Voice of the Industry

Instant payments – the new normal... since 2020

Wednesday 8 February 2023 08:00 CET | Editor: Raluca Ochiana | Voice of the industry

Robrecht Vandormael, Managing Director at FTI Consulting, talks about the recent proposal by the European Commission to boost the uptake of cross-border instant payments.


‘We want to make instant payments the new normal’ – a quote from EU Commissioner for Financial Services, Mairead McGuinness, from 2020. Those close to European politics know that one does not have to look far to find such quote from the European Commission. 

For several years, the Commission has been making pledges to boost the uptake of instant payments – as part of an effort to strengthen its control over the European payments infrastructure, promote European payments champions, and ultimately become less dependant on international players. Indeed, Brussels hopes that instant payments, combined with reforms such as open banking (i.e., European fintechs using customers' banking data to offer payments initiation and aggregation services), will boost competition and break up the power of international card schemes and BigTech.

Initially left to the markets (read: banks), the European Commission became increasingly frustrated about the lack of voluntary uptake of instant payments. Commissioner McGuinness said that ‘it could take a decade for instant payments to become the norm’ if left to the banks. The Commission estimated that only 11% of all euro transfers in the EU were instantaneous at the start of 2022. 

Geopolitical turmoil and the cost of living crisis added further political arguments to the need for low-cost instant payments – that also offer solutions for late payments and SME cash flow issues. As the European Commission’s mandate is soon coming to an end, McGuinness found the perfect timing to release a consumer bill. It would allow her a fresh political win that changes the everyday life of European citizens – as a political quote could read.

So what has the Commission proposed?

The draft law aims to create a regulatory framework that allows consumers to pay by instant bank transfer in shops and online, domestically and across borders, or between friends (peer-to-peer, e.g., to split a restaurant bill) – all of this, without paying more than normal credit transfers. To increase security, banks should, at the time of an instant transfer, alert the consumer that the transaction is safe by matching the account number with the name of the beneficiary (IBAN verification). Lastly, rules on sanction screening have been proposed.


The Commission’s move has been applauded by many stakeholders. Fintechs and Open Banking players see it as a silver bullet to break into the market, merchants expect it to lower acceptance costs, and consumers embrace the proposal as it would make instant payments ‘safer, more affordable, and convenient’. Unlike one would expect, card schemes and banks have also expressed their support, recognising the need for choice and diversification of the market.

Rarely in the history of European law-making have proposals received such wide support from the entire ecosystem. Indeed, while some were fearing market engineering, following an initial analysis, it appears that the EC has done a good job with finding a balance in building a regulatory (not too descriptive) regime that is also strong enough to make a change in the market. As discussions are evolving, the devil will however be in the detail. 

Questions are starting to arise, in particular around the business and commercial model. In an anticipated effort to manage instant payments fraud, such as APP scams, IBAN verification is mandated. A helpful tool – however one that could also cause unnecessary friction if so intended. The mandate also comes with the ability to charge, a charge that will likely have to be paid by the end user, either merchant or consumer. One could also question if IBAN verification should be the only, regulatory-mandated, technology to protect consumers. Would the future not bring new technologies that would serve consumers and merchants better?

The proposal should also not be seen in isolation – and more elements need to fall together before instant payments can really flourish. Aspects such as the development of convenient and innovative front-end solutions fall outside of the remit of policymakers. Other obstacles such as direct access for non-banks to payment systems must also be looked at. And last but not least, the proposal could serve as a building block for the rollout of the Digital Euro by creating the rails on which Europe’s digital cash could run.

The ball is now in the court of the European Parliament and the EU government to strengthen it or pull it apart – under the influence of many interest groups. Expectations are positive and an agreement on a final law should not be too problematic. 

That said, a saying that is well-known in Brussels is ‘nothing has been agreed until everything has been agreed’. Let the game begin!

This editorial piece was first published in The Paypers' Cross-Border Payments and Ecommerce Report 2022–2023, which taps into the fast-growing cross-border market and provides a comprehensive overview of trends and developments that are pivotal in this space, being the ultimate source of information for ecommerce businesses interested in expanding globally.

About Robrecht Vandormael

Robrecht is a Managing Director in Brussels, overseeing a wide range of payments and financial technology clients. He helps them understand and manage complex EU policy and legislative issues that will impact their business, as well as advise them on broader political reputation management to grow or protect their freedom to operate. Robrecht is a member of the European Commission Payment Systems Expert Group, which advises the European Commission on payments policy and legislation. He is also Secretary General of Payments Europe, the association that represents the European and global digital payments industry.

About FTI Consulting

FTI Consulting is a global business advisory firm, providing multidisciplinary solutions to complex challenges, and with a worldwide network of more than 6,600 employees in 29 countries on six continents. FTI Strategic Communications helps companies around the world manage change, mitigate risk, and enhance their market position.

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Keywords: cross-border payments, instant payments, fintech, Open Banking
Categories: Payments & Commerce
Companies: FTI Consulting
Countries: World
This article is part of category

Payments & Commerce

FTI Consulting

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