SEPA Credit Transfer Inst – where are we now?

November 2017 saw the launch of the SEPA Instant Credit Transfer (SCT Inst) scheme, an initiative aimed at easier and faster payments on a pan-European scale.

Among the features, the most relevant one is immediacy – when the funds are available in less than ten seconds after the transfer is initiated. Another important feature is that the scheme is open and accessible to users and service providers 24 hours a day, 7 days a week.

The scheme is embraced at a European Union level. Although the transaction has to be in EUR, the payments accounts held at PSPs operating within the scheme do not have to be denominated in EUR. This means that instant payments can be made between two accounts, in the SEPA region, denominated in different currencies.

What are the latest figures for the adoption across Europe of the SEPA Credit Transfer Inst scheme among banks and PSP?

We are delighted with the latest figures from the Register of Scheme Participants (published in July 2018), which reveals that our scheme, launched in November 2017, now enumerates 1,070 Payments Service Providers (PSPs) (26% of the total) from 15 countries in Europe.

What are the main obstacles and challenges that banks face in the ubiquitous adoption of SCT Inst?

PSPs need to prepare their IT systems (e.g. channels, core applications, etc.) and processes to make them real-time and available 24/7/365, which includes setting up back-up arrangements. They will also have to adapt their operational and risk management processes such as fraud detection, their clearing and settlement arrangements, as well as develop and promote this new service to their customers. These are some of the challenges to be met by any PSP implementing SCT Inst.

So far, what are the biggest opportunities brought about by SCT Inst for banks and PSPs?

The biggest benefits of SEPA Instant Credit Transfer (SCT Inst) stem from its real-time nature - which allows the electronic transfer of money in less than ten seconds, as well as its permanent availability (24/7/365) - since real-time payments will be possible at any time and on any day of the year, including weekends and holidays. This will enable PSPs to meet the demand of their customers for a payment experience in line with the digital world they live in.

Moreover, SCT Inst can support a multitude of use cases: individuals, businesses, and government entities, which will be able to use the scheme. In addition, it is a digital method of payment that provides an opportunity to replace paper-based payment instruments, such as cash and cheques. Its growing targeted pan-European reach will also be a key advantage.

How will the combination of instant payments, PSD2 and open APIs impact the payments scene in Europe and the position of banks within it? Will instant payments accelerate the implementation of open banking?

Indeed, the present times are characterised by the confluence of several key drivers for change in the payments market, such as regulation – in particular PSD2. Other key drivers include the move to instant payments, the growth of the use of mobile, wearable and connected devices and objects, the importance of data, APIs impact on payments, and the emergence of new players and the expansion of e-commerce.

This junction should reshape the payment markets over the coming years and transform interactions between the various players. Nevertheless, we believe that European PSPs will remain key actors in payments – if they proactively embrace these changes with customer needs and experience in mind.

How will TARGET Instant Payment Settlement contribute to the efficient deployment of SEPA Credit Transfer Inst?

The pan-European rollout of instant payments depends not only on the payment service providers but also on the availability of a safe and efficient underlying market infrastructure that can process instant payments across Europe. TARGET Instant Payment Settlement (TIPS) will become operational in November 2018, to complement SCT Inst and help support its successful deployment: it will contribute to the development of instant payments at European level and should facilitate further integration in the euro area.

About Javier Santamaría

Javier Santamaría is the Chair the EPC since June 2012, and has been one of its members since its creation in 2002. During decades as a bank employee, Mr Santamaría accumulated a broad and balanced expertise in the intertwined dimensions of payments – business-related, operational, technical – across different client segments and product lines, in the legacy and the innovative spheres, which he now further develops as an independent self-employed professional. He has been immersed in both cooperative and competitive environments. Besides payments, he is interested in other banking fields and continues to be actively engaged in academic matters. Mr Santamaría is also Chair of the Iberpay Board.

About The European Payments Council (EPC)

The European Payments Council (EPC), representing payment service providers, supports and promotes European payments integration and development, notably the Single Euro Payments Area (SEPA). The EPC is committed to contributing to safe, reliable, efficient, convenient, economically balanced and sustainable payments that meet the needs of payment service users and support the goals of competitiveness and innovation in an integrated European economy. It manages four SEPA payment schemes for direct debits and credit transfers.