Irish banks ‘on track’ for EU instant payments even as survey finds deadlines ‘unrealistic’

The Republic’s three remaining banks insist they are gearing towards EU timelines for instant payments next year, even as a new survey has found that most European lenders without necessary systems in place are calling the schedule “unrealistic”.

EU payment services providers must be capable of receiving payments in less than 10 seconds under the Single European Payments Area (Sepa) instant system from January 9th next year. They must be able to send instant payments from October 2025, according to the new rules, adopted last month by Members of European Parliament (MEPs).

Some 58 per cent of senior payment professionals across European banks that do not have the infrastructure in place for Sepa Instant say that the deadlines set for next year are unrealistic, according to survey carried out by RedCompass Labs, the payments technology and consulting firm.

Sepa Instant, aimed at making bank payments in the EU simpler, faster and cheaper, was launched in 2017. However, only 14 per cent of credit transfers in the EU were instant payments in the first quarter of last year. The EU Commission estimates that about €200 billion in credit transfers is stuck in transit in the European financial system on any given day.

Spokeswomen for AIB and PTSB and a spokesman for Bank of Ireland said they are each working to have systems in place for Sepa Instant for next year’s deadlines.

“This is a significant priority programme which has already been mobilised by BPFI members and it will result in universal instant payments across the EU which are more secure, offering additional fraud prevention measures,” a spokeswoman for Banking & Payments Federation Ireland (BPFI) said. “Following the official EU publication of the regulation on March 19th, BPFI members are working towards the timelines set out for 2025.”

Irish banks had been so far behind the curve in preparing for Sepa Instant that they set out in 2020 to form a joint venture, called Synch Payments, to allow for near-instantaneous money transfers and compete with the likes of Revolut.

The banks decided last November to abandon the planned venture, after the project was hit by a series of setbacks – and the EU payments landscape had moved on. Political agreement had been reached the same month between the European Council and European Parliament on the new planned Sepa Instant rules.

The new rules specify that if a payment service provider does not fulfil certain fraud prevention duties and this results in financial damage, a client may demand to be compensated by the service provider.

The RedCompass Labs survey of 200 bank officials found that more than two-thirds of respondents were either somewhat or very confident that their institution could meet next years’ deadlines.

The report also found that European banks are underestimating how many payments they will need to process per second. On average, European banks are aiming to be capable of processing between 101 and 300 payments per second by the end of 2025, while just 5 per cent said they were targeting above 1,000.

“Given bulk payment files can contain hundreds of thousands of payments that need to be processed as soon as possible, banks should aim to be able to process at least 1,000 payments per second,” RedCompass Labs said.