An executive with open banking platform Tink believes the Jan. 9 deadline for Eurozone banks to receive instant payments marks the most significant shift since PSD2 seven years ago. Head of industry and wallets Jan Van Vonno believes Europe is finally poised to realize the A2A payments opportunity at scale.
As of Jan. 9, all banks in the euro area will be required to receive instant payments. So if a consumer pays from a bank that supports instant payments at checkout, it is guaranteed that Pay by Bank will move the money into the merchant’s euro bank account in under 10 seconds.
Also from Jan. 9, every bank offering instant payments must also ensure that the levy on the customer is no higher than normal credit transfers. In other words, the initiation of instant payments will be free of charge for most consumers.
“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,” Van Vonno said. “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.”
IPR will drive uplift in Pay by Bank
Van Vonno said IPR will encourage greater adoption of Pay by Bank – a payment method that is fast, simple, secure, low cost and reliable. 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 cash flow 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,” Van Vonno added. “For consumers, it provides speed, control and simplicity – wherever they shop across the eurozone.”
According to the European Savings and Retail Banking Group, 96% of the EU population own a bank account – that means Pay by Bank is the most inclusive payments service available to consumers and merchants on the continent.
“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,” Van Vonno concluded.