Instant Payments: What has the Instant Payment Regulation achieved?

Not as a technical overhaul, but as a further development of a process that has been in place since 2017. Although real-time transfers were available, they long remained a niche feature: limited, optional and scarcely present in the daily lives of many users. Usage was correspondingly low.

The regulatory framework has now been significantly tightened. Key points include mandatory participation by all SCT-capable banks and payment service providers, the elimination of the transaction limit and the introduction of Verification of Payee (VoP) as an additional security measure. The goal is to transform this optional payment method into a European standard – at least from a technical and regulatory standpoint. Whether this will lead to widespread adoption remains to be seen. It is more likely that this marks the beginning of a longer transformation process.

Use by private individuals

This standardisation has particular potential among private individuals. The benefits are clear: money is transferred in seconds, rather than having to wait for the next banking day.

Transfers between private individuals – such as splitting costs, settling rent or sending money back – can be made at any time, including on weekends and outside of traditional banking hours. In addition to being fast, these services are also increasingly being used for larger sums. Whether it's for a second-hand moped, bicycle or other high-value goods in a private context, instant payments are effectively replacing cash – providing a quick, definitive and risk-free alternative to handing over cash. PayPal remains more relevant for smaller amounts, while credit cards play a minor role in peer-to-peer payments.

There is also a psychological effect: when people see money immediately, they feel a sense of control and security. Receiving payment straight away reduces uncertainty and builds trust. For private individuals, “instant” is therefore perceived less as a technical feature and more as an expectation: money should behave like other digital services – instant, reliable and without delay.

E‑commerce and retail perspective

In e-commerce, instant payments could have distinct advantages over credit cards and PayPal. The immediate receipt of payments, direct crediting and the elimination of intermediaries could speed up processes and make funds available immediately. In theory, payments could be finalised in real time, with an immediate effect on the release of goods.

However, the challenge lies less in receiving payment than in the procedural response. Retailers are accustomed to receiving structured status signals from the card and PayPal sectors, which automatically prompt the release of goods. In the instant payment environment, this end-to-end consistency is often lacking. The key factor is how payment receipt information is fed back to the store reliably, automatically and in a machine-readable manner. Without this feedback, the process often ends with the bank statement.

One possible solution is for banks to provide a structured report (e.g. camt.053) that automatically confirms incoming payments. It is only with such signals that a fast payment channel becomes operationally viable.

Businesses and Corporate Payments

The situation is rather different when it comes to outbound corporate payments. In the supplier sector and treasury departments, “instant” payments have so far played only a minor role. Does anyone actually pay invoices at 11:47 pm on a Saturday? Which accounting department works around the clock simply because it is technically possible?

Corporate payment processes are deliberately planned, controlled and consolidated. Cash flow is a strategic tool, not a sprint. Therefore, instant payments do not usually solve any urgent problems in the corporate environment; rather, they create options for exceptional cases, which is useful but does not represent a fundamental shift.

Verification of Payee (VoP): useful, but should be considered on a case-by-case basis

Verification of payee (VoP) requires a nuanced analysis. For private individuals, it provides clear added value. A simple name-to-IBAN comparison increases security, detects errors early on and makes it more difficult to commit fraud. VoP is generally well integrated and easy to understand in banking apps.

The situation is rather different for businesses. While VoP is sensible in theory, it is often unwieldy in practice. This is particularly relevant in sensitive situations, such as when dealing with new suppliers or changes in bank details, or when making last-minute alterations – in other words, precisely where fraud typically occurs.

VoP is less convincing when it comes to existing accounts. Those who regularly pay long-standing suppliers have every right to question why each payment needs to be checked again. Furthermore, VoP is currently tied to a specific transaction. As there is no regulatory provision for an independent upstream check, its preventive value is limited and complexity is increased.

Data protection is often used as a justification. However, it is not necessarily clear that an upstream check would breach regulatory requirements as a matter of principle, provided that it is purpose-limited and implemented in a technically sound manner.

Fine-tuning is needed here. The regulator should extend the concept of protection more broadly to cover businesses and enable practical integration of solutions. In practice, targeted VoP use is likely to suffice, for example in cases of new or amended master data. Applying it to every payment would create friction without a proportional gain in security.

When used correctly, VoP becomes less of a transactional feature and more of a targeted control tool.

And yes, banks should be permitted to charge for these services. Security, real-time capability and availability do not come free of charge.

Anyone who explores these issues in greater depth – whether through specialised further training courses or the latest seminars on payment transactions – will quickly realise that instant payments are not so much an isolated product as a component in a comprehensive transformation of the payments sector.