What are the key obligations and timelines for the EU Instant Payments Regulation?

On 8 April 2024, the Instant Payments Regulation (IPR) entered into force. The IPR aims to accelerate the offering real-time credit transfers in the European Union.

For banks offering payment services, 2025 will be a key year in which they must fully comply with the obligations under the IPR. E-money institutions (EMIs) and payment institutions (PIs) must comply with the requirements from 2027 onwards, with the exception of the "verification of payee" requirement, which applies from 9 October 2025 onwards.

The IPR introduces five key obligations applicable to banks, EMIs and PIs, collectively referred to as payment service providers or PSPs. These obligations are summarised below.

Instant credit transfers

PSPs that offer the service of sending and receiving credit transfers, must also offer to all their clients the option to send or receive instant credit transfers. An instant credit transfer means a transfer that is executed immediately, 24 hours per day and on any calendar day.

PSPs must ensure that payers are able to place a payment order for an instant credit transfer through all of the same payment initiation channels as the ones through which those payers are able to place an order for a non-instant credit transfer.

Equal charges

The charges imposed by a PSP for executing instant credit transfers cannot be higher than those charged for corresponding other types of credit transfers.

When identifying corresponding types of credit transfers, PSPs can apply various criteria which include (but are not limited to) the payment channel used to initiate the credit transfer, customer status, and additional features or services linked to the credit transfer.

Where it is possible to submit payment orders for non-instant credit transfers without additional features, the PSP must make available the option to submit payment orders for instant credit transfers without additional features as well. In that case and in line with the above, the charges for the instant credit transfer cannot exceed those for the non-instant credit transfer.

Verification of payee

PSPs must offer payers the service of verifying the payee prior to authorising the credit transfer. Payers that are not consumers may waive this service, provided that they are at all times able to opt back in for the service.

If a payer authorises a credit transfer after being warned by the PSP about an incorrect unique identifier, the payer is liable for the transfer to an unintended recipient.

The verification of payee requirement applies to all credit transfers, and not only to instant credit transfers.

Sanction screening

Instant credit transfers do not allow time for PSPs to verify whether credit transfers trigger targeted financial restrictive measures (TFRM) prior to processing such transfers. PSPs are therefore only obliged to at least daily verify whether their payment service users are persons or entities subject to TFRM, or immediately after the entry into force of new or amended TFRM.

Reporting

The SEPA Regulation requires PSPs to report to their competent authorities every 12 months on the level of charges for credit transfers, instant credit transfers and payment accounts, as well as the share of rejections of payment transactions due to the application of the TFRM.

On 4 February 2025, the European Banking Authority issued implementing technical standards on these reporting requirements (EBA/ITS/2025/02). The first reporting period will be from April 2025-April 2026.

Other changes

Safeguarding

IPR amends the safeguarding requirements included in Article 10 of the revised Payment Services Directive (PSD2):

• Article 10(1) of PSD2 now includes a specific reference to EMIs: funds received by EMIs for the execution of payment transactions must be safeguarded by the end of the business day on which they are received, if the funds are by then still held by the EMI. It is not entirely clear how this requirement relates to the safeguarding requirement included in Article 7 of the e-money directive (which states that funds received in exchange for issuing e-money must be safeguarded by no later than five business days after issuing the e-money). After all, e-money, also newly issued, is often used for the execution of payment transactions.
• Client funds can now also be safeguarded in a separate account held with a central bank at the discretion of that central bank;

Access to payment systems such as TARGET

IPR amends PSD2 and the Settlement Finality Directive (SFD) to enable EMIs and PIs to gain direct access to designated payments systems within the meaning of the SFD, which includes TARGET. The requirements for gaining access to the payment systems will resemble those that apply to banks. Member States must define the procedures for gaining access to payment systems.

On 27 January 2025, the European Commission published its decision on access by EMIs and PIs to the Eurosystem central bank operated payment systems, setting initial rules and restrictions.  

Member States must by 9 April 2025 adopt and apply the laws necessary to comply with the requirement that EMIs and PIs can gain access to relevant payment systems.

Timelines

Below are the application dates of the key requirements arising from the IPR. Application dates differ depending on whether the PSP is a bank or non-bank and whether the PSP is located in the eurozone.

The requirement and application dates apply to instant credit transfers only, except for the verification of payee requirement, which applies to all credit transfers.   

Osborne Clarke comment

The IPR is a positive step towards increasing the use of instant credit transfers. 2025 will mostly be an important year for banks, as they need to ensure full compliance this year. Having said that, EMIs and PIs must also start preparing for compliance with the IPR: processing instant credit transfers may entail significant changes to operations and systems.

In addition, the verification of payment requirement applies as of this year, and all PSPs must prepare to report on the level of charges for credit transfers, instant credit transfers and payment accounts, as well as the share of rejections of payment transactions due to the application of the TFRM.