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European Parliament approves Instant Payment Law

Thursday 8th February, 2024

The European Parliament has formally approved legislation that will force banks and other payment service providers to offer EU citizens and businesses the option of performing virtually instantaneous credit transfers.

To ensure that retail clients and businesses, especially SMEs, will not have to wait for their money as well as to provide safe transfers, the agreement updates the Single Euro Payments Area (SEPA) legislation. Payment service providers (PSPs) such as banks, providing transfer services in euro, will be required to offer the service of instant credit transfers.

The law, which was passed on Wednesday, follows a proposal by the European Commission in October 2022 to make “instant payments” available across the EU, as part of wider efforts to deepen the bloc’s Capital Markets Union (CMU) and strengthen its strategic autonomy.

Michiel Hoogeveen (ECR, NL) the lead MEP said: " With this initiative, EU banks are obliged to provide instant payment services to clients, at no extra cost, under strict deadlines. Customers will enjoy smoother payment options, businesses will face lower costs, and the EU payments systems as a whole will become more competitive. The Parliament negotiating team also secured that, under certain conditions, Fintech companies will be granted direct access to the European Central Bank’s payment infrastructure, so they won't have to pay banks anymore to do it for them”.

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