud and risk controls will increase trust, and network effects from widespread adoption will further drive usage.
Regulatory supervision should work to ensure that non-compliance declines over time. However, whether national competent authorities will prioritise this remains uncertain. The experience with PSD2 illustrates how transitional periods and varying supervisory approaches can contribute to uneven and delayed compliance.
Other factors may also slow adoption: legacy systems and technology costs could delay upgrades, and ensuring continuous liquidity, including nights and weekends, will create financial and operational challenges.
Nonetheless, user behaviour and entrenched payment habits may slow adoption, particularly for large or non-urgent payments. EU regulators will need to monitor uptake closely as they consider the rollout of the digital euro in coming years.
