Which financial entities are subject to regulation 2024/886 ?
 | This new European regulation on SEPA instant payments applies to all payment service providers (PSPs), including payment and electronic money institutions, established in the European Union (EU) or the European Economic Area (EEA). Most payment and electronic money institutions already have processes in place to verify customer identity (KYC), assess customer risk (CDD), and prevent money laundering (AML) and terrorist financing (CTF). Adapting these procedures to the new regulations will only require a few targeted adjustments. |
If you are one of the newcomers to the “institution” category under directive 98/26/CE, don't panic! The regulation gives EU member institutions until 09/01/25 to comply, and until 09/01/27 for EEA members.
What is an instant payment ?
The notion of instant payment is rather vague, and the arrival of this regulation means we can really distinguish it from traditional payments. An instant payment is a transaction that is executed in less than ten seconds, at any time. This transaction can be initiated via a variety of payment initiation channels; online banking services, mobile app, ATM, self-service terminal, in-branch, or even over the phone. This speed offers revolutionary liquidity for payment service users (USPs) and payment service providers (PSPs), as well as unprecedented irreversibility. |  |
How can we guarantee the security and compliance of instant payments ?
The security measures used until now to justify payment processing times of up to four working days, depending on the institution, are being reassessed in the light of European regulation 2024/886. The latter aims to speed up financial transactions while enhancing their security.
The regulation considerably strengthens beneficiary identity verification (VoP) procedures. Financial institutions must now implement more rigorous mechanisms to ensure the identity of the person receiving the funds despite possible disparities between the information provided by the payer and that associated with the payee identifier, while complying with the requirements of the General Data Protection Regulation (GDPR).
 | The verification of payee (VoP) system should signal to the issuer that the unique identifier and name provided by the payer do not match the PSP's internal data, the refusal to correct then leads to a release of risk for the institution. PSPs will also have to check, at least once a day, that their USPs are not subject to targeted financial restrictionsThis will continue to significantly reduce the risk of error, fraud, and money laundering without delay. |
Finally, this regulation encourages the emergence of new, innovative payment services, while guaranteeing a high level of security. As a result, fintechs and neobanks will be able to offer payment solutions that are increasingly tailored to consumers' needs.
What is the impact of instant payments for consumers ?
For users, the new regulation transforms the electronic payments landscape in Europe, offering access to faster, safer and more transparent payment services.
The main benefit is the widespread use of instant euro payments. From now on, your payments can be made in a matter of seconds and at no extra cost.
Indeed, the fees associated with payments can influence consumer choices, and this regulation has adopted clear rules to ensure that instant transfers are massively adopted. Charges for making an instant transfer may not exceed those for a traditional transfer offering the same associated services, such as the ability to initiate payment online or simply obtain a receipt. Unfortunately, some entities have not yet complied with these regulations, and are charging additional fees for instant transfers. |  |
In addition, the regulation encourages user autonomy by giving them the option of setting daily or per-transaction payment limits at any time. This flexibility enables users to adapt their payments to their consumption habits and budget.
For example, an elderly person may decide to deactivate the issuing of instant payments to avoid errors.
Deadlines and requirements for PSPs
The regulation on instant payments obliges all payment service providers (PSPs) in member states whose local currency is the euro (EU) to offer the reception of instant payments by January 09, 2025, and the issuing of instant payments by October 09, 2025, at no extra charge.
PSPs located in the EU area have until October 09, 2025 to implement verification of payee (VoP), for example, by notifying the user of information mismatches, with the option to decline.
PSPs located in the EU and EEA area must implement a verification, at least daily, that their customers are not subject to targeted financial restrictions, by January 09, 2025.
Electronic money PSPs located in the EU area must allow instant transfers to be issued and received at no extra cost by April 09, 2027.
Electronic money PSPs located in the EEA area, whose local currency is not the euro, must also be able to receive
instant payments in euro by April 09, 2027.
Electronic money PSPs located in the EEA area must offer the issuing of instant payments on July 09, 2027, at no extra cost, and to implement verification of payee (VoP), for example, by notifying the user of information mismatches, with the option to decline.
Instant payments, a growth force for tomorrow's European economy
By offering instant payments, financial institutions are meeting their customers' expectations for speed and simplicity. This new regulation also benefits consumers by offering them a wider choice of payment services and reinforcing the security of their transactions. To make the most of these opportunities, it's essential to comply with the new standards.
The new obligation for payment service providers (PSPs) in the EU and EEA to verify daily, starting January 9, 2025, whether their customers are subject to targeted financial restrictions is a sensible and necessary measure. For Liechtenstein-based PSPs, this regulation offers clear advantages, particularly in strengthening the integrity of the financial system and minimizing risks. Daily sanctions screening plays a crucial role in ensuring that no transactions are conducted with sanctioned individuals or organizations. In times of increasing geopolitical tensions and expanding international sanctions regimes, it is essential for PSPs to act proactively and comprehensively to fulfill their responsibilities. For Liechtenstein-based PSPs, which often operate internationally, this measure provides an additional layer of protection against legal and financial risks. By performing daily checks against up-to-date sanctions lists, such as the EU sanctions list or the OFAC list, potential violations can be detected and prevented early. This not only enhances compliance security but also reinforces customer and partner confidence in the reliability and credibility of the institution. Although implementing this measure involves technological and organizational adjustments, the long-term benefits outweigh the challenges. Automated screening systems ensure efficient and seamless monitoring, reduce operational risks, and enable PSPs to meet increasing regulatory requirements effectively.