Understanding the Impact of the Instant Payments Regulation
The Instant Payments Regulation (IPR) is a pivotal development in the banking sector, requiring immediate payments for euro-denominated credit transfers. This new mandate is transforming the landscape of instant transfers from a specialized service to a fundamental expectation in the banking industry. According to a recent report by Celent titled SCT Inst Adoption in Europe: Build It and They Will Come, by 2035, SEPA Instant Payments (SCT Inst) will become the standard in European commerce, effectively turning electronic payments into an instantaneous process.
Realising the Potential of Instant Payments
The real beneficiaries of this shift will be the financial institutions that not only comply with the IPR but also innovate on it. By creating a seamless, secure, and intelligent payment experience where money moves as quickly as information, these institutions can truly offer banking in an instant.
Exploring the SCT Inst Opportunity
Celent embarked on a research study to comprehend the readiness of various players—banks, electronic money institutions (EMIs), and payment institutions (PIs)—to seize the SCT Inst opportunity. The study aimed to answer several key questions:
- How prepared are different institutions to comply with various SCT Inst mandates? What strategies are they adopting, and what challenges are they facing?
- What does the industry expect from SCT Inst? What are the key drivers of SCT Inst adoption?
- What impact will this have on SCT Inst volumes? Will SCT Inst take market share away from other payment types?
Insights from Surveying Over 100 Financial Institutions
To obtain direct industry sentiments, Celent surveyed over 100 financial institutions, including retail and corporate banks, EMIs, and PIs, operating across 10 European markets. Based on the survey inputs and available payment volume data, Celent developed a model forecasting SCT Inst volumes.
The research findings include:
- All 60 bank respondents said they were fully compliant with January 2025 requirements, and over half (55%) are already compliant even with July 2027 mandates.
- The industry’s attitudes to SCT Inst are overwhelmingly positive. 73% of the survey respondents believe that SCT Inst will have a positive impact on the industry overall.
- By 2035, most credit transfers will be instant, with an average of 75% of all SCT volumes expected to become SCT Inst.
- Celent forecasts that SCT Inst volumes will overtake SCT by 2030 and will accelerate away, representing 18% of all payments by 2035.
For more detailed insights, the full report is available via this link.
With the advent of the Instant Payments Regulation, the banking sector is poised for a significant transformation. It is a call for institutions to not only comply but innovate, offering customers a truly instant and seamless banking experience. The future of banking is imminent, and it is real-time and intelligent.
Source: Here
