Instant payment

Originally clearing of payments was based on the cheque clearing cycle that required physical cheques to be exchanged by banks at clearing houses for payments to be made between bank accounts. When electronic payments entered the banking systems from the 1970s onwards, the same timeframes and processes were used to settle these electronic payments.

The growth of e-commerce since the 2000s has caused a change in people's spending patterns and expectations. Shopping is no longer confined to regular business hours, creating new challenges for funds transfers. Similarly, merchants require faster and more reliable money transfer systems to keep up with consumers' demands.

Traditional electronic payments like bank transfers, that perform the electronic funds transfers within a few business days, are not in line with user expectations.

In 2024, EU adopted Instant Payment Regulation, aiming to accelerate instant payments in Europe. For EU member states operating in euro it partially took effect in January 2025, for non-euro member states it will partially take affect in January 2027. This regulation includes requirements to send and receive transfers within 10 seconds (SEPA Instant Credit Transfer), as well as to implement the Verification of Payee service. The Verification of Payee allows payment service providers (PSPs) to verify the IBAN and the name of the payee as given by the payer. It will help to reduce scams and incorrect transfers. The regulation also allowed non-bank financial institutions access central bank-operated payment systems like TARGET. This opened an access to several SEPA services for fintechs and neobanks in Europe.