The European Council and European Parliament have struck a provisional agreement on the mandatory provision of instant credit transfers in euros and access to central bank payment rails by non-bank e-money institutions and stablecoin issuers.
Under the planned rules, payment service providers, such as banks, which provide standard credit transfers in euro, will also be required to offer the service of sending and receiving instant payments in euro at no extra charge.
As part of the agreement, non-bank payment institutions, such as e-money institutions and future regulated stablecoin issuers will be granted direct access to central bank payment systems.
Mep Michieel Hoogeveen says: “The EU payments systems as a whole will become more competitive. The Parliament negotiating team also secured that, under certain conditions, fintech companies will be granted direct access to the European Central Bank’s payment infrastructure, so they won’t have to pay banks anymore to do it for them”
In a statement, the Council and Parliament say that the rules will improve the strategic autonomy of the European economic and financial sector as they will help reduce any excessive reliance on third-country financial institutions and infrastructures.
Not only will the move make instant euro payments universally available and affordable, it will also increase trust thanks to an obligation on providers to verify the match between the IBAN and the name of the beneficiary provided by the payer, says the Council.
The rules will come into forces in two stages, with a shorter transition period in the euro area and a longer one in EEA countries.
Kjeld Herreman, head of strategy advisory at RedCompass Labs, says: “Although this legislation is good news for European consumers and businesses, the technical implementation is set to be an enormous challenge for banks. It will require them to rapidly assess their digital capabilities and to work together with their counterparts and service providers to address these challenges in a short period of time.
“Timelines for this move are extremely ambitious, as banks will also need to enable file-based instant payments without surcharge for their business clients. The result of this is that even payment service providers that are already capable of processing instant payments will massively need to scale their throughput.”