Wednesday, May 22, 2024

Instant payments will necessitate European infrastructure overhaul

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Are European banks underestimating how many payments they will need to process per second to support instant payments?

According to a survey of 200 senior payment professionals at European banks published by RedCompass Labs in late March, most lenders are aiming to be able to process 100 to 300 payments per second by the end of 2025. Just 5% said they were targeting above 1,000.

Bulk payment files can contain hundreds of thousands of payments.

By consolidating the processing of different payment types and associated payment rails into one solution instead of multiple applications, banks could not only achieve big cost savings but also accelerate innovation and time-to-market while improving the customer experience.

According to Francesco Simoneschi, chief executive of TrueLayer, the Sepa credit transfer (SCT) scheme rules could spark a real-time payments revolution in Europe – especially when Sepa Instant is paired with open banking technology.

The EU has long been looking for ways to reduce dependence on US card schemes, and combining instant payments with open banking to create a home-grown account-to-account payment method is an obvious solution.

“An often-overlooked part of this regulation is that it gives non-bank payment service providers the right to access payment rails like Target Instant Payment Settlement (TIPS) directly,” he adds.

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