Brace yourself: Europe’s payments revolution is here

Europe is on the cusp of a payments revolution.

The IPR coming into force represents a significant shift in the European payments landscape

The Instant Payments Regulation (IPR) is levelling the playing field for payment providers, aiming to make instant payments the norm. This supports the region’s rapidly growing digital economy and evolving consumer demand for fast, affordable and transparent payments.

As of 9 January 2025, EU banks need to ensure that their customers can receive instant euro bank transfers. Within 10 seconds, money needs to arrive in the recipient’s account and the sender’s payment service provider (PSP) needs to receive a confirmation of that payment. What’s more, providers need to carry out robust sanctions screening and fraud detection processes all within that timeframe.

By 9 October 2025, EU banks will also need to enable their customers to send instant payments – not just receive them. On top of that, these payments must include a free verification of payee service – a way of checking whether the name and account details actually match, which will reduce the amount of misdirected payments and accidental typos.

With all the upcoming deadlines for instant payments in both 2025 for banks and 2027 for non-banks, this regulation has banks scrambling to understand how it will impact their payment services and revenue models.

So, what does this mean for banks? Here are a few key considerations for the year ahead:

• The competitive stakes have just been raised: EU banks are getting squeezed from all sides – not just by other banks, but by new PSPs offering lightning-fast transaction speeds. In fact, recent industry data from Wise shows that customers receiving instant money transfers have a 6% higher retention rate compared to those waiting over 48 hours. Banks will have no choice but to step up their game and innovate, and they need to do it quickly.

• Liquidity forecasting has become more complex: Liquidity monitoring is now a round-the-clock necessity, helping banks avoid excessive liquidity buffers and their associated costs. This means banks must rethink their forecasting and exposure limits to keep pace with the 24/7 operation environment. Importantly, banks need to update their liquidity monitoring processes and technology to stay ahead of the rapid rise of instant payments.

• Experience isn’t just a nice-to-have – it’s essential for business success: Customers these days expect instant, affordable and super-convenient services. From dynamic workflows to real-time payments, customers want transparent experiences that exceed their expectations.

• Regulatory compliance has banks jumping through new hoops: Banks must ensure data privacy, transaction monitoring and reporting for instant payments – adding to their compliance load. But these new requirements are also helping to establish a standardised payment framework across the EEA, bringing greater structure to the European payments landscape.

• Sub-second compliance checks will become the industry standard: Like many organisations, banks are built on legacy systems that make implementing new technologies, like those enabling instant compliance checks, complex and costly. The IPR will encourage banks to invest in tech-driven processes along with deep local expertise to stay ahead of the curve and identify financial crime with speed and precision – whether this is proprietary technology built in-house or through partnerships.

The new regulation coming into force represents a significant shift in the European payments landscape, fostering a more efficient and seamless transaction experience for consumers and businesses alike. This also positions the EU at the forefront of digital payments innovation along with pioneers like the UK, Brazil and India, encouraging other regions to elevate their payments systems.

However, the IPR also serves as a stark reminder of just how difficult delivering instant payments, domestic or global, can be. With the upcoming G20 deadlines setting ambitious targets for providers to deliver faster, more transparent and accessible global payments by 2027, the year ahead will see banks take a more holistic approach to addressing these challenges.