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Towards Instant Payments as the new normal

  • Netherlands
  • Banking and finance


The Netherlands is leading the eurozone with respect to Instant Payments

In the Netherlands 90% of all single credit transfers between Dutch banks are Instant Payments. However, in the eurozone this percentage is approximately 15%. This is due to the fact that in most countries an Instant Payment is a premium payment method, which is only available to limited customers such as business customers or only for mobile payment transactions. In the Netherlands however, most banks are facilitating Instant Payments for every customer which makes transferring money via Instant Payments the new normal.

An Instant Payment supports a transfer in euro, where the amount is credited to a payment account within less than ten seconds. It does not matter when an Instant Payment is made, as Instant Payments can be transferred at any time of the day and every day of the year, regardless of whether this is in the weekend, a public holiday or in the middle of the night.

Instant Payments are based on a European standard ‘SEPA Instant Credit Transfer Scheme Rulebook’ (SCT Inst scheme) published by the European Payment Council. The SCT Inst scheme allows instant payment transactions in euro currency to any beneficiary within the eurozone within 10 seconds. The SCT Inst scheme was developed in 2017 to establish guidelines for real-time payments which was the first real-time payments regulatory framework in the region that addressed all EU countries. Additionally, TARGET Instant Payment Settlement (TIPS) was developed (as an extension of TARGET2). TIPS will support participants to comply with the SCT Inst scheme following the same process flows and liquidity transfers based on the participation criteria of TARGET2.

The European Commission is of the opinion that Instant Payments should be used as the normal way of transferring funds and therefore the European Central Bank (ECB) aims for full coverage across the eurozone. However, as participation to SCT Inst scheme is optional, action is required to improve the interconnectedness of infrastructures involved in the clearing and settlement of instant payments. Accordingly, ECB aims to ensure pan-European instant payments by the end of 2021.

Respectively, the Governing Council of the ECB has agreed to update the TIPS participation rules for PSPs and automated clearing houses (ACHs). This means that all PSPs which have adhered to the SCT Inst scheme and are reachable in TARGET2 should become reachable via TIPS. PSPs can be reachable via TIPS either as a participant or as a reachable party through the account of another participating PSP. Additionally, ACHs who offer instant payments should move from TARGET2 to TIPS.

What this means for you

The amendments to TIPS will enable PSPs to comply with the SCT Inst scheme and therefore provide instant payments, without depending on other PSPs or ACHs. For ACHs that provide instant payment services, the measures will also support them by allowing them to automatically include pan-European reachability as part of their service offer. The new measures which are adopted by the ECB will help PSPs and ACHs that comply with SCT Inst scheme to meet their legal obligation under the SEPA Regulation accordingly. By introducing these measures, the ECB is taking decisive steps to ensure instant payments as the new normal in the eurozone.

Source: Payment Matters #49