The Latest on Instant Payment Transfers: European Commission adopts Regulation (EU) 2024/886

On the 8th of April 2024, the European Commission implemented The Instant Payments Regulation (Regulation (EU) 2024/886), of the European Parliament and of the Council, amending the Single Euro Payments Area Regulation (260/2012) with regards to credit transfers in euro. This Regulation necessitates that payment service providers (PSPs) within the EU and EEA countries shall be under the general obligation to offer the payment service of sending and receiving instant credit transfers in Euro to payments service users (PSUs).

PSPs which offer the service of sending and receiving credit transfers fall under the scope of the Regulation. In fact, the Regulation obliges PSPs to offer “instant credit transfer(s)” which is defined as ‘a credit transfer which is executed immediately, 24 hours a day and on any calendar day’. In this case, the payee’s PSP shall, within 10 seconds of the receipt of the payment order for an instant credit transfer by the payer’s PSP, make the amount available on the payee’s account and confirm completion of the payment transaction to the payer’s PSP.

With the inclusion of this new service of instant credit transfers, the Regulation requires that a PSP cannot impose a charge higher that already imposed on payers and payees. Essentially, this means that any specific imposition of a fee levied by a PSP for this purpose falls foul of this article.

Consequently, for the purpose of such credit transfers, the verification of the payee must be done free of charge. The rationale behind this mechanism is to notify the payer of any possible errors or fraudulent transactions, prior to their execution. In the case where the PSP fails to abide by this verification requirement, the payee’s PSP shall compensate the payer’s PSP for the financial damage caused to the payer’s PSP by that failure.

Nevertheless, any derogation or breaches of these provisions introduced by this Regulation will ultimately result in an administrative penalty, which is imposed by the national competent authority.  The Regulation draws a distinction on the amount of the penalty, according to the subject-person. In the case of a legal person, the maximum administrative fine is of at least 10% of the total annual net turnover of the legal person in the preceding business year, whereas in the case of a natural person, the maximum administrative fine is of at least EUR 5 000 000, or the equivalent amount in the national currency in the Member States whose currency is not the euro on 8 April 2024.

Furthermore, an interesting development which may be noted, is that even though these credit transfers are effected in an instant manner, it is still more incumbent on the PSP to keep track and report such transfers. This is because in addition to their current obligations, PSPs must also report to their competent authorities every 12 months, firstly, on the level of charges for credit transfers, instant credit transfers and payment accounts, and secondly, on the share of rejections, separately for national and cross-border payment transactions, due to the application of targeted financial restrictive measures. As stipulated in the Regulation, the first report regarding level of charges and on rejections shall be submitted on 9^th of April 2025, which focuses on data collected from the 26^th of October 2022 until the end of preceding calendar year.