What will the European Instant Payments mandate mean for you?

The Fintech Forecast is a series of guest articles published each month from thought leaders at ACI Worldwide. 

Author: Elise Thrale

The European Union (EU) is proposing that Banks (PSPs) operating in the bloc should send and receive mandatory instant payments (IP) in euros.

This is part of the EU’s bid to modernize the way Europeans pay, allowing Europeans to transfer money in seconds, at any time of day, 365 days a year. The benefits would include easily accessible cross-border payments, fostering a more dynamic pan-European market for payments.

Digital spending is here to stay

Europe has seen huge ways in the way that consumers pay since the pandemic. Banks were inspired to level up their mobile offerings beyond banking functions to offer additional services. Accelerated adoption of contactless and mobile banking, more cashless payments and cashless in-store customer experiences have been a welcomed change in the last few years. This has been seen through the opening of cashierless Amazon Fresh stores in Spain, France and Italy, in which customers can simply walk out the door and their payment is accepted.

Where obtaining credit used to be a slow process, companies like Klarna have popularized the concept of buy now, pay later (BNPL). This real-time credit is driving a preference for digital channels and specific retailers and has unlocked spending power for younger generations that wasn’t previously possible, unlocking more future economic prosperity.

Despite this boom, ACI Worldwide’s Prime Time for Real-Time report reported that in 2021, real-time account to account payments were only 6.5% of all electronic payments. Europe has a long way to go compared to its neighbours in MEASA for example, where 41.3% of electronic payments in 2021 were real-time. The report found that real-time payments are the key to unlocking economic growth, so now is the time to digitize.

What was slowing adoption before?

Although SEPA (Single Euro Payments Area) already exists as an infrastructure in Europe for real-time payments, adoption has been slow. Where previously, sending euros cross border in real-time was costly, the new mandate will make real-time transfers as simple as other popular payment methods, such as card. The customer will be able to easily choose this as an option and not be inhibited or discouraged from selecting it.

“Consumers are demanding convenience in the way they pay, and it is those that have offered it early that have come out on top”

Elise Thrale, ACI Worldwide

Europe can look to learn from markets such as India, China, Malaysia, Thailand and Indonesia, where we have seen world-leading real-time payments growth. Through these markets, Europe can learn that by embracing digitization, payment volumes will boom.

When merchants accept mobile wallet and QR code payments in the place of cash or card payments, services become more convenient and accessible, addressing the needs and new expectations of citizens.

Consumers are demanding convenience in the way they pay, and it is those that have offered it early that have come out on top. We have seen this with the fast growth of, Klarna, by offering real-time credit at convenience.

What’s next for Europe?

The European parliament will have the final say as to whether this instant payment mandate goes through, but it is looking likely, and is sure to change the European payments ecosystem. Banks that transact in the euro zone should start preparing now, and consumers can look forward to a future of seamless digital user experiences, and convenience.