Following European Union mandates, the transfer of funds throughout the entire Euro-currency area is now significantly faster and more secure than ever before. Thanks to new EU regulations governing Instant Payments, individuals and businesses can transfer money in euros within seconds, around the clock, seven days a week, regardless of the time of day or location within the Eurozone.
The implementation of these rules has been phased. Payment service providers (Zahlungsdienstleister) were required to offer the ability to receive Instant Payments in the Eurozone as early as January 2025. As of this month, providers are now also fully obliged to offer their customers the service of sending Instant Payments in euros. This transformation ensures that real-time payments are more widely available, more secure, and more affordable for everyone across the Euro-currency area.
The processing of payments across the Eurozone was instantly transformed beginning on October 9th, following the new EU regulation. Real-time bank transfers have become the new standard, completing transactions within seconds, twenty-four hours a day. Crucially, these instant transactions must be provided by banks and other service providers without an extra charge, as they are prohibited from charging more for an Instant Payment than for a standard euro transfer.
This mandate is projected to significantly boost the European economy and bring substantial advantages. For private individuals, money is available immediately, greatly simplifying the handling of emergencies or the easy splitting of bills. For businesses, the new speed improves cash flow management and enhances customer service by offering a fast, reliable additional payment method, saving both time and cost.
Hand-in-hand with faster transfers comes significantly enhanced security and fraud prevention. A new verification step, the Verification of Payee (VoP), commenced for all SEPA transfers and Instant Payments beginning on October 5th.
This security measure mandates that the payee's service provider checks whether the specified recipient name matches the name associated with the provided IBAN. The VoP system returns a result of "MATCH," "CLOSE MATCH," or "NO MATCH," empowering the payer to decide whether to proceed with the transaction. This vital security service must be offered to the payer free of charge, thereby preventing incorrect transfers and combating fraud. The rules are now mandatory throughout the Eurozone.
The way payments are processed has been instantly transformed across the Eurozone beginning on October 9th, following the new EU regulation. The regulation mandates four major shifts to modernize financial transactions:
Instant Transfers 24/7: Transfers in euro that used to take days will now reach the recipient in a matter of seconds, at any time, including nights, weekends, and public holidays.
No Extra Fees: Banks and other payment service providers are now prohibited from charging more for an instant payment than they would for a standard credit transfer, effectively making speed free of charge.
Free Payee Verification: Providers must offer the Verification of Payee (VoP) service free of charge. This system verifies that the name of the recipient matches the IBAN provided, drastically strengthening protection against fraud and errors. The VoP system, which commenced on October 5th, returns a result of "MATCH," "CLOSE MATCH," or "NO MATCH," empowering the payer to decide whether to proceed.
Lower Processing Costs: New rules enable payment and e-money institutions to participate directly in payment systems. This streamlines operations, allowing these institutions to provide their services, including Instant Payments, more efficiently and cost-effectively.
The foundation for this major shift is the Regulation on Instant Payments (Verordnung über Sofortzahlungen), enacted in March 2024. This regulation updates the 2012 rules for euro transfers to reflect contemporary technological advancements and the needs of citizens and companies. Additionally, new rules now allow payment and e-money institutions to participate directly in payment systems, enabling them to offer services, including Instant Payments, more efficiently and at a lower cost.
Looking ahead, payment service providers outside the Euro-currency area must enable their customers to send and receive Instant Payments in euros and provide the recipient verification service starting in January 2027. The European Commission will closely monitor the evolution of Instant Payment fees to ensure they remain affordable and accessible across the entire EU.
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