Consumers and businesses throughout Europe benefit from ubiquitous, standard Euro SEPA credit transfers (SCT) and direct debits (SDD).
However since SEPA currently has no instant payment option, new payments needs (in Euro) continue to be met using legacy infrastructure to provide the underlying clearing and settlement. Although this may suffice in the short term, customer’s payment expectations are high and increasingly set by digital experiences outside financial services where everything happens instantly.
The demand for ‘instant’ payments in Europe is therefore clear. New mobile and online channels are increasing customer convenience, enabling people to pay who they want, when they want (irrespective of time of the day and day of the week). Beneficiaries want certainty of receipt and the ability to draw on funds as soon as a payment is made without waiting for the next working day (the concept of the ‘business day’ is disappearing fast). Instant Payments fulfil a very simple but essential requirement for consumers and business and are necessary to align financial services with the 24x7 real world. The absence of commonly available Instant Payments means that Europe cannot realise the wider benefits of real-time technology that are enjoyed by an increasing number of economies. In practical terms, an Instant Payments service is the next stage of SEPA and should become a focus for European payments harmonisation.
There is ample evidence to support a strong business case for Instant Payments in Europe. As a direct replacement for existing credit transfers it offers great value: however, the UK and Singapore experiences suggests that a successful solution should deliver greater benefits as the core of a new, real-time ecosystem: in effect, act as a catalyst for innovation within banks, government and the wider business community.