COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT REPORT Accompanying the document Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Regulations (EU) No 260/2012 and (EU) No 2021/1230 as regards instant credit transfers in euro
Date: 2022-10-26
Institutions: Directorate-General for Financial Stability, Financial Services and Capital Markets Union, European Commission
Subjects: capital movement, electronic banking, electronic money, euro, financial legislation, financial services, innovation, intra-EU payment, payment system, provision of services

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 26.10.2022  SWD(2022) 546 final  COMMISSION STAFF WORKING DOCUMENT  IMPACT ASSESSMENT REPORT  Accompanying the document Proposal for a  REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL  amending Regulations (EU) No 260/2012 and (EU) No 2021/1230 as regards instant credit transfers in euro       {COM(2022) 546 final} - {SEC(2022) 546 final} - {SWD(2022) 547 final}  
 
 
Contents 

1. 

INTRODUCTION ............................................................................................................................... 1 

1.1.  WHAT ARE INSTANT PAYMENTS? ............................................................................................. 1 

1.2.  POLITICAL CONTEXT.................................................................................................................... 2 

1.3.  LEGAL CONTEXT ............................................................................................................................ 4 

2. 

PROBLEM DEFINITION ................................................................................................................. 5 

2.1  THE PROBLEM: INSUFFICIENT UPTAKE OF EURO IPS ....................................................... 5 

2.2  CONSEQUENCES OF THE PROBLEM ......................................................................................... 6 

2.2.1  UNREALISED BENEFITS AND EFFICIENCY GAINS FROM IPS ........................................... 6 

2.2.2  LIMITED  CHOICE  OF  MEANS  OF  PAYMENT  AT  POI,  IN  PARTICULAR 

CROSS-BORDER ..............................................................................................................................11 

2.3  PROBLEM DRIVERS.......................................................................................................................13 

2.3.1  DRIVER  1:  INSUFFICIENT  INCENTIVES  FOR  PSPS  TO  OFFER  EURO  IPS 

(MARKET FAILURE) ......................................................................................................................14 

2.3.2  DRIVER 2: DISSUASIVE TRANSACTION FEES FOR IPS .......................................................17 

2.3.3  DRIVER  3:  HIGH  RATE  OF  REJECTED  IPS  DUE  TO  FALSE  HITS  IN 

SANCTIONS SCREENING ..............................................................................................................20 

2.3.4  DRIVER 4: PAYER CONCERNS ABOUT SECURITY OF IPS .................................................21 

2.4  HOW WILL THE PROBLEM EVOLVE? .....................................................................................23 

2.5  PROBLEM TREE ..............................................................................................................................24 

3  WHY SHOULD THE EU ACT?.......................................................................................................25 

3.1  LEGAL BASIS ...................................................................................................................................25 

3.2  SUBSIDIARITY: NECESSITY OF EU ACTION ..........................................................................25 

3.3  SUBSIDIARITY: ADDED VALUE OF EU ACTION ....................................................................26 

4 

OBJECTIVES: WHAT IS TO BE ACHIEVED? ...........................................................................26 

4.1  GENERAL OBJECTIVE ..................................................................................................................26 

4.2  SPECIFIC OBJECTIVES .................................................................................................................26 

5  WHAT ARE THE AVAILABLE POLICY OPTIONS? ................................................................27 

5.1.  WHAT IS THE BASELINE FROM WHICH OPTIONS ARE ASSESSED? ..............................27 

5.2.  DESCRIPTION OF THE POLICY OPTIONS ...............................................................................29 

5.2.1. INCREASE THE SUPPLY OF IPS IN THE EU ............................................................................29 

5.2.2. ADDRESS DISSUASIVE FEES FOR EURO IPS COMPARED TO ALTERNATIVE 

PAYMENT MEANS ..........................................................................................................................30 

5.2.3. SIMPLIFY  AND  ENHANCE  THE  EFFICIENCY  OF  THE  SANCTIONS 

SCREENING PROCESS FOR EURO IPS ......................................................................................31 

5.2.4. INCREASE PAYER CONFIDENCE IN EURO IPS WITH REGARD TO THE RISK 

OF FRAUD AND ERRORS ..............................................................................................................32 

i 

 
 
 
 
 
5.2.5. OPTIONS DISCARDED AT AN EARLY STAGE ........................................................................33 

6  WHAT  ARE  THE  IMPACTS  OF  THE  POLICY  OPTIONS  AND  HOW  THEY 

COMPARE? .......................................................................................................................................35 

6.1 

INCREASE THE SUPPLY OF IPS BY PSPS .................................................................................35 

6.2  ADDRESS DISSUASIVE FEES FOR EURO IPS COMPARED TO ALTERNATIVE 

PAYMENT MEANS ..........................................................................................................................40 

6.3  SIMPLIFY  AND  ENHANCE  THE  EFFICIENCY  OF  THE  SANCTIONS 

SCREENING PROCESS OF EURO IPS ........................................................................................44 

6.4 

INCREASE  PAYER  CONFIDENCE  IN  EURO  IPS  WITH  REGARD  TO  RISK  OF 
FRAUD AND ERRORS ....................................................................................................................46 

7 

PREFERRED OPTION.....................................................................................................................51 

7.1  EFFECTIVENESS .............................................................................................................................51 

7.2  EFFICIENCY .....................................................................................................................................52 

7.3  COHERENCE ....................................................................................................................................53 

7.4  SUMMARY OF IMPACTS OF SELECTED OPTIONS ...............................................................57 

7.5  “ONE IN ONE OUT” ........................................................................................................................57 

7.6  CLIMATE AND SUSTAINABILITY ..............................................................................................58 

7.7  REFIT (SIMPLIFICATION AND IMPROVED EFFICIENCY) .................................................58 

8 

HOW WILL IMPACTS BE MONITORED AND EVALUATED? ..............................................58 

ANNEX 1: PROCEDURAL INFORMATION .........................................................................................60 

ANNEX 2: STAKEHOLDER CONSULTATION ....................................................................................63 

ANNEX 3: WHO IS AFFECTED AND HOW? ........................................................................................75 

ANNEX 4: SANCTIONS SCREENING ....................................................................................................83 

ANNEX 5: PAYER CONCERNS ABOUT SECURITY OF IPS ............................................................86 

ANNEX 6: BACKGROUND ON FUNCTIONING OF INSTANT PAYMENTS  IN EU AND 

GLOBALLY .......................................................................................................................................91 

ANNEX 7: EU NON-CASH PAYMENTS MARKET AND CHARACTERISTICS OF PSPS 

PROVIDING CREDIT TRANSFERS IN EURO ...........................................................................99 

ANNEX 8: REDUCTION OF PAYMENT FLOAT ...............................................................................102 

ANNEX  9:  BACKGROUND  ON  THE  FUNCTIONING  OF  CROSS-BORDER 

TRANSFERS IN THE EU ...............................................................................................................108 

ANNEX 10: NETWORK EFFECTS IN PAYMENTS ...........................................................................110 

ii 

 
 
 
 
 
 
 
Term or 
acronym 

AML 

API 

APP fraud 

CBPR 

CEGBPI 

Glossary 

Meaning or definition 

Anti-Money Laundering (Directive (EU) 2015/849 of 20 May 2015 on 
the  prevention  of  the  use  of  the  financial  system  for  the  purposes  of 
money laundering or terrorist financing) 

Application  Programming  Interface  (software  allowing  communication 
between different applications or systems) 

Authorised Push Payment fraud, a type of fraud in which the payer (an 
individual  or  a  business)  is  tricked  into  authorising  a  payment  to  a 
fraudster posing as a genuine payee 

Cross-Border  Payments  Regulation  (Regulation  (EU)  2021/1230  on 
cross-border payments in the Union (codification)  

Commission  Expert  Group  on  Banking,  Payments  and  Insurance,  a 
group in which the Commission consults experts appointed by Member 
States  

Credit transfer  Payment  service  as  defined  in  Article  4(24)  of  Directive  (EU) 
2015/2366 (PSD2) and in Article 2(1) of Regulation (EU) No 260/2012 
(SEPA Regulation) 

CSM 

EBA 

EFIP 

EPC 

GDPR 

ICS 

IP 

Clearing and Settlement Mechanism 

European Banking Authority 

European  Forum  for  Innovation  in  Payments,  a  platform  for  exchange 
of views by payments stakeholders set up by the European Central Bank 
and  the  European  Commission  to  contribute  to  increased  economic 
efficiency and a deeper Single Market by fostering the development of 
an integrated, innovative and competitive EU market for retail payments  

European  Payments  Council,  a  private  law  association  of  banks  and 
other payment service providers, founded in 2002, which functions as a 
decision-making  and  coordination  body  of  the  European  payments 
industry, and with the main task of the development of SEPA 

General  Data  Protection  Regulation  (Regulation  (EU)  2016/679  of  27 
April  2016  on  the  protection  of  natural  persons  with  regard  to  the 
processing of personal data and on the free movement of such data) 

International  Card  Schemes  (e.g.,  American  Express,  Discover, 
Mastercard, Visa, etc.) 

Instant payment, a credit transfer which arrives on the payee’s account 
within ten seconds of the sending of a payment order by the payer 

iii 

 
 
 PISP 

Payment 
scheme 

 PSP 

Payment  Initiation  Service  Provider,  a  PSP  offering  the  service  of 
payment  initiation,  as  defined  in  Article  4(15)  of  Directive  2015/2366 
(PSD2) 

A  single  set  of  rules,  practices,  standards  and/or  implementation 
guidelines  agreed  between  payment  service  providers  (PSPs)  for  the 
execution of payment transactions across the Union and within Member 
States,  and  which  is  separated  from  any  infrastructure  or  payment 
system that supports its operation 

Payment Service Provider, a provider of payment services as defined in 
Annex  I  of  Directive  2015/2366  (PSD2),  such  as  a  credit  institution, 
payment institution or electronic money institution 

Point of 
Interaction 
(PoI) 

A place where goods or services are purchased from a merchant, either 
a physical point of sale (a brick and mortar shop, self-service terminals, 
etc.) or an e-commerce website 

P2P 

Person to Person (payments) 

PoI solutions 

Payment  solutions  (e.g.  mobile  phone  application,  instant  messaging 
system) which allow initiation of IPs at PoI 

Point of Sale 
(PoS) 

A physical Point of Interaction (in a brick and mortar shop, self-service 
terminals, etc., but not in ecommerce) 

PSD2 

PSMEG 

RPS 

SEPA  

Second  Payment  Services  Directive  (Directive  (EU)  2015/2366  of  25 
November 2015 on payment services in the internal market) 

Payment  Systems  Market  Expert  Group,  a  group  of  stakeholders 
consulted by the Commission  composed of representatives of  payment 
service providers and users, as well as payments experts 

Retail Payments Strategy, Commission Communication COM/2020/592 
final of 24 September 2020 on a Retail Payments Strategy for the EU 

Single  Euro  Payments  Area  (Regulation  (EU)  No  260/2012  of  the 
European Parliament and of the Council of 14 March 2012 establishing 
technical and business requirements for credit transfers and direct debits 
in euro and amending Regulation (EC) No 924/2009)  

SCT Inst.  

SEPA Instant Credit Transfer Scheme 

SFD 

Uptake  

Settlement  Finality  Directive  (Directive  98/26/EC  of  19  May  1998  on 
settlement finality in payment and securities settlement systems) 

The percentage of euro IPs in all euro credit transfers effected in the EU 
by volume 

iv 

 
 
1.  INTRODUCTION 

1.1. What are instant payments? 

Instant  Payments  (hereafter  IPs)  are  a  form  of  credit  transfer,  whereby  the  funds  pass 
from the account of the payer to that of the payee in a matter of seconds, at any time, day 
or  night,  and  any  day  of  the  year.  This  distinguishes  IPs  from  regular  credit  transfers1, 
where the funds must be credited to the payee by the end of the business day following 
the day when the payer ordered the transaction and the transaction amount was debited 
from the payer’s account. IPs are also distinct from card payments, in the case of which it 
can take up to 48 hours for funds to be credited to the account of the payee and where a 
payment  guarantee  is  usually  provided  to  the  payee  (e.g.  a  merchant)  for  this  interim 
period.  IPs  are  a  major  technological  innovation  in  payments,  as  they  allow  releasing 
funds  that  are  locked  in  the  ‘back-office’  of  the  financial  system  and  making  them 
immediately available to end users - citizens and businesses in the EU - for consumption 
and investment.   

IPs  also  offer  opportunities  for  EU  banks  and  fintechs  to  develop  new  Point  of 
Interaction  (PoI)  solutions  (e.g.  mobile  payment  applications  on  smartphones),  which 
would contribute to  increasing the  choice of available payment means, in  particular for 
cross-border payments at PoI. Such new payment solutions have the potential to provide 
convenient and efficient additional alternatives to (i) cash in person-to-person payments 
(P2P, e.g. splitting a bill in a restaurant); (ii) cash and payment cards in physical shops, 
and (iii) payment cards in e-commerce.   

IPs are available in approximately 60 countries worldwide and are under development in 
others. In the EU, the infrastructure for IPs in euro and in all other EU currencies already 
exists  and  is  used  by  EU  payment  service  providers  (PSPs)  to  a  varying  degree.  This 
infrastructure  firstly  consists  in  a  set  of  harmonised  rules  and  procedures  (a  ‘Scheme’) 
agreed by PSPs, allowing them to process payments instantly. The only scheme for euro 
IPs  is  called  SEPA  Credit  Transfer  Instant  Scheme  (SCT  Inst.  Scheme),  launched  in 
November 2017, managed  by the European Payments Council (EPC). Most schemes for 
other  EU  currencies  have  been  largely  based  on  the  EPC  scheme,  with  a  licencing 
agreement2, and are thus very similar. The second relevant infrastructure is the settlement 
system:  PSPs  have  access  to  various  payment  settlement  systems,  such  as    the  ECB’s 
TARGET IP Settlement service (TIPS), which ensures pan-European settlement of euro 
IPs.  Instant  settlement  systems  for  other  EU  currencies  also  exist,  although  some  non-
euro IPs are settled or will soon be settled in TIPS3.  

Within  the  EU  the  provision  and  use  of  euro  IPs  remains  patchy.  In  certain  Euro  area 
Member  States,  euro  IPs  are  very  popular,  in  particular  for  payments  between  private 

1 For the purposes of this impact assessment, the expression “regular credit transfers” is used to refer to 
credit transfers executed within the time limits stipulated in Article 83 of PSD2. 
2 Bulgaria, Croatia, Denmark, Hungary, Romania and Sweden (see also Section 6.1 and Annex 6) 
3  Annex  6  provides  details  on  the  functioning  of  SEPA  instant  credit  transfers  as  well  as  IPs  in  other 
currencies (in the EU and globally). 

1 

 
 
 
                                                           
persons  (P2P  transfers).  In  other  Euro  area  Member  States  only  certain  PSPs  can 
send/receive  euro  IPs  and  the  usage  is  limited.  Finally,  in  yet  other  Euro  area  Member 
States and all non-Euro area Member States, euro IPs are practically not available.  

IPs in national currency  other than euro are useful for domestic transactions within one 
Member State. However, it is not possible to use them to send and receive cross-border 
IPs  between  any  two  Member  States  (within  or  outside  the  Euro  area).  Being  able  to 
make and receive cross-border payments within the EU as easily as domestic payments is 
at the core of the integration of the internal market for retail payments. Thus, only IPs in 
euro are the subject of this impact assessment.  

The growth in the number of PSPs offering euro IPs has been too slow since the end of 
2018 and the volume of euro IPs currently stands at 11% of all euro credit transfers. IPs 
can bring significant benefits to citizens and businesses in the EU (summarised in box 1 
and with more detail in section 2 below). These are however impeded by the slow roll-
out  of  euro  IPs  in  the  EU.  Against  this  background,  this  impact  assessment  examines 
whether  there  is  a  need  for  EU  legislative  action  and  analyses  the  impacts  of  available 
solutions. 

BOX 1 

Benefits of IPs 

  Convenience for citizens and businesses, receiving due money instantly 
  No longer any need for a (costly) payment guarantee for merchants 
  Release  of  billions  of  euro  locked  in  the  financial  system  for  productive  use 

("float")  

  Improved cash-flow for businesses and public administrations 
  Stimulus  for  innovation  in  the  development  of  new  solutions  for  merchant 

sales (PoI) and electronic person-to-person payments 

  Potential cost savings for merchants which could be passed on to consumers 
  Faster dispatch of purchased goods (compared to when payment is made by 

regular credit transfer) 

  Greater opportunities for payment fintechs to deliver mobile payment apps 
  More  choice  among  payment  means  /  services,  particularly  with  respect  to 
cross–border payments at PoI (indirect benefit, subject to emergence of IP-
based PoI solutions) 

  Increased resilience of the EU retail payments systems 
  Accelerated and improved fiscal receipts and other societal benefits 

1.2. Political context 

In  2018,  in  its  Communication  Towards  a  stronger  international  role  of  the  euro4,  the 
Commission  supported  IPs  as  a  means  to  reduce  risks  and  vulnerabilities  in  retail 
payments in the EU and increase the autonomy of existing payment solutions.   
In its  Retail  Payments  Strategy for  the EU5 (RPS), adopted on 24  September 2020, the 
Commission  announced  that  it  would  assess  whether  it  is  appropriate  to  prepare  an 

4 
contribution-european-council-13-14-december-2018_en  

https://ec.europa.eu/info/publications/towards-stronger-international-role-euro-commission-

2 

 
 
 
                                                           
initiative  aiming  for  a  prompt,  full  uptake  of  IPs  in  the  EU.  The  public  consultation 
carried out in the context of the development of the RPS revealed significant support for 
such  an  initiative6,  which  was  then  included  in  the  Commission  Work  Programme  for 
2022. 
In  its  ECOFIN  conclusions  of  22  March  20217  the  Council  noted  that  “most  domestic 
payment  solutions  based  on  cards  or  IPs  currently  do  not  work  across  borders,  which 
can  constitute  an  obstacle  for  cross-border  payments  in  shops  and  e-commerce”, 
considered that “the lack of interoperability between existing national solutions, schemes 
and  infrastructures,  which  is  also  linked  to  the  lack  of  EU-wide  common  standards  in 
some  areas,  contributes  to  fragmentation  in  the  EU  retail  payments  market”  and  in 
particular  highlighted  “the  objectives  (of  the  RPS)  of  promoting  the  widespread  use  of 
IPs.”  Moreover,  in  its  Conclusions  on  the  EU’s  economic  and  financial  strategic 
autonomy:  one  year  after  the  Commission’s  Communication  adopted  on  5  April  2022, 
the  ECOFIN  Council  referred  to  the  Commission’s  intention  to  present  a  legislative 
initiative on IPs in 2022, recalling the objective to “foster the development of competitive 
homegrown  and  pan-European  market-based  payments  solutions”,  and  stressing  “the 
importance  of  defining  and  effectively  implementing  a  framework  for  an  independent, 
efficient, well-functioning, open and autonomous “European payments area.”8  

MEPs from the four largest political groups (EPP, S&D, Greens and Renew) expressed 
their  broad  support  for  the  RPS’  focus  on  the  full  roll  out  of  IPs  in  the  EU  during  a 
FISMA webinar organised on 17 March 2021.  

Universal availability of euro IPs is necessary to update and modernise the project of the 
internal  market  integration  for  euro  retail  payments,  branded  as  the  Single  Euro 
Payments  Area  (SEPA).  SEPA  strives  to  allow  European  consumers,  businesses  and 
public  administrations  to  make  and  receive  cross-border  payments  in  euro  as  easily  as 
domestic  payments,  and  to  allow  people  to  use  their  existing  payment  account  in  their 
home Member State to receive their salary or pay bills between different Member States. 
The  SEPA  project  was  launched  in  2002,  prompting  the  European  banking  industry  to 
create the EPC which, at the request of the European Commission and European Central 
Bank (ECB), committed to developing, in close dialogue with all stakeholders (including 
merchants  and  consumers),  harmonised  rules  and  procedures  for  executing  euro 
payments (so called ‘SEPA schemes’). The  SEPA  scheme for euro credit  transfers was 
launched  in  2008,  for  SEPA  direct  debits  in  2009  and  for  the  instant  version  of  SEPA 
credit  transfers  (IPs)  in  2017.  Within  the  EU,  the  SEPA  Regulation9  requires  all  credit 
transfer  and  direct  debit  transactions  denominated  in  euro  to  meet  conditions  which  in 
practice only the SEPA schemes currently meet. PSP communities outside the EU may 
also  apply  to  be  included  in  the  SEPA  geographical  scope  in  order  to  benefit  from  a 
possibility  to  execute  cross-border  transactions  also  outside  the  euro  area  more  quickly 

5 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52020DC0592 . 
6 See Annex 2 
7 Conclusions of ECOFIN of 22 March 2021, pdf (europa.eu).  
8https://data.consilium.europa.eu/doc/document/ST-6301-2022-INIT/en/pdf?utm_source=dsms-
auto&utm_medium=email&utm_campaign=Council+adopts+conclusions+on+strategic+autonomy+of+the
+European+economic+and+financial+sector.  
9 Regulation (EU) No 260/2012 

3 

 
 
                                                                                                                                                                            
and cheaply (if only denominated in euro)10. PSPs in all EEA countries and six non-EEA 
countries (Andorra, Vatican City, Monaco, San Marino, Switzerland, and most recently 
the UK) have seized the opportunity to join the SEPA geographical scope. Also, plans for 
Ukraine  to  join  the  Scheme  to  facilitate  cross-border  payments  have  been  announced 
recently11.  

Payment  services  play  a  key  role  among  digital  financial  services,  being  at  the  cutting 
edge  of  innovation12.  The  full  roll-out  of  euro  IPs  in  the  EU  would  be  consistent  with 
initiatives laid out in the Commission’s Digital Finance Strategy for the EU13 adopted on 
24  September  2020,  aimed  at  promoting  digital  transformation  of  finance  and  the  EU 
economy and removing fragmentation in the Digital Single Market, such as the European 
Digital ID Wallet or digital euro.  
At  international  level,  the  G20  targets14  on  payments  speed  include  the  objective  of 
having,  by  the  end  of  2027,  75%  of  global  retail  payments  being  credited  within 
maximum one hour. The present initiative would contribute to the EU achieving the G20 
objectives. 

1.3. Legal context 

Regulation  (EU)  No  260/2012  (the  SEPA  Regulation),  concerns  only  two  types  of 
payment  services  (credit  transfers  and  direct  debits)  denominated  in  euro.  It  set  a 
deadline by which all EU PSPs were obliged to  offer regular credit transfers and direct 
debits  in  euro  under  the  same,  harmonised  rules.  Based  on  a  decision  of  the  European 
legislators  that SEPA should extend to the entire EU, these rules  also  apply to  PSPs in 
non-Euro area Member States, if they decide to  offer credit transfers  or direct debits in 
euro. Those rules were largely based on the schemes developed by the EPC in 2008 and 
2009. The 2012 SEPA Regulation did not oblige PSPs to start offering euro IPs as they 
did not exist at the time, being first launched in 2017.  

Directive  2015/2366  on  payment  services  (PSD2)  concerns  eight  types  of  payment 
services (credit transfers and direct debits included) in all EU currencies. It sets out, inter 
alia, rules about the information that PSPs have to give to consumers and about the rights 
and obligations of payment service providers and users. A review of the application and 
impact of PSD2 is ongoing and the results are expected in the first half of 2023. 

Regulation  (EU)  2021/1230  on  cross-border  payments  (CBPR)  equalises  charges 
between  cross-border  payments  in  euro  and  the  corresponding  domestic  payments  in 
national currency of an EU Member State, offered by any PSP within the EU. Thus, the 

10 An alternative to SEPA for cross-border payments is SWIFT payments, which are slower and more costly 
than SEPA payments. See Annex 9 for more details. 
11 Ukraine Connects to SEPA - GTInvest (good-time-invest.com)  
12  A  2020  Study  by  Deloitte  Financial  Advisory  Netherlands  found  that  “Digital  payments  market  is  the 
largest segment within the Fintech spectrum and accounts for more than 80% of global Fintech revenues” 
(see:  https://www2.deloitte.com/content/dam/Deloitte/nl/Documents/financial-services/deloitte-nl-fsi-
fintech-report-1.pdf); Ernst and Young finds that in the US, “Valuations of FinTech firms in the payments 
space  grew  at  an  annual 
(see: 
https://www.ey.com/en_lu/banking-capital-markets/how-banks-can-win-at-payments) 
13 https://ec.europa.eu/info/publications/200924-digital-finance-proposals_en  
14 Targets for Addressing the Four Challenges of Cross-Border Payments: Final Report (fsb.org)  

rate  of  27%  between  2016  and  2020” 

compound 

4 

 
 
                                                           
 
Regulation  already  requires  that  PSPs  offering  euro  IPs  apply  the  same  charges  for  a 
cross-border  euro  IPs  as  for  the  corresponding  domestic  IPs  in  national  currency 
(whether euro or otherwise). 

2.  PROBLEM DEFINITION 

2.1 The problem: insufficient uptake of euro IPs 

As of the fourth quarter of 2021, four years into operation of the SCT Inst. Scheme, the 
estimated uptake of euro IPs15 was only 10.97%. It varied considerably by Member State, 
as shown in the chart below. 
Chart 1 - Uptake of euro IPs by volume as % of all euro credit transfers by Member State16 

Thus, only around one in ten euro credit transfers effected in the EU is an IP. In terms of 
overall  transferred  value,  the  percentage  is  even  lower,  only  around  2%  (EUR  1.6 
trillion)  in  2020.17  The  current  uptake  level  reflects  mostly  the  high  level  of  domestic 
euro IP transactions in some Member States. 

Importantly, the dispersion of the uptake of euro  IPs across Member States is markedly 
wide,  underscoring  the  untapped  potential  to  achieve  a  considerably  higher  uptake  at 
European  level.  Whereas  in  May  2021  the  uptake  of  euro  IPs  in  five  Member  States 
exceeded  the  EU  average  significantly  (i.e.,  Estonia  67%,  Lithuania  45%,  Spain  38%, 
Latvia  29%  and  the  Netherlands  24%);  in  a  number  of  other  Euro  area  Member  States 
(France, Portugal, Germany18, Slovenia) the uptake was only between 1% and 4%, it was 
negligible in  Austria,  Italy, Cyprus,  Ireland, and  Malta, and non-existent in  Greece and 
Slovakia. 

15 The percentage of euro IPs in all euro credit transfers effected in the EU, by volume 
16  Estimates  for  May  2021  based  on  data  provided  by  National  Payments  Committees  (EFIP 
questionnaire).  EU  average  represents  the  uptake  for  Q4  2021  (EPC  estimate).  For  Greece,  Slovakia, 
Romania, Croatia, Hungary and Czechia, there were no PSPs adhering to SCT Inst. Scheme in May 2021. 
Uptake for Belgium reflects only IPs processed in the main domestic retail payment system.  
17 Source: ECB, National Payments Committees, European Commission calculation. 
18 The current level of uptake in Germany reflects the fact that approximately 50% of all credit transfers 
are submitted by corporate customers in batch mode and, therefore, are not processed as IPs. Hence, the 
uptake mainly reflects IPs initiated by users via online banking or mobile banking applications. 

5 

010203040506070EELTESLVNLFIBEEUAvgLUPTDEFRSIATITCYIEMTSKELBGDKPLSEROCZHRHUNegligibleNegligiblenon Eurozone MS 
 
 
                                                           
Considered as a percentage of all electronic payment transactions in the EU (i.e. not only 
credit transfers but also including other payment means), the share of IPs is even lower. 
Even  in  Member  States  with  relatively  high  uptake  of  IPs,  usually  carried  out  via 
dedicated online or mobile banking apps such as Bizum in Spain, retail purchases at PoI 
using  electronic  means  of  payment  remain  dominated  by  card-based  payments.  Card 
transactions represented approximately 50% of all non-cash payment transactions in the 
EU in 2020.19 In 2018, the two most commonly used International Card Schemes (ICS), 
Visa and Mastercard, handled 69% of card payment transactions in Europe.  Moreover, 
ICS card payments constitute almost all of the cross-border card payments in the EU.20   

More  information  on  the  shares  of  various  non-cash  payments  instruments  in  the  EU 
payments market can be found in Annex 7. 

2.2 Consequences of the problem 

Two  consequences  are  discussed  in  this  section:  (i)  unrealised  benefits  and  economic 
efficiency  gains  from  the  wider  use  of  euro  IPs,  and  (ii)  limited  choice  of  means  of 
payment at PoI, especially cross-border. Regarding these consequences, it is important to 
distinguish two types of situations in which IPs can be made. The first situation is where 
IPs are initiated by the payer (consumer or corporate user) through online banking or in a 
branch, for a variety of reasons (P2P payments between individuals, payment of invoices 
etc.). The second is  IPs at PoI made for the purpose of consumers purchasing goods or 
services from a merchant; they can take place online or in a physical point of sale.  

The first consequence discussed below concerns both situations, while the second applies 
particularly  for  IPs  at  PoI.  The  development  of  cross-border  solutions  for  making 
payments at PoI (such as mobile payment applications) or the interoperability of existing 
national solutions is facilitated, but not directly dealt with, in the present initiative. The 
wider  availability  and  use  of  IPs,  which  the  present  initiative  aims  to  achieve,  should, 
together  with  other  relevant  initiatives  discussed  in  Section  7.3,  act  as  a  catalyst  and 
stimulant for the development of such PoI payment initiation solutions. 

2.2.1  Unrealised benefits and efficiency gains from IPS  

Macro level unrealised benefits 

Funds  which  are  in  transit  in  a  payment  system  between  the  payment  accounts  of  the 
payer and the payee  (known as  ’float’)  are not  available for spending or  investment  by 
payment  service  users.  It  is  estimated  that  at  any  given  day,  an  amount  of  187  billion 
euro is locked in the financial system in this way, using regular euro credit transfers or 
cheques21  (see  Annex  8  for  further  analysis  of  payment  float  and  impacts  of  its 
reduction).  If  IPs  were  to  become  universally  used,  these  funds  would  become 
immediately  available  for  economic  use,  either  consumption  or  investment,  thus 
contributing to growth. 

19 Source: ECB. See Annex 7. 
20  Source:  ECB,  Card  payments  in  Europe  –  current  landscape  and  future  prospects:  a  Eurosystem 
perspective (europa.eu). 
21 Source: ECB, National Payments Committees, Commission calculation. As shown in Annex 7, the annual 
value of regular euro credit transfers and cheques in 2020 was EUR 68 161 billion, equivalent to average 
daily float of non-settled funds of EUR 187 billion.  

6 

 
 
                                                           
Unrealised benefits for EU citizens 

Citizens  can  benefit  from  IPs  directly,  in  their  capacity  as  senders  or  beneficiaries  of 
credit transfers, and also indirectly, in so far as other economic actors, such as merchants, 
fintechs or PSPs, can pass on to them some benefits from  IPs which accrue to them, or 
use IPs for the development of new goods and services. 

As  regards  the  direct  benefits  for  citizens,  as  payers  or  payees  of  credit  transfers,  the 
growing digitalization of modern societies has led consumers to expect everything to be 
available in  real  time. This  behavioural  change  concerns  also  payments.  It is  no longer 
commonly accepted that a bank transfer can take up to two business days to be credited 
to the beneficiary22, not counting additional delays due to weekends and public holidays. 
As society moves towards real-time, digital ways of interacting in all spheres of life, EU 
citizens expect payments to match this new reality.  

Thanks  to  the  near  immediate  speed  (less  than  10  seconds),  with  which  the  funds  are 
transferred, users of IPs can see their real-time account balance before and after making a 
payment  (helping  with  better  management  of  finances  and  avoiding  falling  into 
overdraft), or meet last-minute financial obligations (e.g. pay a forgotten bill in time to 
avoid late payment penalty), which is in particular important for low-income households.  

This  expectation  of  immediacy  is  underlined  by  the  consumer  feedback  to  the  open 
public consultation on IPs23.  All consumer organisations and an overwhelming majority 
of  individual  consumers  who  responded  expect  credit  transfers  to  be  credited  to  the 
beneficiary within seconds (88%) and at any time, i.e., 24/7/365 (90%). The demand for 
round-the-clock  credit  transfers  is  confirmed  by  the  fact  that  already  now,  as  many  as 
33% of all euro IPs  are  requested by payers between 6pm and 6am, time during which 
regular  credit  transfers  are  not  processed  by  PSPs24.    The  same  trend  can  be  observed 
outside the Euro area.25 

The  call  of  the  European  consumer  organisation  BEUC  on  the  industry  and  regulators 
“not  to  promote  slow  finance”26,  and  to  ensure  that  IPs  “become  the  new  normal  for 
credit  transfers”  and  are  “adapted  to  different  use  cases,  such  as  payment  in  shops”27 
reflects the expectations of EU citizens when it comes to payments.  

22  PSD2  requires  credit  transfers  to  be  effected  by  the  end  of  the  next  business  day  which  can  be 
extended by another business day for paper-initiated transfers. 
23 IPs (europa.eu). See Annex 2 on public consultation. 
24https://www.europeanpaymentscouncil.eu/sites/default/files/infographic/2022-
02/SCT%20Inst%20today%20%20%281%29.pdf  
25 For example, the data on the volume of submitted (and instantly settled) IP in PLN orders in the Express 
Elixir system (in Poland) shows that in the first quarter of 2021 48,7% of payment orders were credited to 
the payee between the hours of 16:00 and 8:00 and 19.6% over weekends (when regular credit transfers 
are  not  credited  to  the  payees).  The  corresponding  figures  for  another  Polish  IP  settlement  system, 
BlueCash,  were  38.1%  and  11,3%,  respectively.  Source:  Informacja  o  rozliczeniach  i  rozrachunkach 
międzybankowych w I kwartale 2021 r. (nbp.pl)   
26  FISMA  webinar  on  IPs:  Webinar:  Exploring  the  potential  of  IPs  for  EU  consumers  and  businesses  | 
European Commission (europa.eu). 
27 A retail payments strategy for the EU | www.beuc.eu. 

7 

 
 
                                                           
IPs  can  also  enable  the  governments  and  public  authorities  to  provide  support  to 
households in crisis situations in near real time, including on weekends (e.g., see Annex 
6 regarding experiences in Australia).  

The  indirect  benefits  to  consumers  of  IPs  would  arise  from  the  availability  of  more 
efficient and affordable payment solutions available to merchants, on the hypothesis that 
PoI  solutions  would  be  developed  to  allow  the  use  of  IPs  for  purchase  of  goods  and 
services, including cross-border. There are concrete examples of industry efforts to set up 
such  solutions  based  on  IPs28.  Currently,  merchants  do  not  usually  receive  real-time 
electronic  payment  for  goods  and  services  and  consider  fees  for  acceptance  of  ICS 
payment  cards  to  be  high  (see  following  section).  Merchants’  potential  cost  savings 
resulting from more affordable payments could be passed on to consumers in the form of 
lower retail prices, while the improved cash-flow enabled by IPs could enable merchants 
to improve services to consumers, such as expedited refund services.  

Unrealised benefits for EU merchants 

The full realisation of the benefits of IPs to merchants are to a large extent contingent on 
the  development  of  IP-based  PoI  solutions  by  the  market,  which  would  work  for  both 
domestic and cross-border transactions. The wider use of IPs which the present initiative 
aims to achieve is expected to trigger the development of such solutions, or to promote 
interoperability of the existing ones, within a short timescale. 

The potential benefits to merchants from using IPs fall into two categories: higher speed 
and lower cost of receiving payments for goods and services sold. 

As regards speed, with the currently available means of payment (cash, cards, cheques, 
regular  credit  transfers),  liquidity  management  for  merchants  is  a  major  issue  and  can 
hinder management of stock and other assets. Currently, the only way the merchant can 
send goods or provide services immediately after payment is by means of card payment 
schemes or Payment Initiation Service Providers (PISPs) offering a payment guarantee or 
similar service to the payee, although actual funds reach the merchant's bank account on 
average  one  to  two  days  later.  If  merchants  were  to  receive  the  funds  immediately  on 
their accounts, it would  improve their liquidity  and cash flow management,  and  enable 
them  to,  for  example,  immediately  re-invest  the  funds  received  from  customers  in 
restocking, buying the necessary materials, and so on.  

As regards costs, 92% of merchant respondents to the open public consultation stressed 
the importance of the potential cost savings that would result from lower fees on IP PoI 
solutions  compared  to  other  alternatives  (e.g.  cards).  The  payment  means  currently 
widely used with merchants all have very high costs: 

28 The European Payments Initiative (EPI) aims to launch a digital payment wallet which would run on IPs 
and,  based  on  information  available  as  of  April  2022,  would  be  offered  in  at  least  5  Member  States, 
including 
Spain); 
https://www.epicompany.eu/;  EU  PISPs  have  been  investigating  the  setup  of  PoI  solutions  (including  in 
physical 
(ERPF); 
https://www.etppa.org/news.  

European  Retail  Payments 

shops)  based  on 

Netherlands, 

cross-border 

Framework 

(Germany, 

Belgium, 

France, 

called 

IPs, 

the 

8 

 
 
                                                           
  Cash comes with substantial costs related to theft, human error, handling (need to 
manually  reconcile  cash  payments  at  the  end  of  the  day);  transporting  and 
depositing it safely, etc.29; 

  Cards  (in  particular  provided  by  ICS),  as  well  as  ICS-based  mobile  payment 
applications are expensive for merchants to accept. According to  merchants, the 
costs  associated  with  accepting  ICS  cards  have  been  increasing  due  to  the 
increasing  scheme  fees  (see  section  2.2.2).  ICS-based  mobile  payment 
applications  may  result  in  higher  merchant  fees  than  regular  card  payments  as 
they  can  add  their  own  margin  on  top  of  interchange  and  scheme  fees  and 
acquirers’ margins. For instance, PayPal merchant fees can reach up to 3% of the 
transaction value processed30. According to a recent research of the Irish and UK 
markets,  costs  are  among  the  top  three  concerns  for  merchants  associated  with 
card payments31.  

  Cheques are by far the most expensive payment instrument still in use in several 
European  countries  (e.g.,  France,  Italy,  Spain,  Portugal,  Malta):  1  386.4  million 
cheques were issued in the euro area in 2020 (and 1 387.4 million in EU27), with 
an estimated average cost to the society of EUR 3.55 per transaction, compared to 
EUR  1.92  for  credit  transfers32.  Moreover,  cheques  cannot  be  used  in  other 
Member States as there is no cross-border mechanism to settle them. 

The  potential  for  cost  savings  for  merchants  resulting  from  the  use  of  IP-based  PoI 
solutions  is  confirmed  by  other  countries’  experience.  For  example,  the  Brazilian  PoI 
solution  based on  IPs,  PIX (see Annex  6)  costs  an average of 0.22% of  a transaction’s 
value for merchants,  whereas debit cards cost  slightly  above 1% and credit cards reach 
2.2%.33. 

Unrealised benefits for corporate users related to liquidity management 

Similarly to merchants, all corporates can benefit from better liquidity management as a 
result  of  receiving  payments  instantly  instead  of  with  a  delay  of  hours  or  even  days. 
Studies  show  that  over  50%  of  payments  to  EU  companies  are  delayed  by  10  days  or 
longer34 and that the issue is in particular acute for SMEs as they tend to get paid later 
than large companies. 95% of SMEs in Western Europe and 89% in Eastern Europe say 
that they are paid late.35 While these delays are first and foremost caused by late payment 
by debtors,  the slower processing of multiple successive regular credit transfers by PSPs 
could further exacerbate the problem of late payment to an ultimate beneficiary at the end 
of a long supply chain. IPs or IP-based solutions would not remove the root cause of the 
delays, but would contribute to mitigating their impacts. 

29  Study  by  Fidelis  Consulting;  https://op.europa.eu/en/publication-detail/-/publication/735d5b9d-0c5e-
11ec-adb1-01aa75ed71a1/language-en/format-PDF/source-228716981. 
30 https://ec.europa.eu/competition/publications/reports/kd0120161enn.pdf. 
31 TrueLayer Blog | 5 reasons the checkout is changing – ecommerce payments after the pandemic. 
32 A third of cheque costs and half of credit transfer costs are attributable to merchants.  The social and 
private costs of retail payment instruments: a European perspective (europa.eu). 
33  BIS  Bulletin  no.52:  Central  banks,  the  monetary  system  and  public  payment  infrastructures:  lessons 
from Brazil’s Pix  
34 https://ec.europa.eu/growth/smes/sme-strategy/late-payment-directive_en  
35 Business-to-business transactions: a comparative analysis of legal measures vs. soft-law instruments for 
improving payment behaviour, VVA, Milieu, 2018; ET0118678ENN.en.pdf. 

9 

 
 
                                                           
As a result of delays in the availability of funds to the beneficiary, an average of 63% of 
businesses  in  the  EU  maintain  a  cash  contingency  to  cover  the  time  it  takes  to  receive 
payments36. The relevance of this issue was confirmed by the majority (77%) of retailer 
respondents  to  the  open  public  consultation  who  noted  the  importance  of  ensuring 
instantaneous availability of funds 24 hours a day, any day of the year. Similarly, 77% of 
all respondents  to the  consultation  thought  that  IPs would enable corporates to  manage 
their cash flows more efficiently. 

Unrealised benefits for Payment Service Providers and payment fintechs 

Under-utilisation of IPs can lead to considerable untapped gains for EU PSPs. On the eve 
of  the  development  of  the  SCT  Inst.  Scheme,  the  EPC,  which  represents  the  EU  PSP 
community,  stated  that  “Payment  Service  Providers  (PSPs)  could  use  their  instant 
payment infrastructure (where available or planned) as a springboard to develop other 
24/7/365 financial services and products to serve their customers better and attract new 
clients”37.  In  a  similar  vein,  ECB  argued  that  “since  the  early  announcement  of  IPs, it 
has been argued that the main economic incentives for PSPs to bear their investment cost 
is to strengthen their competitive position and to introduce cost efficiencies by replacing 
existing payment instruments that are more costly, e.g. cheques”38.  

90% of respondents to the open public consultation on the provider side (PSPs, technical 
service  providers,  payment  systems)  who  expressed  their  opinion  on  the  matter 
considered  that  IPs  could  positively  impact  PSPs’  ability  to  preserve  their  existing 
customer  base,  while  88%  thought  that  IPs  could  help  them  attract  a  larger  customer 
base. Moreover, without a reduction of the volumes of cash and cheques usage thanks to 
wider  use  of  IPs,  PSPs will  continue  to  incur  significant  cash  and  cheque  management 
costs.  A  study  conducted  by  Deloitte39  showed  that  having  more  IPs  would  lead  to  a 
significant  decrease  in  the  volume  of  cheque  transactions  per  capita.  Hence,  given  that 
1.4 billion cheques were issued in the Euro area in  2020, a full substitution of cheques 
with  IPs  could  potentially  lead  to  up  to  EUR  2  billion  in  annual  savings  for  PSPs.40 
Those  substantial  savings  would  be  in  addition  to  benefits  for  society  arising  from 
elimination of losses arising from the absence of a payment guarantee on cheques and the 
costs of the various procedures required for the beneficiary to be credited.41   

Other potential benefits for PSPs of wider use of IPs would be increased opportunities to 
innovate thanks to greater economies of scale for developing new payment services and 
PoI solutions, based on IPs. The ECB observes that combined with the development of 
mobile  payment  services,  IPs  are  an  innovation  providing  a  competitive  technology  in 

36  Fidelis  Consulting  study;  https://op.europa.eu/en/publication-detail/-/publication/735d5b9d-0c5e-
11ec-adb1-01aa75ed71a1/language-en/format-PDF/source-228716981 . 
37 EPC Report to the ERPB on Instant Payments, 4 June 2015. Available here.  
38  Are  instant  payments  becoming  the  new  normal?  A  comparative  study  (europa.eu).  (hereafter  ECB 
2019)  
39  Economic 
payments-report-vocalink-mastercard-april-2019.pdf ). 
40 The ECB has estimated that the cost for the society of a cheque transaction is EUR 3.55 (2/3 of which 
attributable to PSPs), compared to the cost of a credit transfer of EUR 1.92 (50% of which attributable to 
PSPs). The social and private costs of retail payment instruments: a European perspective (europa.eu) . 
41  1.4  million  French  citizens  were  registered  on  the  “Fichier  Central  des  Chèques”  for  having  issued 
cheques without provision in 2017. Statistics from Banque de France, 21 December 2018. 

impact  of  real-time  payments,  July  2019  (deloitte-uk-economic-impact-of-real-time-

10 

 
 
                                                           
the  race  for  retail  payments  markets  dominated  either  by  cash  or  cards42.  Indeed, 
complementary services (e.g. mobile payment solutions based on IPs) have the potential 
to  provide  convenient  and  efficient  alternatives  to  cash  in  person-to-person  payments 
(P2P, e.g. splitting a bill  in  a restaurant); to  cash and payment cards in  physical  shops, 
and  to  payment  cards  when  paying  online.  It  should  however  be  noted  that  developing 
new solutions based on euro IPs risks being unprofitable if their uptake is too low. 

The higher uptake of IPs at EU level would also create greater incentives for EU fintechs 
and non-bank PSPs, such as Payment Initiation Service Providers (PISPs), to engage in 
developing  IP-based  PoI  solutions  which  would  work  not  only  domestically  but  also 
cross-border (in the same way as ICS work). Today, there are no IP-based PoI solutions 
that work in shops cross-border (see Annex 6). With the reduced opportunities to expand 
beyond national markets, EU providers of IP-based solutions cannot gain the economies 
of scale on the cost side necessary to innovate and compete with the large, international 
incumbents.  

Attempts  to  develop  pan-European  solutions  have  been  made  by  EU  providers.  In 
2020/2021, EU PISPs assessed the opportunity of designing a European Retail Payments 
Framework (ERPF), with the aim of ensuring availability of pan-European  IP solutions 
in  physical  shops.  The  objective  of  ERPF  was  to  provide  solutions  for  payments    in 
physical  shops.  However,  the  limited  use  of  euro  IPs  was  identified  by  the  ERPF’s 
promoters as one of the main stumbling blocks to the project43. 

Wider use of IPs would also allow PISPs to fulfil their tasks more efficiently. Banks do 
not have any obligation to provide the confirmation of account balances to PISPs44. As 
part  of  their  service  of  payment  initiation,  PISPs  must  then  estimate  the  likelihood  of 
sufficient  funds  being  available  on  the  payer’s  account  to  cover  the  payment  to  the 
retailer.  There  is  therefore  always  a  risk  for  the  PISP  that  the  payment  that  is  initiated 
based on a regular credit transfer will not be executed. IPs would remedy such risk as the 
payment  execution  can  be  instantly  verified.  A  large  EU  PISP  reported  to  the 
Commission  that  the  rate  of  successful  transactions  it  initiated  in  2020  had  been  10 
percentage points higher for IPs than for regular credit transfers. Greater uptake of euro 
IPs  by  PSPs  would  allow  further  leveraging  on  the  Open  Banking  policy  enshrined  in 
PSD2, which is aimed at opening up the market for more competition and innovation.  

 Unrealised benefits for public administrations and others 

Public  administrations  which  collect  fees,  fines  or  taxes  would  benefit  from  improved 
cash flow management similarly to merchants and corporates. In addition, a greater take 
up of IPs could reduce tax fraud and tax evasion, leading to fiscal benefits in the range of 
EUR  0.25-1.59  billion  per  year  (see  section  7.3).  With  IPs,  NGOs  and  charities  could 
make  use  of  contributions  more  quickly,  which  is  of  particular  benefit  when  funds  are 
urgently needed, particularly in times of international crisis.  

2.2.2  Limited choice of means of payment at PoI, in particular cross-border 

As  indicated  above,  the  use  of  IPs  for  retail  (PoI)  payments  is  very  limited  in  the  EU, 
with the exception of certain merely domestic systems, mostly located outside the Euro 

42 ECB 2019, report referred to in footnote 35 above.  
43 Bilateral communication between ERPF and Commission services. 
44 Unlike in the case of cards (Art 65 PSD2). 

11 

 
 
                                                           
area and limited to payments denominated in national currency45. As a consequence, the 
vast majority of electronic PoI payments, in particular cross-border ones, in the EU are 
carried out or facilitated by a very limited number of ICS and BigTechs providing mobile 
payment  applications  based  on  ICS,  including  Apple  Pay,  Google  Pay46  and  PayPal, 
except  for  national  card  transactions  in  Member  States  with  domestic  card  schemes  in 
place.  Obstacles  to  access  to  certain  technologies  developed  by  ICS  can  make  entering 
the card market for cross-border payments difficult for new players. For example, some 
market players allege that they have difficulties in using the ICS' contactless ‘kernel’47 in 
physical shops, which is necessary for offering contactless card payments and which, for 
cross-border payments in Europe, is deployed by ICS. 

Compared  to  electronic  payments  in  physical  shops,  in  e-commerce  there  are  more 
payment solutions available, as in addition to ICS, solutions based on credit transfers or 
direct  debits  are  provided  by  international  (e.g.,  PayPal48,  Tink,  Plaid49)  and  EU 
providers  (e.g.,  Klarna/SOFORT,  Trustly).  Card-based  solutions  offered  by  ICS  or 
BigTech service providers are most widely accepted by merchants. For example, in 2018 
in Europe, over 72% of online merchants accepted PayPal, 54% accepted Visa, and 48% 
accepted MasterCard. By comparison, Klarna/SOFORT was accepted by 8.6%50.  

As  indicated  above,  in  terms  of  volume,  in  2018,  the  two  most  commonly  used  ICS 
handled 69% of card payment transactions in Europe.51 They are continuously expanding 
to new payment areas, as demonstrated by the purchase of the Swedish Fintech Tink by 
Visa, or the launch of Visa’s own IPs service52. This could reduce growth prospects for 
new entrants and make it harder for them to raise capital53.  

The  current  situation  creates  significant  vulnerabilities  for  the  European  PoI  payments 
ecosystem  in  terms of  choice,  innovation  and the emergence of pan-European payment 
solutions.  With  the  low  uptake  of  IPs,  the  unique  opportunity  for  EU  PSPs  (bank  and 
non-banks) and  fintechs  to  develop  and promote  new pan-European payment  solutions, 
which would not need to rely on the infrastructure provided by the incumbent providers, 
will remain unrealised.   

The  limited  choice  of  payment  methods,  in  particular  for  cross-border  transactions, 
means  that  merchants  have  very  little,  if  any,  bargaining  power  when  dealing  with  the 
handful of available providers, even if accepting those few payment methods is costly for 
them. A study by EY 54 showed that during the years 2015-2017, scheme charges paid by 

45 E.g. in Swish in Sweden, Blik in Poland, MobilePay in Denmark. 
46 Currently, Apple Pay and Google Pay can be used to make payments through a debit or credit card. 
47  Kernels  are  the  set  of  functions  that  provide  the  necessary  processing  of  data  between  a  point  of 
interaction and a card/mobile device to perform contact or contactless transactions. 
48 PayPal allows for cross-border payments through ICS or through a credit transfer. 
49 In France, Spain, Ireland and the Netherlands. 
50  Ecommerce  News  Europe  has  gathered  the  data  from  Dataprovider  on  payment  methods  offered  by 
over 900,000 ecommerce websites across Europe in 2018; see this link.  
51Source: ECB (see this link) . 
52 VisaDirect is based on IPs. Visa  is also developing a  Request-to-Pay service based on IPs. MasterCard 
acquired IP service provider BLIK in Poland and NETs account-to-account business in Denmark.  
53 https://www.bis.org/publ/qtrpdf/r_qt2109c.pdf . 
54 Commissioned by the Commission (DG Competition) from Ernst & Young (available at  this link or this 
link). Published 4 August 2020. 

12 

 
 
                                                           
acquirers  (but  later  passed  onto  merchants)  for  card  transactions  increased  by 
approximately EUR 560 million and were driven mainly by increases in charges paid to 
ICS,  with  particularly  steep  increases  for  cross-border  transactions.  Eurocommerce 
estimates  that  ‘merchant  service  charges’,  including  scheme  fees,  interchange  fees  and 
acquirers’  margins,  increased  in  the  EU  from  2015  to  2020,  by  EUR  876  million  in 
total55. Higher fees on card transactions incurred by merchants tend to be passed (fully or 
partially) onto consumers via higher prices.  

Merchants,  as  well  as  corporate  users,  including  SMEs,  need  to  be  able  to  make  and 
accept  cross-border  payments.  This  is  confirmed  by  the  responses  to  the  open  public 
consultation, where merchants stated unanimously (100% of merchants’ responses) that 
ensuring the ability to  accept  payments from customers from  other Member States was 
very important.  They have therefore little choice but to accept Visa and Mastercard, and 
mobile wallet solutions incorporating these, since only they enable payments from other 
Member States.  

Greater choice of payment means and providers available in shops, in addition to cards, 
would  also  benefit  users,  including  SMEs.56  Currently,  users  can  only  benefit  from 
mobile  payment  solutions  based  on  IPs  in  certain  domestic  markets  (see  Annex  6).  A 
consumer  who  is  used  to  making  payments  by  using  a  popular  and  widely-acceptable 
domestic  payment  solution  that  allows  initiation  of  IPs  at  PoI  is  compelled  to  rely  on 
another payment instrument, most likely an ICS card or cash, purely for the purpose of 
making payments in  other Member States. This  is  both  inconvenient  and costly  for the 
consumer57.  The  pertinence  of  this  concern  is  confirmed  by  85%  of  consumer 
respondents to the open public consultation who stated that it was important to be able to 
pay with IPs not only in their own Member State but also abroad. 

A wider uptake of IPs is thus a necessary – although not sufficient in itself - prerequisite 
for the development of new IP-based retail payment solutions that work at pan-European 
level, in order to bring more choice of payment methods at PoI.  

2.3 Problem drivers 

Four  key  problem  drivers  hindering  the  uptake  of  euro  IPs  have  been  identified:  (i) 
insufficient  incentives  for  PSPs  to  offer  euro  IPs  (market  failure);  (ii)  dissuasive 
transaction  fees  for  IPs;  (iii)  high  rate  of  rejected  IPs  due  to  false  hits  in  sanctions 
screening;  and  (iv)  payer  concerns  about  security  of  IPs  (in  terms  of  fraud  and  errors). 
Two (i and iii) are on the supply side (affecting PSPs and providers of technical services) 
and two (ii and iv) on the demand side (affecting consumers and other types of payers). 
The supply and demand side drivers affect and mutually reinforce each other, and taken 
together are largely responsible for the insufficient uptake of euro IPs. 

There are other factors that could be considered to potentially influence the uptake of IPs 
and contribute to the apparent differences in the current use of IPs in individual Member 
States. These could include the competitive environment (such as market structure, entry 

55 Excluding UK [CMSPI Zephyre - Scheme Fee Study final.pdf (eurocommerce.eu)].   
56 BEUC position paper on the RPS.  
57  Even  if  there  are  no  ‘per  transaction’  costs  for  consumers  related  to  paying  with  cards,  holding  a 
payment card is not free (annual cardholder fees). In addition, higher merchant fees on card transactions 
are passed onto consumers via higher prices. 

13 

 
 
                                                           
barriers, competitive pressure from non-banks, switching costs, etc.); specific consumer 
payment  preferences  (e.g.  cultural  preferences  for  cash  or  cheques),  business  strategies 
(such  as  transaction-based  or  package  pricing  for  retail  financial  services),  wired  and 
mobile internet penetration (necessary for online or PoI transactions)58, etc. Nonetheless, 
it  was  concluded  that  in  the  current  context  these  factors  are  either  of  a  secondary 
importance,  do  not  apply  equally  in  all  Member  States,  or  are  not  in  the  regulator’s 
control, hence are outside of the scope of the present initiative. 

2.3.1  Driver 1: Insufficient incentives for PSPs to offer euro IPs (market failure) 

As  explained  in  detail  in  Annex  10,  payments  are  a  network  industry  exhibiting 
significant  economies  of  scale.  Network  externalities  lead  to  undersupply,  and  the 
resulting unexploited scale economies may prolong higher prices reducing demand that 
in turn creates disincentives to increase supply. In order to overcome market failures and 
help  the  industry  reach  critical  mass,  coordinated  efforts  are  frequently  taken  in 
payments, either based on industry initiative or by some sort of government intervention. 

For an IP transaction to take place, both a payer and a payee need to have a PSP which 
offers  such  service.  PSPs’  decisions  to  adhere  to  the  SCT  Inst.  Scheme  are,  however, 
impacted by the presence of network externalities. Network externalities occur in a form 
of  circular  interaction  whereby  the  more  PSPs  and  users  (both  payers  and  payees)  of  a 
certain payment method (such as IPs) there are in a network, the more attractive it is for 
other PSPs to join the network and start offering that payment method. This is, inter alia, 
because  a  high  volume  of  payments  brings  a  better  chance  of  recouping  PSPs’ 
investments necessary to offer that new payment method.  
In  this  regard,  three  levels  of  initial  investment  are  needed59:  a  common  scheme,  a 
common settlement infrastructure and, finally, investments by individual PSPs. The first 
two  types  of  investments  have  already  occurred:  the  EPC  launched    the  SEPA  Inst. 
Scheme  in  2017,  while  the  ECB  has  already  ensured  the  existence  of  a  pan-European 
settlement  infrastructure,  TIPS,  and  its  interconnection  with  national  clearing  and 
settlement  infrastructures.  Therefore,  the  necessary  fixed  investment  cost  for  offering 
euro IPs is now limited to PSPs’ individual investments (see Box 2).  

However, a high number of PSPs (about one in three) across the EU do not see sufficient 
incentives to make such investments to join the network, as they deem its current scale, 
in terms of other participating providers, payments services users and the IP volume, to 
be  too  low  to  justify  such  investments  (see  Annex  10  for  more  analysis  of  network 
effects).  However,  the  participation  of  the  vast  majority  of  PSPs  offering  regular  euro 
credit transfers is a precondition to achieving such volume.  

As of February 2022, over four years into the operation of SCT Inst. Scheme, only 2 308 
EU PSPs60 have adhered to it, thereby committing themselves to be able to send and/or 
receive61  euro  IPs.  This  represents  66.8%  of  the  3 454  PSPs  in  the  EU  that  are  able  to 
send and receive ‘regular’ credit transfers in euro. Within the Euro area, this percentage 

58  ECB  Occasional  Paper  Series  Are  instant  payments  becoming  the  new  normal?  A  comparative  study 
(europa.eu), Monika Hartmann, Lola Hernandez-van Gijsel, Mirjam Plooij, Quentin Vandeweyer, 2019 
59 As discussed in section 1.1. and Annex 6. 
60 Some SCT and/or SCT Inst. Scheme participants may not be authorised as PSPs under PSD2. 
61 Approximately ten of those PSPs are only able to receive IPs. 

14 

 
 
                                                           
was  slightly  higher  at  70.5%  (2 299  out  of  3 260),  while  outside  the  Euro  area,  it  was 
significantly lower at 4.6% (9 out of 194). 

There are significant differences between national markets within the EU. In 8 Member 
States  (Austria,  Estonia,  Finland,  Germany,  Italy,  Latvia,  Slovenia  and  Spain),  as  of 
February 2022, a majority of PSPs offering regular euro credit transfers to customers also 
offered  euro  IPs.  In  four  other  Member  States  (Belgium,  Greece,  Portugal  and  the 
Netherlands),  even  though  the  PSPs  able  to  offer  IPs  did  not  constitute  a  majority  of 
PSPs, these PSPs held more than 90% of payment accounts in their respective countries. 
However,  in  as  many  as  twelve  national  markets  (eight  outside  the  Euro  area  and  four 
within  the  Euro  area:  Cyprus,  Ireland,  Slovakia,  Malta)  only  a  handful  of  PSPs  have 
made  the  investments  necessary  to  enable  the  payment  accounts  they  hold  to  send  and 
receive euro IPs. The below chart provides a breakdown per Member State. 

Chart 2 – Share of PSPs offering euro IPs and share of payment accounts enabled to send and 
receive euro IPs by Member State62  

The real number of EU payment accounts with the ability to send and/or receive euro IPs 
is  lower  than  the  number  of  accounts  held  by  PSPs  adhering  to  the  SCT  Inst.  Scheme. 
This  is  because  not  all  PSPs  with  the  capability  to  send  and/or  receive  IPs  offer  this 
service  to  all  of  their  account  holders.  Moreover,  certain  PSPs  adhere  to  the  SCT  Inst. 
Scheme  only in the capacity of a receiving PSP. It is estimated that holders of at least 70 
million payment accounts in the euro area alone still cannot receive or send euro IPs. 

62  Source:  EPC.  Data  on  the  share  of  PSPs  offering  IPs  is  as  of  February  2022.  Data  on  the  share  of 
payment accounts enabled to receive and send IPs is as of November 2021 (data not available for Cyprus, 
Ireland,  Sweden,  Bulgaria,  Poland,  Denmark,  while  for  Slovakia  and  Czechia  it  was  0%  as  in  November 
2021 no local PSPs adhered to the SCT Inst Scheme).  

15 

 
 
 
                                                           
As regards the trend, the participation rate of EU PSPs in the SCT Inst. Scheme has been 
stagnant,  as  shown  in  the  chart  below.  After  the  initial  adherence  to  the  SCT  Inst. 
Scheme at its launch in 2017 of those PSPs that saw a business case in offering IPs, the 
rate at which new PSPs have been joining has been very slow since Q3 2018. Recently 
this rate plateaued, increasing only by 2.4 p.p. from 64.4% in February 2021 to 66.8% in 
February 2022, in correspondence with the fact that 1 146 PSPs still did not adhere to the 
SCT Inst. Scheme (see chart 3 below).63 

Chart 3 - Adherence gap to the SCT Inst. Scheme, number of PSPs (EU27)64 

The  uptake  of  euro  IPs  in  a  cross-border  context  lags  behind  the  uptake  of  domestic 
transactions (i.e. where the payer’s and beneficiary’s PSPs are based in the same Member 
State). For instance, in  Spain, the volume of cross-border credit transfers  accounted for 
1.8% of all credit transfers in 202065, while the share of cross-border euro IPs in all euro 
IPs  was  six  times  lower,  i.e.,  0.3%66;  the  respective  figures  for  the  Netherlands  were 
3.9% and 0.2%, almost twenty times lower for cross-border IPs.  

Based on informal feedback from PSPs, it is clear that in order to expand the supply of 
euro  IPs cross-border, PSPs  want  to be confident  that if the customer requests an  IP, it 
will  be  possible  to  execute  that  payment  regardless  of  where  the  payee  is  based  in  the 
EU. In this regard, there is zero or close-to-zero chance that an IP will be successful if the 
payment is addressed to a payee in a Member State with no or very few PSPs enabled to 
receive euro IPs. Offering an IP service to customers without being able to guarantee that 
the  payment  will  actually  be  instant  can  expose  a  PSP  to  customer  dissatisfaction  and 
reputational risk. Therefore, for many PSPs that already offer euro IPs, it is safer to stick 
to domestic transactions and not offer the service at all for cross-border payments. This 

63 The decreasing number for SCT can be explained by PSP consolidation. 
64 Source: EPC. 
65  Source:  ECB,  European  Commission  calculation.  This  figure  also  includes  extra-EU  transfers  but  these 
are likely to be a small minority of cross-border transfers, most of which will be within the EU. 
66 Data provided by National Payments Committees.  

16 

 
 
 
                                                           
represents  an  important  obstacle  to  meeting  the  objectives  of  a  Single  Euro  Payments 
Area for IPs.  

To sum up, for PSPs that do not yet offer euro IPs at all, and given the relative stagnation 
in  participation  in  the  SCT  Inst.  Scheme,  it  is  preferable  to  wait  for  other  PSPs  to 
generate  sufficient  volumes,  which  the  latter  cannot  achieve  when  participation  in  the 
network  of  the  PSPs  is  lagging  behind.  This  creates  an  impasse  that  is  not  easy  to 
overcome by the industry itself.  

However, there is an indication that where market coordination exists, the disincentives 
arising  from  network  externalities  can  be,  to  a  varying  degree,  dealt  with.  This  is 
reflected  by  the  experience  of  some  Member  States  where  the  vast  majority  of  PSPs 
joined the SCT Inst. Scheme at the same time (e.g., Belgium67, Spain68), which was due 
to a coordinated approach of the industry towards adopting euro IPs. It is naturally much 
more challenging to achieve the same market coordination at EU level. 

In other Member States, National Central Banks or National Payment Committees played 
a  very  important  role  in  promoting  the  uptake  of  euro  IP  technology.  For  instance,  in 
Lithuania,  a Memorandum  of Understanding between  six largest  PSPs  and the national 
central  bank  was  concluded  in  2017,  aiming  at  ensuring  that  euro  IPs  are  offered  to 
customers.69 In the Netherlands, the four largest banks committed in early 2015 to build 
an IP infrastructure under the programme guidance of the Dutch Payments Association, 
and all relevant stakeholders, including the Dutch Central Bank, have been involved from 
the start.70   

In  this  regard,  a  number  of  studies  (see  Annex  10)  suggest  that  involvement  of  public 
authorities  is  necessary  to  help  address  the  failure  of  the  market  participants  to  take  a 
coordinated action to achieve a synchronised adoption of a new payments technology and 
realise  the  full  scale  of  network  benefits.  Such  interventions  have  been  key  for  a 
successful  adoption of  IPs  in  other jurisdictions.  Also, this  is  why the migration of  EU 
PSPs to the – new at the time – euro regular credit transfers and direct debits was made 
mandatory under the 2012 SEPA Regulation after years of unsuccessfully waiting for the 
industry to complete that migration on a voluntary basis. 

2.3.2  Driver 2: Dissuasive transaction fees for IPs 

The  economic  theory  implies  that  demand  for  euro  IPs,  as  a  network-based  service,  is 
impacted  favourably  by  the  number  of  users  participating  in  the  network  and, 
particularly, once  ‘the  critical  mass’ of users is  attained (see Annex 10).  Yet,  users are 
sensitive to the pricing of payment services  which appears to dampen their demand for 

67 See the report available here. 
68 A very early adopter of the SEPA Instant Credit Transfer scheme tells us about the Spanish experience | 
European Payments Council  
69 
in 
Instant  payments 
https://www.lb.lt/en/media/force_download/?url=%2Fuploads%2Fdocuments%2Ffiles%2Fmusu-
veikla%2Fmokejimai%2FApie-mokejimu-rinka%2FMokejimu-
taryba%2FInstant+payments+in+Lithuania.pdf  
70  Instant  payments  are  the  new  normal  in  the  Netherlands;  who  will  follow?  |  European  Payments 
Council  

standardisation  and  developmental  directions,  2019, 

Lithuania: 

17 

 
 
                                                           
euro  IPs  and  delay  the  attainment  of  that  critical  level  of  IP  turnover  (as  well  as  its 
expected impact).  

The data presented in Table 1 shows that there is a strong negative correlation between 
pricing of IPs and levels of uptake. 

Table 1: Impact of transaction fees on the uptake of euro IPs  
PSPs charging the same level of 
Member 
transaction fees for IPs and regular 
State 
credit transfers 

PSPs charging a different level of 
transaction fees for IPs and regular 
credit transfers 

Uptake of IPs 

Average level of 
transaction charges 
for IPs and regular 
credit transfers, in 
EUR 

Average 
transaction fee 
of euro IP, in 
EUR 

Average transaction 
fee of regular credit 
transfer, in EUR 

% of PSPs 
which offer IPs 
applying the 
same 
transaction 
charges as for 
regular credit 
transfers 

Not applicable  Not applicable 
Not applicable  Not applicable 

67% 
45% 

Not available 

Not available 

Estonia 
Lithuania 

100% 
100% 

Spain* 

30 
PSPs, 
covering  95% 
of market share, 
via 
Bizum 
solution 

From 0 to 0.38 
0 or 
0.41  (where  there  is 
no  package  fee  for 
all services) 
0 (when initiated via 
Bizum),  otherwise  a 
fee may apply 

100% 
Latvia 
Netherlands  100% 
100% 
Finland 
65% 
Belgium 

0.40 
0 
0 
0 

Portugal 
Germany 

7% 
A minority 

France* 

Slovenia 
Italy 

11 
PSPs 
participating  in 
Paylib 
P2P 
payment 
solution  
14% 
0% 

0.25 
Not available 

0 

Not applicable  Not applicable 
Not applicable  Not applicable 
Not applicable  Not applicable 
0.88 
EU average uptake: 10,97% 
1.59 
Typically 
priced 
premium 
products, 
(from  0.50  to 
2.50) 
0.76 
initiated 
online) 

0.81 
in most cases 0 

(when 

as 

0 

0 (when initiated via 
Paylib),  otherwise  a 
fee may apply 

(almost 
driven 
510  mln 

via 

38% 
entirely 
by 
transactions 
initiated 
Bizum) 
29% 
24% 
19% 
17% 

3% 
3% 

3% 

0.395 
Not applicable 

0.90 
2.80 (average) 
1.60 (median) 

0.38 
0.45 (average) 
0.70 (median) 

1% 
0.1% 

Source: Ministries of Finance, National Payment Committees, BEUC, Bizum 
* In these Member States, a PSP may offer free IPs when initiated via a  payment solution jointly offered by multiple 
PSPs, but charge for IPs when initiated in a different way 

Currently, there appears to be a great variety of approaches  to transaction fees  for euro 
IPs. Some PSPs and even entire PSP communities (e.g. in the Netherlands) have adopted 
a  no-transaction  fee  policy  or  apply  equal  (Lithuania)  or  very  comparable  (Estonia, 

18 

 
 
 
 
Latvia) fees for IPs and regular credit transfers. Other PSPs apply relatively high fees per 
IP transaction, which many times exceed those for regular credit transfers71. For instance, 
based on a stock-take carried out by BEUC, in Italy, the fee per IP transaction may be as 
high as EUR 30. The overview of the transaction fees for IPs for most national payment 
markets is presented in the table below.  

The  impact  of  fees  policy  on  demand  for  IPs  is  evidenced  by  the  uptake  rate  of  IPs  in 
Member  States  where  the  fees  of  the  two  transfer  types  is  at  the  same  or  comparable 
level. For instance, as shown in Table 1, in Estonia, the share of euro IPs in the volume 
of all credit transfers in euro in May 2021 was equal to 67%, in Lithuania 45%, in Latvia 
29%, in the Netherlands 24%, and in Finland 19%, i.e., significantly higher compared to 
Member  States  where  PSPs  have  adopted  “premium”  fees  approaches,  even  with  the 
same broad levels of participation in SCT Inst. Scheme. The impact of the pricing policy 
of IPs on their uptake is confirmed by the feedback to the targeted consultation and the 
data at Member State level. That data shows a healthy growth of the uptake in Member 
States where the pricing of euro regular credit transfers and euro IPs is comparable, and 
stagnant uptake in Member States where IPs are priced at a premium for the period May 
2020  to  May  2021.72  A  study73  by  the  ECB  analysing  the  impact  of  the  level  of 
transaction  fees  on  the  uptake  of  IPs  in  other  international  jurisdictions  also  concluded 
that higher fees limit the uptake of instant retail payments.  

It can be observed that in a number of Member States where the fees charged by PSPs for 
IPs  and  regular  credit  transfers  are  currently  comparable,  this  was  facilitated  or 
encouraged by the national authorities (see section 3.2). Similarly, the most successful, in 
terms  of  the  number  of  users  and  transaction  volumes,  domestic  IP  solutions  offered 
today by EU banks (e.g., Swish in Sweden or Bizum in Spain) have no transaction fee.  

Fee differences do not seem to be justified by the differences in transaction costs (though 
theoretically  this  may  reflect  the  intention  of  some  PSPs  to  recover  one-off  costs 
gradually via transaction fees). The available evidence on the average recurring cost per 
transaction  for  IPs  and  regular  credit  transfers  shows  that  the  level  of  the  two  is  rather 
close74. In some cases, PSPs reported that the average cost per transaction of IPs is lower 
than  that  of  a  regular  credit  transfer.  In  cases  where  the  average  cost  of  an  IP  was 
reported  to  be  higher  than  that  of  a  regular  credit  transfer,  the  difference  in  euro  cents 
was typically in single digits and was dependent on the volume of IPs.  

Some may argue that higher fees on IPs may be applied to obtain a compensation for the 
elimination of the one-day payment float when moving from a regular credit transfer to 
an  IP  (see  Annex  8).  However,  it  needs  to  be  acknowledged  that  interest  rates  for 
investments with such a short horizon have been extremely low, or even negative, in the 

71  Usually,  fees  apply  to  transactions  made  outside  the  PSP’s  network  (i.e.  where  the  payer  and  payee 
hold  accounts  with  different  PSPs).  Transfers  within  the  PSP’s  network  (on-us  transactions  -  where  the 
payer and payee hold accounts with the same PSP), are often priced at zero. 
72 Over the 12 month period up to May 2021, the uptake of IPs in Spain increased by 19 p.p., in Lithuania 
by 16 p.p., in Finland by 8 p.p. while in Member States  where PSPs apply ‘premium pricing’ the annual 
growth in uptake was minimal: 1.6 p.p in France, 1.2 p.p. in Germany, 0.4 p.p in Portugal and 0.1 p.p in 
Italy (Data source: National Payment Committees).  
73 Are instant retail payments becoming the new normal? (europa.eu) 
74 Feedback from PSPs via targeted consultation and on a bilateral basis. 

19 

 
 
                                                           
recent years and, therefore, this impact is not considered to have had a major impact on 
the pricing of euro IPs.  

As  regards  the  competitive  environment  in  Member  States  where  premium  pricing  is 
applied it should be noted there is a relatively high number of PSPs adhering to the SCT 
Inst Scheme75. Furthermore, in those Member States a variety of pricing models for IPs is 
present,  i.e.,  while  the  majority  of  PSPs  charge  a  high  premium  compared  to  regular 
credit transfers, there are also some PSPs that are not charging any premium or any fees 
for IPs76.   

Charging  transaction  fees  for  IPs  equal  to  200%  or  600%  of  the  transaction  fee  for  a 
regular  credit  transfer  tends  to  reflect  the  positioning  of  IPs  as  a  ‘premium  service’77.  
However, consumers do not consider IPs a premium service. According to the feedback 
from  consumers  and  consumer  representatives  to  the  open  public  consultation,  87%  of 
them  stated  that  fees  are  an  important  factor  when  deciding  whether  to  use  IPs. 
Furthermore, 67% of consumers stated that they would not be willing to pay a premium 
fee  for  IPs.  Of  the  25%  who  would  be  open  to  paying  more,  all  indicated  that  an 
acceptable  difference  would  be  between  1%  and  50%  more  than  for  regular  credit 
transfers,  which  is  far  from  the  practice  of  charging  up  to  six times  more,  as  shown  in 
Table 1. Studies also indicate that consumers are sensitive to price incentives, regardless 
of  their  actual  payment  preferences,  and  that  price  differentiation  can  be  used  to  steer 
consumers towards or away from a certain payment method78. 
Consumer organizations79 have on several occasions brought up the issue of transaction 
fees and called for legislation equalizing the level of fees for regular credit transfers and 
IPs.  During  the  2021  FISMA  webinar  on  IPs  and  the  PSMEG80  discussion,  consumers 
were  joined  by  merchants,  PISPs  and  some  banks,  who  agreed  that  offering  IPs  to 
consumers for a premium fee was not appropriate.  

In addition to creating disincentives for consumers and businesses from using IPs, high 
transaction  fees  for  IPs  imposed  by  PSPs  may  create  obstacles  to  the  emergence  of 
payment  solutions  at  PoI  offered  by  payments  initiation  service  providers  (PISPs),  by 
making them unattractive in terms of fees compared to alternative payment means at PoI, 
such as cash or cards, which do not have a transaction fee for consumers.  

2.3.3  Driver 3: High rate of rejected IPs due to false hits in sanctions screening 

Currently,  EU  legislation  does  not  prescribe  the  ways  and  means  for  PSPs  to  ensure 
compliance  with  their  obligations  to  apply  EU  sanctions  such  as  asset  freezing  against 
designated persons and entities. Thus, for cross-border IPs, PSPs apply transaction-based 
screening, which generates a high number of alerts that the payee or payer is a designated 

75 For instance, as of February 2022, 1 214 PSPs adhered to SCT Inst Scheme in Germany, 282 in Italy and 
130 in France. 
76In France for example, the Banque Postale recently removed fees for Ips. See this press report in French. 
77  Reported  by  consumers  (see  this  report  from  BEUC),  studies  (see  this  report  made  for  the  ECB)  and 
PSPs (bilateral exchanges, position letters). 
78 How Do Consumers Make Their Payment Choices? (ssrn.com). 
79 beuc-x-2021-027_consumers_and_instant_payments.pdf. 
80 Commission Payment Systems Market Expert Group, meeting of 16 December, 2021  (available at this 
link).  

20 

 
 
                                                           
person on an EU sanctions list. Based on PSP feedback to the targeted consultation, this 
proportion falls in the range of 0.4% to 9.4%, compared to close to 0% for regular credit 
transfers.  

Such alerts are the main reason for the rejection of initiated euro IPs, given that the time 
needed  to  verify  the  alert  does  not  allow  for  executing  the  transaction  instantly.  The 
payment is therefore either not executed, or it can be executed but no longer as an IP (but 
as  a  regular  credit  transfer).  This  is  highly  inefficient  considering  that  in  as  much  as 
99.8% of such cases81, the alert is a false positive. At the current level of uptake of IPs, 
each percentage point of rejected cross-border transactions is equivalent to some 150 000 
IPs  that  did  not  reach  the  intended  payee  and  this  figure  would  only  increase  in 
proportion  with  the  expected  growth  in  the  uptake  of  euro  IPs.  Moreover,  the  same 
problem  is  also  applicable  in  the  context  of  domestic  euro  IPs  where  the  transaction-
based screening is applied by PSPs.  

The  high  volume  of  inaccurately  ‘flagged’  and  subsequently  rejected  IPs  arising  when 
transaction-based sanctions screening is applied creates operational challenges for PSPs’ 
who  wants  to  offer  IPs  to  their  customers.  Some  PSPs  across  various  Member  States 
have indicated that those challenges contributed to their decision to delay a provision of 
IPs  on  a  cross-border  basis.  It  also  limits  the  reliability  and  predictability  of  IPs  in  the 
perception of users (consumers, merchants, corporates), having a negative effect on the 
level of uptake of IPs (see the Problem Tree in section 2.5).  

More  details  on  the  different  approaches  to  sanctions  screening  and  their  impacts  on 
processing of IPs are included in Annex 4. 

2.3.4  Driver  4:  Payer  concerns  about  security  of  IPs  with  regard  to  fraud  and 

errors 

Credit transfers (regular or IPs) may82 end up being sent to a payee not intended by the 
payer. This can be due to mistakes made by the payer (e.g. mistyping the payee’s account 
number)  or  as  a  result  of  fraud.  The  latter  can  involve  illegal  impersonation  (e.g.  a 
fraudster  makes  the  payment  instead  of  a  genuine  payer  as  a  result  of  a  cyberattack  or 
theft  of  the  payment  instrument)83,  or  a  criminal  activity  which  occurs  before  the 
payment is made by a genuine payer (pre-payment fraud).  

Pre-payment  fraud  can  take  the  form  of  an  invoice  fraud  (e.g.  where  invoices  are 
intercepted and the merchant account number is substituted for that of the fraudster), or 
more  sophisticated  APP  frauds  involving  manipulation  of  the  payer  through  direct 
interaction  (e.g.  manipulation  of  the  payer  into  believing  he  is  dealing  with  a  genuine 
payee or even with his bank’s representative). Such type of fraud precedes the execution 

81 PSP responses to the targeted consultation and industry feedback. 
82 This is unlikely to happen in case of IP-based PoI solutions, working similarly to card schemes, where 
both payer and payee (merchant) undergo prior verification at onboarding process to be able to use the 
PoI  solution  and  which  often  use  proxies  for  the  IBAN  number  (e.g.  telephone  numbers  or  email 
addresses). This means the payer does not need to manually input the IBAN  number of the payee when 
making a payment. 
83 Payment fraud is addressed in the EU payments legislation (PSD2), and in particular  regarding Strong 
Customer  Authentication  (SCA)  and  PSP  liability  for  unauthorised  transactions  (e.g.  Article  73  and  74 
PSD2) 

21 

 
 
                                                           
of the payment transaction. Currently the EU payments legislation does not envisage any 
specific provisions to protect payers from such criminal practices, neither with respect to 
more traditional payment methods (regular credit transfers, cards, direct debits) nor more 
novel ones, such as IPs. Likewise, EU payments legislation does not provide for any ex-
post remedies for possible errors made by payers when inputting the IBAN84 of the payee 
to place a payment order for a regular credit transfer or IP. 

However, a common perception of payers is that even in case of pre-payment fraud, as 
well as for the possible errors in inputting the IBAN, when using regular (‘slower’) credit 
transfers, they will be able to cancel or reverse such transactions, while with IPs (‘faster’) 
credit  transfers,  they  will  not  be  able  to  do  so.  In  fact,  in  order  to  ensure  stability  and 
certainty of payments, PSPs have no legal obligation to stop, cancel or reverse a payment 
order  placed  by  the  payer  (such  revocation  can  only  be  agreed  upon  contractually, 
possibly  against  a  fee85).  This  needs  to  be  distinguished  from  a  refund,  which  can  be 
offered  as  a  new  transaction  paid  from  the  original  payee  back  to  the  original  payer. 
Certain payment means  come with such refund options, which are provided either on a 
commercial  basis  by  card  schemes  or  IP-based  PoI  solutions,  or  by  law  in  the  case  of 
direct debits86.  

Even  if,  in  terms  of  the  risk  of  fraud  or  errors  occurring,  and  in  terms  of  the  legal 
guarantees87 of recovering the funds, the difference between regular credit transfers and 
IPs  is  not  materially  significant,  the  novel  nature  of  IPs,  their  speed  and  perceived 
reduced  margin  for  reaction  to  fraud  and  errors  may  lead  to  payer  concerns  about  the 
security  of  IPs  and  lead  them  to  choose  a  slower  form  of  payment,  thus  reducing  the 
uptake of IPs even in cases where they are available. These concerns, whether justified or 
not,  seem  to  be  a  driver  of  suboptimal  uptake  in  situations  where  supply  of  IPs  exists, 
alongside  premium  pricing.  The  need  to  enhance  consumers’  and  businesses’  trust,  is 
generally recognised by stakeholders as a key element to facilitate a greater uptake of IPs 
88. 

The more technical explanation of the types and extent of pre-payment fraud affecting all 
credit transfers, the different refund rights specific to different payment methods granted 
by  law  or  on  a  commercial  basis,  and  the  rules  on  the  irrevocability  of  payments  are 
included in Annex 5.  

84 The standardised account number for payments in euro, International Bank Account Number (IBAN). 
85 Under Article 80(5) PSD2, the payment order may be revoked only if agreed between the PSU and the 
relevant  PSPs.  If  agreed  in  the  framework  contract,  the  relevant  PSP  may  charge  for  revocation.  For 
example, contractual arrangements under which the payer may request  revocation of  a  payment  order 
until the end of the same business day are possible with some PSPs in Italy. 
86 The only refund right laid out in the law (PSD2) concerns direct debits, because here the payee deducts 
the funds from the payer’s account who has little control over when and how much will be deducted. 
87 Which are without prejudice to various possible contractual arrangements between PSUs and PSPs. 
88 E.g.  Council in its conclusions of 22 March 2021  “welcomed the priority given to enhance consumers’ 
and businesses’ trust, especially in instant payments, notably by assessing consumer protection aspects, in 
particular 
[beuc-x-2022-
035_how_to_make_instant_payments_the_new_normal.pdf] 

confirmation-of-payee 

(europa.eu)];  BEUC 

functionality” 

[pdf 

a 

22 

 
 
                                                           
2.4 How will the problem evolve? 

In the absence of EU action, as regards supply of IPs, the number of PSPs offering IPs 
will gradually increase, but the process will remain slow. Even where there is supply of 
euro  IPs, with  premium transaction fees  for  them being  applied, the user  uptake  would 
remain  limited.  This  would  be  further  exacerbated  by  any  unaddressed  payer  concerns 
about security of IPs. Finally, with sanctions screening procedures remaining inefficient, 
the  rate  of  rejection  of  a  notable  portion  of  euro  IPs,  especially  cross-border,  would 
remain  significant.  The  consequences  of  this  “baseline  scenario”  are  discussed  more  in 
detail in section 5.1 below. 

In that case, the benefits of euro IPs for EU consumers, merchants, corporates, fintechs, 
PISPs, banks  and the society  as a  whole  will remain largely  untapped.  The inability  of 
the market to achieve, by itself and in a timely fashion, the critical mass of euro IPs in the 
EU will have a negative effect on new pan-EU product offerings by PSPs and fintechs. 
The market for IPs, especially at PoI, will remain fragmented. Without an EU initiative 
to  promote  euro  IPs,  the  best  possible  future  evolution  would  be  the  development  of 
bilateral  or  multilateral  interconnections  between  domestic  IP  solutions  that  exist  in 
certain Member States.  

23 

 
 
s
r
e
v
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r
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m
e
l
b
o
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P

m
e
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o
r
P

s
e
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s
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o
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2.5 Problem Tree 

<----------Supply side drivers-----------> 

<---------Demand side drivers---------> 

High rate of 
rejected IPs due 
to false hits in 
sanctions 
screening 

Insufficient 
incentives for 
PSPs to offer 
euro IPs (market 
failure) 

Dissuasive 
transaction fees 
of IPs  
(compared to 
alternative payment 
means) 

 Payer 
concerns 
about security 
of IPs (with 
regard to fraud and 
errors) 

Insufficient uptake of euro IPs 

Unrealised 
economic benefits & 
efficiency gains from 
IPs  

24 

Limited choice of 
means of payment at 
PoI in particular 
cross-border  

 
 
 
 
 
 
 
 
 
  
3  WHY SHOULD THE EU ACT? 

3.1 Legal basis  

Article 114 of the Treaty on the Functioning of the European Union (TFEU) confers on 
the European institutions the competence to lay down appropriate provisions that have as 
their  objective  the  establishment  and  proper  functioning  of  the  Internal  Market  as 
announced in Article 26 TFEU. 

Payments are an enabler of the Internal Market, which encompasses the free movement 
of  goods,  persons,  services  and  capital.  The  limited  choice  of  cross-border  payment 
methods  creates  effective  barriers  to  cross-border  activities  of  consumers  (buying 
goods/services in another Member State) and businesses (using suppliers located abroad, 
reaching clients in another Member State) that restrict their access to the Internal Market 
by imposing additional costs.  

Article 114 TFEU is the legal basis of the SEPA Regulation concerning direct debits and 
credit transfers in euro. Euro IPs are a sub-category of euro credit transfers.  

For all the above reasons, it is appropriate that the present initiative be introduced via an 
amendment to the SEPA Regulation. 

3.2 Subsidiarity: Necessity of EU action 

Member States acting alone are not able to ensure a high level of uptake of cross-border 
euro IPs. Only through an EU intervention can all relevant EU PSPs be required to offer 
the  sending  and  receiving  of  cross-border  IPs.  The  fact  that  in  several  Member  States 
there are not more than a handful of PSPs able to send and receive euro IPs means that 
cross-border IPs cannot effectively work, given the network effects described in section 
2.3  above.  This  remains  true  even  despite  the  fact  that  a  relatively  high  uptake  of 
domestic IPs has been achieved within some Member States.  

Members  States  could  theoretically  take  actions  to  ensure  a  high  level  of  uptake  of 
domestic IPs. However,  in practice there are no indications to suggest that the Member 
States where the current level of uptake of IPs is low have any immediate plans to adopt 
effective measures to increase that level. Only a few89 Member States have developed a 
national  strategy  for  retail  payments  aiming  at  promoting  the  use  of  IPs,  but  without 
stipulating any obligations or target dates for PSPs to engage in offering euro IPs.  

Moreover,  Member  States  alone  cannot  provide  for  harmonized  EU  rules  regarding 
cross-border  IPs,  be  it  on  sanctions  screening  or  the  protection  of  the  payer  in  case  of 
fraud  or  errors.  If  Member  States  do  take  action  at  national  level,  this  would  only 
accelerate  the  already  emerging  regulatory  fragmentation.  For  instance,  in  Lithuania,  a 
Memorandum of Understanding between PSPs aiming at ensuring that IPs are offered to 
customers and at the same transaction fee as regular credit transfers has been concluded 
at  the  initiative  of  the  national  central  bank.  In  Portugal,  a  law90  imposes  limits  on  the 

89 Five according to the ECB. 
90  Law  53/2020,  of  26  August  2020,  which  stipulates  that  PSPs  may  charge  commissions  only  when 
transactions exceed EUR 30 per transaction and EUR 150 per month, or 25 bank transfers per month. 

25 

 
 
                                                           
collection  of  fees  by  PSPs  for  payment  services,  including  IPs-based  PoI  solutions.  In 
Belgium, a law has been proposed to make the provision of a service ensuring a check 
between the name of the beneficiary and the IBAN of the beneficiary mandatory for all 
PSPs,  and  laying  out  the  main  design  features  of  a  solution91.  In  France,  specific 
provisions  prescribe  the  procedure  applicable  to  PSPs  in  the  context  of  sanctions 
screening of payment transactions92. It cannot be excluded that more such initiatives will 
be  taken  by  Member  States,  raising  the  compliance  costs  for  PSPs  offering  services  in 
multiple Member States and making the execution of cross-border IPs more difficult.  

3.3 Subsidiarity: Added value of EU action 

Given  the  network  nature  of  the  payments  industry,  only  European  level  action,  co-
ordinated  on  the  supply  and  demand  side,  can  unlock  the  full  potential  of  the  network 
benefits of IPs for EU consumers, merchants, corporate users, fintechs, banks and the EU 
economy.  The  alternative  to  an  EU-wide  approach  would  be  divergent  national 
legislation and at best a patchwork of purely domestic  IPs solutions, unable to inject  in 
the  EU  retail  payments  market  the  much  needed  increased  diversity  and  choice  of 
payment methods for both domestic and cross-border payments. Compared to individual 
action by Member States, EU intervention would also ensure a greater synchronisation of 
implementation  of  the  relevant  measures.  This  would  not  only  create  positive  overall 
network effects, but also reduce the operational costs (e.g. due to economies of scale) for 
the PSPs that already provide euro IPs and for those that would start providing them in 
compliance  with  such  EU-level  measures.  The  EU-level  action  would  also  support  the 
competitiveness of more PSPs and fintechs vis-à-vis the large incumbents. 

4  OBJECTIVES: WHAT IS TO BE ACHIEVED? 

4.1 General objective 

Under the Commission Work Programme objective of “An economy that works for the 
people”, the general objective of this initiative is to  significantly increase the uptake of 
euro IPs in the EU, in order to improve the efficiency of the retail payments market and 
unlock  their  benefits  for  EU  citizens  and  businesses.  This  would  also  contribute  to 
facilitating cross-border trade within the EU, leading to  deeper integration of the Single 
Market and Digital Single market and supporting the recovery of the European economy. 

4.2 Specific objectives 

The specific objectives of this initiative are to:  

1.  Increase the supply of euro IPs in the EU;  
2.  Address dissuasive fees for euro IPs compared to alternative payment means;  
3.  Simplify  and  enhance  the  efficiency  of  the  sanctions  screening  process  for  euro 

IPs; and 

91 Proposal of 27 October 2021, available here.  
92 Decree (arrêté) of 6 January 2021 regarding internal control measures for anti-money laundering and 
terrorism  financing,  and  regarding  asset  freezing  prohibition  to  supply  funds  or  economic  resources:  
https://www.legifrance.gouv.fr/jorf/id/JORFTEXT000042992976. 

26 

 
 
                                                           
4.  Increase payer confidence in euro IPs as regards risk of fraud and errors. 

5  WHAT ARE THE AVAILABLE POLICY OPTIONS? 

5.1. What is the baseline from which options are assessed? 

Under  the  baseline,  the  EU  would  not  develop  any  new  regulatory  or  non-regulatory 
action  to  increase  the  uptake  of  euro  IPs.  The  provision  of  IPs  in  euro  would  remain 
voluntary for PSPs, which would also have full discretion in terms of pricing of euro IPs. 
There  would  be  no  EU  harmonised  rules  laying  out  the  process  of  sanctions  screening 
with  respect  to  euro  IPs  and  there  would  be  no  measures  to  address  payers’  concerns 
about security of IPs.  

Given that Member States are  expecting EU action in  these  areas, inaction at  EU level 
could prompt measures to be taken at national level.  However, uncoordinated measures 
would  lead  to  inconsistent  approaches  to  retail  payments  and  unfinished  Single  Euro 
Payments  Area  integration  project  and,  more  broadly,  a  fragmented  Single  Market.  In 
any  case,  such  uncoordinated  approach  would  not  increase  the  uptake  of  cross-border 
IPs.  Also,  the  PoI  payment  market  would  remain  concentrated,  especially  for  cross-
border  transactions  and  efficiency  gains  from  the  wider  use  of  IPs  would  not  be  fully 
exploited. Many problem consequences described in section 2.2 would not be tackled. 

Regarding supply of euro IPs, based on recent evolution of the number of PSPs able to 
send and receive euro IPs, full coverage of all PSPs offering euro regular credit transfers 
would be attained in about 14 years, even if accompanied by ‘soft’ measures undertaken 
by EU institutions to promote the uptake (as they have proven to be ineffective with one 
third of PSPs) 93. Varying speed of progress can be expected within Member States, with 
those with only a handful of PSPs adhering today being more likely to lag behind (given 
that  some  PSPs  consider  that  joining  the  scheme  makes  sense  only  if  a  sufficient 
domestic level of uptake of IPs is already ensured).  

New  provision  of  IPs  by  PSPs  would  also  not  be  synchronised.  As  a  result,  PSPs  that 
already offer IPs would continue to incur various costs arising from the inability of other 
PSPs to receive/send IPs, such as costs linked to liquidity management (given that it is 
possible that more outgoing transfers would leave a given PSP instantly while a share of 
the incoming funds would continue to arrive with a delay of at least one business day). In 
view  of  the  network  nature  of  the  service,  for  them  it  would  also  be  more  difficult  to 
quickly  grow  the  volume  of  IPs  in  order  to  realise  positive  network  effects  and 
economies of scale.  

Regarding fees, dynamics in the level of fees would be entirely market-driven. However, 
it  is  unlikely  that  a  significant  reduction  in  transaction  fees  for  IPs  would  be 
implemented/pursued by PSPs themselves given that: (i) a significant share of PSPs (in 
certain Member States) tend to position IPs as a ‘premium service’, setting a transaction 

93 For instance, the concluding statement of November 2019 of EFIP called on all relevant stakeholders to 
“ensure pan-European reach of instant payments as soon as possible, and at the very latest in 2020” (EFIP 
- statement from the 2nd meeting (europa.eu)). See also Section 7.3. 

27 

 
 
                                                           
fee  at  a  considerable  premium  to  a  fee  for  regular  credit  transfers,  and  (ii)  fees  are 
considered as a stable source of revenues for PSPs.  

Given the high sensitivity of consumers, regardless of their actual payment preferences, 
to the fees of substitute payment means, it is unlikely that there would be any significant 
increase of uptake of euro IPs, either in the form of online account-to-account transfers or 
at  PoI,  if  the  premium  pricing  of  euro  IPs  by  some  PSPs  is  not  addressed.  In  addition, 
transaction fees for IPs greater than transaction fees for alternative payment means (such 
as  regular  credit  transfers),  would  hinder  the  development  and  competitiveness  of  IP-
based  PoI  solutions  offered  by  third  party  providers  who  would  be  unlikely  to  cover 
themselves  the  disproportionate  transaction  fees  for  IPs  charged  by  PSPs.  This  would 
make  these  solutions  too  expensive  for  the  end  users  (compared  to  other  PoI  payment 
means, such as cash or cards).  

Regarding  sanctions  screening,  according  to  PSPs,  through  their  own  efforts  (e.g.  by 
improving their automated screening tools or data quality), they could reduce the number 
of ‘false positive’ hits for cross-border and domestic IPs only to a limited extent. Those 
efforts would not be sufficient to lower the proportion of rejected cross-border IPs to the 
rate  of  rejections  experienced  by  PSPs  for  (i)  domestic  and  cross-border  regular  credit 
transfers  (since  in  this  case  PSPs  have  more  time  for  a  follow  up  investigation,  as 
crediting of the funds to the account of the beneficiary must be completed at the latest on 
the  following  business  day),  or  (ii)  domestic  IPs  of  those  PSPs  that  comply  with  their 
sanctions screening obligations by regularly and frequently updating their customer lists 
(in lieu of transaction-based screening).  

Moreover, the potential use of IPs at PoI would also be severely undermined as it would 
not be acceptable for consumers and merchants to have such a high rate of rejections in 
shops and in e-commerce. This would reduce the attractiveness of IPs at PoI, given that 
the  competing  payment  options  (cards  and  cash)  would  not  suffer  from  the  same 
problem.  

Regarding payer confidence in  the security of  IPs, the issues described  in section 2.3.4 
and  Annex  5  would  persist,  affecting  consumers’  and  corporates’  trust  and  demand  for 
euro IPs. Pre-payment fraud, such as social engineering scams  and other APP fraud, as 
well  as  consequences  of  errors  made  by  payers,  would  continue  to  be  unaddressed 
through  the  existing  EU  payments  legislation.  With  the  increased  use  of  e-commerce94 
and  digitization  of  all  kinds  of  personal  and  organizational  activities  it  is  likely  that 
payers would become even greater targets of such scams. 
In addition, with  the upcoming initiatives of  several  national  communities of PSPs95 or 
public  authorities  in  some  Member  States,  to  offer  or  require  some  kind  of  an  IBAN-
name verification service for domestic euro IPs only, and designed in diverging fashions, 
the  attention  of  fraudsters  would  likely  shift  to  cross-border  credit  transfers,  where  the 
combined  rate  for  all  types  of  fraud  is  already  20  times  higher  than  that  of  purely 
domestic transfers. Postponing the introduction of additional payer protection for cross-
border  IPs  could  imply  two  rounds  of  investments  for  PSPs  (first  for  domestic 

94 In the EU alone, 15 million new e-shoppers appeared in 2020 vs 2019. Source: Europe 2020 Ecommerce 
Region Report, Ecommerce Europe and EuroCommerce, July 2020. 
95 E.g. in Belgium: see this press release from the Belgian Finance Association. 

28 

 
 
                                                           
transactions  on  the  basis  of  non-harmonised  local  initiatives,  and  again  for  ensuring 
coverage of cross-border transactions).  

5.2. Description of the policy options  

5.2.1.  Increase the supply of IPs in the EU 

The following policy options are considered: 

Option 1.1. Legal obligation for PSPs to be able to receive euro IPs 

This option would make it mandatory for PSPs offering euro regular credit transfers to be 
able  to  receive  euro  IPs  but  would  leave  it  to  them  to  voluntarily  offer  their  users  a 
service of sending a euro IP.  

Option 1.2. Legal obligation to offer sending and receiving of euro IPs for PSPs offering 
the service of regular euro credit transfers to users (with targeted exclusions)  

Wide availability of  IPs  would be ensured through a legal  obligation imposed on PSPs 
that offer regular credit transfers in euro to offer both the sending and receiving of IPs in 
euro. 

Proportionality  would  be  embedded  in  this  option  by  ensuring  that  only  PSPs  that 
execute euro regular credit transfers for their clients (consumers and businesses), i.e. as a 
payment service offered to users and not for own account, are covered by this obligation. 
Moreover, the option would not impose a mandatory offering of euro IPs on certain types 
of  PSPs  (payment  institutions  and  electronic  money  institutions),  given  that  under  the 
current  EU  law96,  they  have  no  right  to  participate  in  certain  key  payment  systems 
(including systems settling IPs, such as TIPS) and have to rely on banks to get (indirect) 
access to such systems.  

This option would apply to PSPs in both Euro area and outside for the following reasons:  

(i) 
(ii) 

(iii) 

ensuring coherence with the present scope of SEPA (see section 7.3); 
the  need  to  provide  the  same  right  of  receiving  and  sending  cross-border  IPs  to 
citizens regardless of their place of residence in the EU, which is possible only by 
means of cross-border euro IPs (see Annex 9), and 
the  share of euro cross-border  credit transfers sent  from  non-Euro  area  Member 
States in the overall volume of euro cross-border credit transfers within the EU is 
material (around a quarter97).  

96 The Settlement  Finality Directive  (Directive 98/26/EC) excludes  such institutions  from participation in 
settlement systems which are "designated" under that directive, including many EU settlement systems 
which  are  widely  used  for  credit  transfers  and  IPs.  As  part  of  a  review  of  that  Directive,  a  public 
consultation  took  place  during  the  first  half  of  2021,  including  a  question  on  this  exclusion.  If  this 
exclusion in SFD were to be removed in future, then the corresponding exclusion in this initiative on IPs 
could be reconsidered during the first review of this initiative.  
97 Source: ECB, Commission services calculation. 

29 

 
 
                                                           
This option would entail transitional provisions to ensure that the obligation is introduced 
gradually, initially for PSPs within the Euro area, followed by those outside the Euro area 
at a later stage. 

The obligation to be able to receive IPs would need to be complied with by PSPs within a 
specific deadline, while the obligation to be able to send IPs would have to be complied 
with by PSPs within a longer deadline (e.g. with several months more time). This would 
allow  PSPs  to  stage  their  efforts,  since  being  able  to  only  receive  IPs  is  linked  to  a 
reduced implementation burden (e.g. there is no need to update online banking interfaces 
and channels  in  order to only  receive  IPs, the same  IT resources  can be  used to  ensure 
consequent stages of implementation, etc.). 

Option  1.3.  Legal  obligation  for  all  PSPs  carrying  out  euro  regular  credit  transfers  to 
carry out euro IPs  

Universal availability of IPs would be ensured through a legal obligation imposed on all 
PSPs that carry out regular credit transfers in euro to carry out their instant version. This 
option would entail no carve-out of PSPs as described in option 1.2, and would include 
all PSPs that offer regular credit transfers in euro as a service to payment services users 
as well as those that carry out such transfers exclusively on own account98. This option 
would  cover  both  sending  and  receiving  of  euro  IPs.  It  would  still  include  staggered 
compliance  dates  (i)  for  being  able  to  receive  and  send  euro  IPs  or  (ii)  based  on  the 
currency area of the Member State where PSPs offer their IP services. 

Under options 1.2. and 1.3., entities subject to the obligation to offer IPs would be free to 
decide whether they wish to continue to offer or carry out regular euro credit transfers in 
parallel.  

Option 1.4. Mandatory migration for all PSPs from regular euro credit transfers to euro 
IPs 

This  option  would  require  that  as  of  a  certain  date,  all  euro  credit  transfers  must  be 
carried  out  as  instant,  i.e.,  that  PSP  clients  would  no  longer  have  the  option  to  initiate 
regular  credit  transfers.  Euro  IPs  would  legally  replace  regular  transfers,  and  the  SCT 
Scheme of the EPC would be ended and entirely replaced by SCT Inst Scheme.  

5.2.2.  Address  dissuasive  fees  for  euro  IPs  compared  to  alternative  payment 

means 

The following policy options are considered: 

Option 2.1: Obligation for PSPs to apply fees for IPs in euro that are not higher than fees 
for regular credit transfers in euro 

Under  this  option,  euro  IPs  could  not  cost  the  user  more  than  euro  regular  credit 
transfers.  This  means  that  where,  for  example,  PSPs  would  choose  not  to  charge 
customers a per-transaction fee for a euro regular credit transfer, they  could  not  charge 

98 See Annex 7 for details on the characteristics of PSPs carrying out regular and instant credit transfers in 
euro. 

30 

 
 
                                                           
for a euro IP either. PSPs that do apply transaction fees for regular credit transfers in euro 
would  be  obliged  not  to  charge  higher  fees  for  euro  IPs.  PSPs  would  maintain  full 
discretion as to their pricing structure and levels, as long as the fees for IPs that a given 
PSP charges are not higher than the fees that the same PSP charges for euro regular credit 
transfers. 

The  obligation  would  apply  to  fees  applicable  to  both  sending  and  receiving  euro  IPs. 
The  date  of  application  of  this  obligation  would  be  consistent  with  the  dates  of 
application of the obligations for PSPs to offer euro IPs in the Euro area and outside the 
Euro area respectively. 

In non-Euro area Member States, PSPs which currently charge more or the same for euro 
cross-border regular credit transfers than for corresponding domestic IPs denominated in 
the national currency, this option will have no impact on the level of fees for cross-border 
euro IPs, because such fees are already regulated under CBPR and must be the same as 
the fees for corresponding  domestic non-euro  IPs. Only  if a PSP located in a non-Euro 
area  Member  State  currently  charges  more  for  domestic  non-euro  IPs  than  for  cross-
border  regular  euro  credit  transfers,  would  they  be  required  to  lower  the  fee  for  cross-
border euro IPs at least to the level of the fee for cross-border regular euro credit transfer. 
99.  

Option 2.2. Obligation for PSPs to offer euro IPs free of charge 

Under this option, PSPs would be prohibited from applying fees per euro IP transaction, 
regardless of transaction fees that PSPs apply for euro regular credit transfers.  

The  obligation  would  apply  to  fees  applicable  to  both  sending  and  receiving  euro  IPs. 
The  date  of  application  of  this  obligation  would  be  consistent  with  the  dates  of 
application of the obligations for PSPs to offer euro IPs. 

As regards cross-border euro IPs carried out by a PSP in a non-Euro area Member State, 
the same impacts and approach with respect to CBPR as in the case of Option 2.1. would 
be applicable. 

5.2.3.  Simplify and enhance the efficiency of the sanctions screening process for 

euro IPs 

The following policy options are considered: 

Option 3.1: Eliminate overlaps in transaction-based screening   

This option would consist in adjusting and harmonizing the way in which the transaction-
based  screening  is  to  be  carried  out  to  remove  inefficiencies  and  duplications.  The 

99 Article 3.1 of CBPR provides that  “Charges levied by a payment service provider on a payment service 
user in respect of cross-border payments in euro shall be the same as the charges levied by that payment 
service  provider  for  corresponding  national  payments  of  the  same  value  in  the  national  currency  of  the 
Member State in which the payment service provider of the payment service user is located”. This means 
that if a domestic IP in national currency costs (the equivalent of) EUR 5, a cross-border euro IP must cost 
exactly the same, i.e. EUR 5, even if the cross-border regular euro credit transfer costs less (e.g. EUR 2). In 
such  cases,  the  requirement  of  the  present  initiative  would  apply  instead  of  that  under  CBPR,  which 
would mean that such cross-border euro IP must cost no more than EUR 2.  

31 

 
 
                                                           
current duplication of screening of the same elements of a given transaction by a payer 
PSP and a payee PSP would  be removed, with  the tasks (elements  to  be screened, lists 
against  which  the  screening  to  be  performed,  etc.)  being  clearly  allocated  between  the 
two of them. For EU sanctions lists, the transaction screening of both a payer and a payee 
would be carried out only by the payer PSP before a payment is sent to the payee PSP.   

Option  3.2:  Replace  transaction-based  screening  with  regular  updates  by  PSPs  of  own 
customers lists against applicable EU sanctions lists (‘SEPA domestic’ approach) 

This option would consist in each PSP which offers IPs (whether under a requirement to 
do so or voluntarily) being responsible for screening its own clients both at the moment 
when  a  payment  account  is  opened  and  via  regular  and  timely  updates  of  customer 
records vis-à-vis the latest applicable EU sanctions lists. In doing so, the payer’s PSP and 
the payee’s PSP will be able to clarify which payment accounts truly belong to persons 
and  entities  that  are  designated  on  EU  sanctions  lists  and  which  ones  belong  to  clients 
whose  name  is  only  very  similar  to  the  name  of  sanctioned  persons  or  entities  (so  that 
such  clients  are  able  to  initiate  IPs  and  have  access  to  funds  received,  with  no  need  to 
carry out transaction-based screening).  

Mutual trust of PSPs and national authorities in the ‘SEPA domestic’ approach and in its 
uniform and effective application would be aided by a possibility to impose a penalty on 
a  PSP  that  fails  to  comply  with  its  obligations  underlying  such  harmonised  screening 
process. 

5.2.4.  Increase payer confidence in euro IPs as regards risk of fraud and errors 

The following policy options are considered: 

Option  4.1:  An  obligation  for  PSPs  to  ensure  the  availability  of  a  service  allowing  a 
payer to have an immediate check of the ‘match’ between the IBAN and the name of a 
payee, before confirming an IP 

This  option  would  imply  an  EU-wide  obligation  for  PSPs  offering  euro  IPs  (whether 
under a requirement to do so or voluntarily) to provide a service to payers, ensuring that 
before they authorise the payment, they are informed of the degree of a match between 
the name and IBAN of the payee as provided by the payer. The payer would maintain the 
final control and, based on the feedback received from the PSP, would decide whether to 
proceed with the IP. The liability regime of PSPs under PSD2 would remain unchanged. 
The  service  would  be  required  in  respect  of  both  domestic  and  cross-border  euro  IPs. 
PSPs would be free – but not required – to offer the same service with regard to regular 
credit  transfers,  which  are  targeted  by  the  same  type  of  pre-payment  fraud  and  can  be 
affected by errors made by the payer in the same way as IPs. 

Option  4.2:  Grant  payers the right  to  ask for a refund under certain  circumstances (e.g. 
where a payer can prove that there was a pre-payment fraud or a mistake) 

This option would consist in granting payers a right to obtain a refund of an authorised 
and  executed  euro  IP  within  a  certain  period  of  time.  This  right  would  apply  where  a 
payer can prove that their intention was to send the payment to a different payee (e.g. by 
providing  a  copy  of  the  invoice  or  evidence  of  a  contractual  agreement  with  the  payee 
from which the payment obligation derived).  

32 

 
 
Option 4.3: An obligation for the payee’s PSP to temporarily ‘freeze’ funds credited  to 
the payee’s account 

This option would consist in crediting the funds received through a euro IP to the account 
of the payee within maximum 10 seconds, but making them available for spending by the 
payee only after a certain period of time (e.g. 1-2 days). This would allow the payer some 
limited time to realise the occurrence of a potential error or pre-payment fraud, and could 
facilitate a returning of these funds to the payer by the PSP of the payee. 

5.2.5.  Options discarded at an early stage 

Option 1.1 (Legal obligation for PSPs to be able to receive euro IPs) would only partially 
respond  to  the  problem  driver  1  of  insufficient  incentives  for  PSPs  to  offer  euro  IPs 
(market  failure).  PSPs  which  have  not  so  far  decided  to  offer  euro  IPs  on  a  voluntary 
basis are likely to limit their euro IP offering to the bare legal minimum and refrain from 
offering  the  service  of  sending  IPs,  given  that  investments  required  to  offer  sending  of 
IPs represent a material, often larger100, share of the total investment costs needed to be 
able to offer euro IPs. Some of those PSPs may consider offering the sending of euro IPs 
but many would have a preference to wait for higher volumes of euro IPs to be achieved 
in the network. Requiring that all PSPs are only able to receive euro IPs would generate 
only limited increase of euro IP volumes since a significant share of users, holding more 
than 70 million payment accounts in the Euro area alone (see section 2.3.1), would still 
not be able to send a euro IP. As a result, this would significantly impair the achievement 
of full network benefits. Due to the lower overall uptake of euro IPs, this option would 
also be ineffective in promoting the emergence of IP-based PoI payment solutions such 
as mobile apps.  

As regards liquidity management within PSPs,  in  the case of an obligation for PSPs to 
both  send  and  receive  payments  instantly,  the  impact  on  their  liquidity  needs  and 
management would be rather symmetric given that each PSP acts both as a payer’s PSP 
and  a  payee’s  PSP  (and  funds  would  simply  move  quicker  –  from  the  moment  of  the 
payment  order  initiation  -  between  PSPs  without  materially  impacting  their  liquidity 
position). Similarly, all PSPs would be impacted rather evenly in terms of foregoing the 
revenues arising from the float.  Under option 1.1, however, these impacts would become 
rather asymmetric and would create significant liquidity disadvantages for PSPs offering 
the sending and receiving of euro IPs, compared to PSPs only receiving euro IPs.  Only 
the PSPs offering both sending and receiving euro IPs would face higher liquidity needs 
in their settlement accounts with payment systems and forego any payment float–related 
revenue101, while the only receiving PSPs could continue to benefit from the float, which 
in turn may create disincentives for them to offer the sending of IPs on a voluntary basis 
(see Annex 8). On grounds of the above considerations, this option was discarded at an 
early stage. 

Option 1.4 (Mandatory migration for all PSPs from regular euro credit transfers to euro 
IPs)  would  fully  achieve  the  general  objective  of  significantly  increasing  the  uptake  of 
euro IPs, as it would not only require all PSPs that carry out regular euro credit transfers 

100 Based on PSP responses to targeted questionnaires and bilateral discussions with PSPs. 
101 See Annex 8. 

33 

 
 
                                                           
to carry out euro IPs (as in option 1.3), but it would automatically absorb all the current 
volume of regular credit transfers in euro. However, it was discarded at an early stage as 
disproportionate.  

From  the  user  perspective,  rather  than  providing  incentives  for  uptake  of  IPs  through 
removing  dissuasive  fees  and  alleviating  concerns  over  fraud  or  errors,  it  would 
effectively force consumers and businesses to use IPs in all circumstances. From the PSP 
perspective,  the  prohibition  of  processing  of  any  euro  credit  transfers  as  non-instant 
could cause undesirable consequences arising from the lack of capacity and preparedness 
by the industry to ensure an uninterrupted provision of euro IPs in the current volumes of 
SEPA  credit  transfers  (22.5  billion  transactions  in  2020)  and  to  prudently  manage  the 
associated  risks  which,  in  turn,  may  have  negative  spill-over  effects  for  the  stability  of 
the EU payment and financial system. While this concern could be addressed through a 
sufficiently  long  transitional  period,  it  would  delay  the  application  of  the  obligation  to 
offer  euro  IPs  in  the  first  place,  ultimately  rendering  the  effectiveness  of  this  option 
lower than that of options 1.2 and 1.3.  

Moreover,  many  stakeholders  (users,  PSPs,  authorities)  consider  that  regular  credit 
transfers should be phased out by the industry itself based on the evolution of customer 
demand  and,  also,  in  view  of  the  pace  of  uptake  of  IPs  globally  (as  the  provision  of 
international  or  non-SEPA  regular  credit  transfers  would  have  to  be  continually 
supported by EU PSPs).  

Option 4.3. (An obligation for payee’s PSP to temporarily ‘freeze’ funds credited to the 
payee’s  account)  would  have  several  serious  intrinsic  shortcomings  and  therefore  was 
discarded  at  an  early  stage.  First,  it  would  be  incompatible  with  the  nature  of  credit 
transfers, including instant ones, as a credit transfer, once authorised, cannot normally be 
revoked102. This is a matter of stability of and trust in financial transactions.  

Second, freezing of the funds for a short period of time would have a limited benefit in 
terms of protecting the payer from losses since, based on feedback received from a PSP, 
the average time to discover that a transaction was made to a fraudster can range between 
2 and 6 weeks.  

Third, the immediate availability of the funds to the payees is one of the key features of 
IPs  that  makes  them  attractive  to  users.  As  mentioned  in  Section  2.2.1,  all  consumer 
organisations and a majority (88%) of individual consumers who responded to the open 
public  consultation  deemed  it  important  that  the  funds  reach  the  payee  immediately. 
Importantly,  this  feature  of  IPs  also  enables  the  payees  to  realise  important  associated 
economic benefits of having funds immediately available for investment or consumption 
(see Annex 8). Removing this feature by way of requiring a freezing of the funds on the 
payee’s account (even if only for a day or two) would make IPs effectively the same as 
regular  credit  transfers  and  eliminate  their  key  distinctive  advantage  for  users.  The  full 
certainty  of  having  been  paid  (as  the  funds  arrive  on  the  payee’s  account  in  a  few 
seconds) is as effective as the payment guarantee offered by cards schemes for a fee and, 
therefore, is key for a successful and widespread adoption of IP-based payments at PoI. 
The feedback received from across the industry, banks and fintechs alike, has been that 

102 Article 80, Recitals 78 and 79 PSD2 

34 

 
 
                                                           
any  payer protection measure must not  jeopardise the essence of  IPs  which is  payment 
certainty and finality. 

6  WHAT ARE THE IMPACTS OF THE POLICY OPTIONS AND HOW THEY COMPARE? 

6.1 Increase the supply of IPs by PSPs  

Option  1.2  (Legal  obligation  to  offer  sending  and  receiving  of  IPs  in  euro  for  PSPs 
offering  the  service  of  regular  euro  credit  transfers  to  users  (with  targeted  exclusions)  
would  ensure  that  the  vast  majority  of  PSPs  that  offer  the  service  of  sending  and 
receiving  regular  credit  transfers  in  euro  would  be  added  in  a  timely  and  synchronised 
manner to  the network of PSPs offering euro  IPs.  This  option would ensure that  IPs in 
euro,  both  domestic  and  cross-border,  become  a  widely  available  method  of  payment 
across the EU much sooner than under the baseline. This option would entail a number of 
features  aimed  to  ensure  that  the  obligations  are  proportionate  and  are  phased  in 
gradually.  

Proportionality  would  be  embedded  by  not  covering  by  the  abovementioned  obligation 
the following two groups of PSPs: 

(i) 

PSPs  that  do  not  offer  regular  credit  transfers  as  a  payment  service  to  their 
customers  (i.e.,  consumers  and  corporates),  but  carry  out  such  transfers 
exclusively on own account. Examples of such PSPs may include certain clearing 
and  custody  institutions,  investment  or  securities  firms  or  bank  holding 
companies103.  Their  exemption  would  be  contingent  on  them  not  providing 
regular credit transfers, as a payment service, to customers.  

(ii)  Electronic money institutions and payment institutions would be excluded due to 
their  current  ineligibility  to  become  participants  (directly  or  indirectly)  of 
payment  systems  designated  under  the  Settlement  Finality  Directive  (SFD)104. 
These  PSPs  need  to  secure  their  access  to  the  payment  system  via  another 
participant (such as for example a credit institution), which makes offering of IP 
services  for  them  more  complex  process-wise  and  potentially  more  costly, 
compared to other PSPs that are credit institutions and qualify as participants of 
designated payment systems under the SFD105. 

These  two  types  of  exemptions,  in  total,  would  apply  to  approximately  300  PSPs  that 
today carry out regular credit transfers in euro106, leaving 800-900 PSPs that would fall 
under the obligation (about a quarter of PSPs carrying out credit transfers in euro). 

103 See also Annex 7 
104 Directive 98/26/EC on settlement finality in payment and securities settlement systems. 
105  Inclusion  of  e-money  institutions  and  payment  institutions  in  the  scope  of  this  obligation  could  be 
revisited if their eligibility as participants of designated payment systems were to change. 
106  Based  on  (i)  the  assessment  of  the  trade  description  (provided  in  ORBIS  database)  of  PSPs  that 
currently  do  not  adhere  to  the  SCT  Inst  Scheme  and  (ii)  identification  of  payment  institutions  and  e-
money  institutions  on  the  basis  of  the  EBA  register  (https://www.eba.europa.eu/risk-analysis-and-
data/register-payment-electronic-money-institutions-under-PSD2).  

35 

 
 
 
                                                           
The  total  one-off  compliance  costs  are  reported  by  PSPs  to  fall  in  the  range  of  EUR 
10 000 to EUR 1.3 million per PSP. This cost would vary in relation to the size of a PSP, 
i.e.,  it  would  be  higher  for  larger  PSPs  and  lower  for  smaller  PSPs,  with  the  overall 
estimated cost for the industry in the range of EUR 36 million and EUR 477 million107. 

Box 2 

Actions necessary for a PSP to be able to send and receive euro IPs 

A.  Join  SCT  Inst.  Scheme  (i.e.,  ensure  internal  compliance  with  scheme 

requirements).  

B.  Integrate  IP  module  in  internal  IT  system,  adjust  online  and  mobile  banking 
interfaces  and  APIs  in  order  to,  e.g.,  (i)  receive  euro  IPs,  (ii)  provide  users 
with  means  of  submitting  instructions  for  sending  euro  IPs;  (iii)  provide 
immediate  feedback  on  screen  if  the  payment  failed  or  was  rejected  by  the 
beneficiary bank.  

C.  Update terms and conditions and other legal documentation (e.g. the notion of 

a banking business day would not be applicable). 

D.  Connect  to  a  relevant  Clearing  and  Settlement  Mechanism  (CSM)  in  order  to 

fulfil the instant settlement obligations.  

E.  Set up 24/7/365 operability with IT support capabilities (e.g. customer support 

based on artificial intelligence, such as chatbots). 

Moreover, in Member States outside the Euro area credit transfers in euro are much less 
common than in the local currency108 and the volume of euro IPs is also expected to be 
lower. Thus, the potential revenue for PSPs outside the Euro area is expected to be lower  
compared  to  the  Euro  area.  Nevertheless,  a  number  of  market  factors  and  deliberate 
proportionality measures are expected to provide a counter-balancing mitigatory effect. 

Firstly, the obligation would be introduced gradually: firstly, for PSPs in the Euro area, 
and at a later stage109, for those outside the Euro area. Such a later deadline for non-Euro 
area  PSPs  will  enable  them  to  optimise  their  implementation  efforts  and  resources  by 

107 The quoted range reflects one-off implementation costs incurred in order to be able to provide IPs as 
reported  by  PSPs  whose  size,  in  terms  of  total  assets,  is  comparable  to  the  size  of  PSPs  that  would  be 
captured by this obligation. The reported implementation costs were as follows: EUR 10 000 (a PSP with 
total assets of 240 million), EUR 25 000 (a PSP with total assets of 67 million), EUR 55 000 (a PSP with total 
assets of EUR 14 million), EUR 143 000 (a PSP with total assets of EUR 138 million), EUR 100 000 (a PSP 
with total assets of EUR 5 billion), EUR 343 000 (a PSP with total assets of EUR 59 billion), EUR 1 million (a 
PSP with total assets of EUR 4 billion) and EUR 1.3 million (a PSP with total assets of EUR 93 billion). On 
this  basis,  the  overall  costs  for  PSPs  were  estimated  for  2  buckets  of  PSPs  depending  on  their  balance 
sheet size: PSPs whose assets are below EUR 1 billion (255) and PSPs whose assets are greater than EUR 1 
billion (311), using ORBIS database.  PSPs that did not have their assets identified (258), were assumed to 
have total assets below EUR 1 billion. For  the lower bucket, the range of one-off compliance costs was 
EUR 10 000 to EUR 143 000, while for the upper bucket the range was EUR 100 000 to EUR 1.3 million. On 
this basis, total one-off compliance costs are estimated to fall in the range of EUR 36 million to EUR 477 
million.  
108  For  instance,  in  2020,  non  SEPA  credit  transfers  (i.e.  in  EU  currencies  other  than  euro)  represented 
98.8%  of  all  credit  transfers  in  Bulgaria,  98.7%  in  Czechia,  99.6%  in  Denmark,  99%  in  Croatia,  99.1%  in 
Hungary and 86.6% in Romania (ECB data).  
109  In  line  with  the  approach  in  the  SEPA  regulation  with  respect  to  regular  credit  transfers  and  direct 
debits, the adherence deadline may be delayed by 24 months compared to the deadline applicable  for 
the Euro area PSPs. 

36 

 
 
 
                                                           
spreading  them  over  a  much  longer  period  of  time.  The  later  implementation  deadline 
would  also  further  mitigate  any  negative  or  disproportionate  effect  on  non-Euro  area 
PSPs by virtue of the fact that greater euro IP network benefits would be set in motion by 
then  (as  a  greater  volume  of  euro  IPs  is  expected  to  be  attained  due  to  earlier 
implementation deadline applicable to Eurozone IPs).  

Secondly,  proportionate  impact  of  this  option  on  non-Euro  area  Member  States  also  is 
based on the estimation that 13% of all PSPs offering payment services in Member States 
outside the Euro area would fall in the scope of this policy option (see Annex 7). This is 
because (i) a large majority of them are not carrying out regular credit transfers in euro 
and  thus  would  not  be  covered  by  the  obligation,  while  others  either  (ii)  already  offer 
euro  IPs  on  a  voluntary  basis,  or  (iii)  carry  out  regular  credit  transfers  in  euro  only  on 
own  account,  or  (iii)  are  e-money  or  payment  institutions  excluded  from  the 
obligation.110  

Thirdly,  two  Member  States  (Bulgaria  and  Croatia)  will  have  adopted  the  euro  by  the 
time this initiative will apply;  

And  finally,  domestic  IP  systems  in  national  currencies  exist  in  all  non-Euro  Member 
States. For PSPs already offering IPs in national currencies, investments in these systems 
can  be  leveraged  for  providing  euro  IPs,  thus  reducing  the  initial  adjustment  costs,  in 
view of the fact that the domestic approaches are often heavily based on the rules of the 
SCT  Inst.  Scheme,  and  in  some  of  those  Member  States  the  same  settlement  system 
would be used for IPs in euro and national currencies (e.g., Sweden and Denmark intend 
to use TIPS). Similar synergetic effects are expected with respect to ongoing costs, such 
as providing 24/7/365 customer support for both types of IPs. Thus, actions listed in Box 
2 above would be to a large extent already covered:  

A  Largely  covered  in  6  non-Euro  area  Member  States  where  national  schemes 
are    based  on  the  SCT  Inst.  Scheme  (Bulgaria,  Croatia,  Denmark,  Hungary, 
Romania, Sweden) 

B  Already  covered  in  all  non-Euro  area  Member  States  for  IPs  in  national 

currency 

C  Largely  covered  in  all  non-Euro  area  Member  States  for  IPs  in  national 

currency 

D  Already covered for 4 non-Euro area Member States: two using TIPS for non-
euro  IPs  (Denmark,  Sweden),  two  which  will  join  the  Euro  area  (Bulgaria, 
Croatia)  

E  Already  covered  in  all  non-Euro  area  Member  States  for  IPs  in  national 

currency 

See  Annex  6  for  detailed  description  of  IP  systems  in  national  currencies  in  non-Euro 
area Member States. 

In addition, the staging of the obligations for all PSPs covered by this option (within and 
outside  the  Euro  area),  by  requiring  PSPs  first  to  be  able  to  receive  euro  IPs  and  only 
from  a  later  date  to  be  able  to  also  send  them,  would  allow  PSPs  to  spread  the 

110 According to the ECB, at the end of 2020, there were 1 333 institutions in eight non-Euro area Member 
States that provided payment services. Of them, only some 170 (13%) are expected to fall in the scope of 
option 1.2, since 85% of them did not carry out regular credit transfers in euro, while additional 2% are 
estimated to fall in one of the categories (ii)-(iv). 

37 

 
 
                                                           
implementation costs of the project over time, which could be of particular usefulness for 
smaller PSPs that do not have extensive internal IT resources111. At the same time, such 
sequencing  would  still  ensure  a  greater  reachability  of  payees  across  the  EU  from  the 
beginning  of  the  intervention  and  enable  PSPs  that  already  offer  IPs,  to  both  achieve 
greater customer satisfaction and benefit themselves from the rising volumes of IPs due 
to expanding network effects. 

The synchronised addition of the majority of the currently non-adhering PSPs to the SCT 
Inst. Scheme, and any resulting increase in the volume of  euro  IPs, would decrease the 
average transaction cost of an IP at a PSP level due to economies of scale. It  would also 
make it easier for the PSPs that already offer euro IPs to manage their (intraday) liquidity 
risk,  as  the  overall  speed  with  which  funds  flow  out  and  flow  in  a  PSP  would  become 
more balanced and predictable. The impact on the amount of liquidity that PSPs would 
have to hold in their settlement account in the relevant payment systems is not expected 
to be material. In this regard, a study conducted by the Bank of Finland112 looked into the 
additional liquidity that PSPs would have to hold under the scenario of a full migration 
from regular credit transfers to  IPs (i.e., 100% uptake of  IPs). The study estimated that 
the  aggregate  increase  in  daily  liquidity  needs  for  Finnish  PSPs  in  their  settlement 
accounts  would  be  small,  i.e.,  on  average  2.7%.  Under  the  IP  uptake  assumptions 
considered  by  this  impact  assessment  (50%-70%),  an  accordingly  lower  increase  of 
liquidity  needs  in  settlement  accounts  can  be  reasonably  assumed.  The  study  also 
observed that the timing for a transition to IPs might be favourable as the high liquidity 
currently  held  by  PSPs  could  accommodate  any  temporary  increases  in  liquidity  needs 
(for more implications of a higher uptake of IPs on PSPs’ liquidity and its management 
please see Annex 8).  

The PSPs would forego any current revenues generated by placing the funds arising from 
the payment float in short-term investments. It is estimated that at the industry level such 
revenues  would  represent  less  than  0.3%  of  the  total  annual  net  operating  income  (see 
Annex  8).  However,  this  is  not  seen  as  an  unintended  consequence,  as  from  the 
regulation point of view the payment float is considered as an inefficiency in payments to 
the  detriment  of  payment  services  users  (to  whom  the  related  economic  benefit,  as  a 
result  of  this  policy  option,  would  be  redistributed),  rather  than  a  deliberate  policy 
targeted  to  aid  PSPs’  profitability.  Moreover,  the  possibility  for  PSPs  to  generate 
earnings from the payment float creates disincentives for PSPs to innovate and improve 
the efficiency of payments. 

The extent of the increase of the volumes of euro IPs would be even greater if problems 
identified  on  the  demand  side,  such  as  dissuasive  fees  of  euro  IPs  and  risks  related  to 
fraud and errors, were also addressed. 

A legal obligation for PSPs to offer IPs in euro was supported by 56% of all respondents 
to  the  open  public  consultation  leading  up  to  the  Retail  Payments  Strategy  and  by  two 
thirds of respondents to the consultation on the inception impact assessment113, including 

111 Industry feedback shows that in some markets up to 50% of PSPs currently adhering to the SCT Inst. 
Scheme have taken such an implementation route. 
112 Instant payments as a new normal: Case study of liquidity impacts for the Finnish market (helsinki.fi)  
113https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12931-Instant-
payments_en.  

38 

 
 
                                                           
67% of PSPs and fintechs (albeit in a number of cases the support of the latter group was 
subject to the abovementioned features that ensure a proportionate approach). Among the 
provider  community,  the  leading  supporters  of  such  obligation  tend  to  be  PSPs  that 
already  adhere  to  the  SCT  Inst.  Scheme  and  PISPs/fintechs  for  whom  a  widespread 
reachability of IPs is key in order to develop viable and commercially successful service 
offerings  to  payment  users.  Some  PSPs  that  currently  do  not  offer  IPs  in  euro  may 
oppose such an obligation, however, the above-described proportionality features of this 
option  would  ease  their  compliance  costs  and  efforts.  At  the  same  time,  the  overall 
impact of the initiative may accelerate the achievement of the critical mass of euro IPs in 
the EU and thus fully unlock the benefits of euro IPs also for those PSPs. 

The  legal  obligation  for  PSPs  to  offer  IPs  in  euro  is  very  strongly  supported  by  the 
payment services users, i.e., consumers, corporates and merchants, including SMEs114. In 
terms of political feasibility,  the overwhelming majority of Member  States’ experts has 
been supportive of the need to introduce an obligation to offer euro IPs, with the type of 
proportionality and transitional features contained in this option115. This policy option is 
also very much supported by the ECB.  

No  administrative  burden  (such  as  reporting  obligations  for  example)  is  expected  to 
derive from this option for the private sector. 

Option  1.3  (Legal  obligation  for  all  PSPs  carrying  out  euro  regular  credit  transfers  to 
carry out IPs in euro) would be also highly effective in achieving the specific objective 1 
aiming to increase the supply of euro IPs in the EU, as it would cover all PSPs that carry 
out  regular credit transfers in  euro, without exceptions (i.e., 1 146 PSPs as  of February 
2022). However, it would be less efficient than option 1.2, since its compliance burden 
would  be  disproportionate  for  the  types  of  PSPs  that  would  benefit  from  the 
proportionality  features  incorporated  under  the  previous  option  (approximately  300 
PSPs).  

As regards the coherence of the above options with other policies of the EU, while both 
options  1.2  and  1.3  would  be  coherent  with  the  Commission’s  agenda  of  promoting 
digital transformation of finance and the EU economy and the objective of updating the 
project for integration of internal market for euro retail payments, branded as the Single 
Euro  Payments  Area  (SEPA)  as  set  out  in  the  RPS,  option  1.3  is  deemed  not  fully 
compatible  with  the  current  treatment  of  e-money  institutions  and  payment  institutions 
under the SFD and, therefore, in relative terms, is less coherent than option 1.2. 

On the basis of this analysis, option 1.2 is selected as a preferred policy option in terms 
of achieving the specific objective 1 aiming to increase the supply of euro IPs in the EU. 

114 Instant payment can become an attractive option for SME merchants | SMEunited  
115  In  the  CEGBPI  meeting  of  30  November  2021,  the  majority  of  Member  States’  experts  agreed  with 
carving out from this obligation of PSPs depending on whether they carry out euro regular credit transfers 
as a retail payment service offered to end users (i.e., consumer and corporates). ECOFIN conclusions 22 
March 2021 [pdf (europa.eu)], inter alia, highlighted the objectives of the Commission’s Retail Payment 
Strategy which promote the widespread use of IPs. 

39 

 
 
 
 
 
                                                           
Comparison of options aimed to increase the supply of euro IPs in the EU 

Option 

Effectiveness 

Efficiency 
(cost-effectiveness) 

Coherence 

Overall 
score 

1.1 Legal obligation for 
PSPs to be able to receive 
euro IPs 
1.2 Legal obligation to offer 
sending and receiving of IPs 
in euro for PSPs offering the 
service of regular euro credit 
transfers to users (with 
targeted exclusions) 

1.3 Legal obligation for all 
PSPs carrying out euro 
regular credit transfers to 
offer IPs in euro  

1.4 Mandatory migration for 
all PSPs from regular euro 
credit transfers to euro IPs 

Rejected at an early stage (see Section 5.2.5) 

++ 
Overcomes 
network 
externalities 
issues, ensures 
wide user access 
to euro IPs 
++ 
Overcomes 
network 
externalities 
issues, ensures 
wide user access 
to IPs 

+ 
Covers only PSPs 
which offer 
payment services to 
customers and have 
direct access to 
payment systems 
- 
Inefficient as it 
includes PSPs 
carrying out 
payments only for 
own account and 
those without direct 
access to payment 
systems 

++ 

+ 

+ 
Scope based on 
SEPA Regulation 
with 1 targeted 
exclusion (PIs & 
EMIs) 

≈ 
Would require 
extension of 
scope of SEPA 
Regulation and 
changes to SFD 

Rejected at an early stage (see Section 5.2.5) 

Magnitude of impact as compared with the baseline scenario (the baseline is indicated as 0): ++ strongly positive; + 
positive; – – strongly negative; – negative; ≈ marginal / neutral; ? uncertain; n.a. not applicable. 

6.2 Address dissuasive fees for euro IPs compared to alternative payment means 

Option 2.1 (Obligation for PSPs to apply fees for euro IPs in euro that are not higher than 
fees of regular credit transfers in euro) would mean that PSPs that currently do not apply 
transaction  fees  for  regular  credit  transfers  in  euro  would  be  obliged  not  to  apply 
transaction fees  on  IPs either. Those that do apply  such fees  would need  to  ensure that 
fees for euro IPs are not higher. Therefore, this option, by design, would be considerably 
more effective than  the  baseline in  attaining the  relevant  specific  objective 2  aiming  to 
address dissuasive fees for euro IPs compared to alternative payments means.   

In view of the above-mentioned sensitivity of consumers to the level of transaction fees 
of substitute payment means, this option would ensure that euro IPs are priced in a way 
that is  reasonable  and  conducive to  promoting  a widespread  and significant  increase in 
the  uptake  of  euro  IPs  across  the  EU  and,  in  particular,  in  those  Member  States  where 
PSPs  currently  tend  to  apply  differentiated  transaction  fees  for  IPs  and  regular  credit 
transfers in euro.  

In  terms  of  euro  IPs  at  PoI  specifically,  the  effectiveness  of  this  option  could  be 
somewhat dampened by  the fact that in  cases where PSPs currently apply a transaction 
fee for euro regular credit transfers, they will have discretion to set the fee for euro IPs at 
that  same  level.  If  that  were  the  case,  it  would  leave  euro  IPs  still  more  expensive  for 
consumers than alternative payment means for PoI such as card or cash payments that do 
not  have  any  transaction  fee.  For  euro  IPs  to  become  a  viable  alternative  that  could 
compete  with  ICS  cards,  in  particular  in  the  cross-border  payment  segment,  any  such 
remaining  transaction  fee  would  have  to  be  absorbed  either  by  PSPs  themselves  (by 

40 

 
 
 
making  IPs  at  PoI cost-free,  as  is  currently the case in  some  national  markets116) or by 
third party providers, such as PISPs, whose solutions would be used to initiate/facilitate 
IPs  at  PoI.  Feedback  from  third  party  providers  indicates  that  they  could  accept 
absorption of the cost reduced in this way117. 

This option therefore is expected to contribute materially to the increase in uptake of euro 
IPs, both in general and at PoI. Available data (see Table 1 in section 2.3.2) shows that 
already  today,  the  uptake  in  Member  States  where  the  fees  of  IPs  and  regular  credit 
transfers are equalised can be as high as 70%. 

The cost impact of this option on PSPs is expected to vary notably by national  euro IP 
markets. As discussed in section 2.3.2, in at least five Euro area Member States (Estonia, 
Lithuania, the Netherlands, Latvia and Finland) PSPs already charge the same transaction 
fees for euro IPs and regular credit transfers (which for most payment accounts is set at 
zero).  Hence,  no  direct  impact  is  expected  on  PSPs  active  in  those  Member  States. 
Indirectly,  they  would  benefit  from  greater  network  effects  as  a  result  of  (i)  a  greater 
volume  of  cross-border  euro  IPs  coming  in  from  other  Member  States  where  PSPs 
currently  apply  differentiated  pricing  or  where  provision  of  euro  IPs  is  only  starting  in 
general  and  (ii)  expected  decline  in  average  transaction  cost  per  euro  IP  (as  explained 
below).  

PSPs active in  Euro area  Member States  where  premium  pricing  of  euro  IPs is  applied 
may  experience  a  negative  impact  in  the  form  of  lower  fee  revenue.  The  extent  of  this 
impact eventually will depend on the interaction between variables such as: (i) the share 
of  PSPs  active  in  a  national  market  which  offer  euro  IPs  at  a  premium  to  regular  euro 
credit transfers, (ii) difference between the level of current transaction fees for  euro IPs 
and  regular  credit  transfers  applied  by  those  PSPs,  and  (iii)  the  average  cost  per 
transaction of IPs and its variation in relation to changing IP volume. Given that the data 
on  variables  (i),  (ii)  and  (iii)  are  not  systematically  available  at  a  PSP  level  across  all 
Member  States,  the  impact  of  this  policy  option  on  the  PSPs  that  currently  apply 
‘premium’ fees for euro IPs is difficult to estimate in quantitative terms. Having said that, 
the following qualitative observations could be made as regards each of them: 

-  With  respect  to  variable  (i):  all  else  equal,  the  lower  the  percentage  of  PSPs  in  a 
certain  Member  State  applying  the  same  transaction  fees  for  IPs  and  regular  credit 
transfers,  the  greater  the  expected  impact  of  this  measure  in  that  Member  (see  the 
second column of Table 1 in section 2.3.2).  

-  With  respect  to  variable  (ii):  all  else  equal,  a  greater  impact  of  this  measure  is 
expected  in  those  Member  States  (and  PSPs),  where  the  fee  ‘premium’  for  IPs 
compared to fees for regular credit transfers charged by PSPs is greater (please refer 
to the 4th and 5th columns in Table 1 in section 2.3.2). 

-  With  respect  to  variable  (iii):  feedback  from  PSPs118  shows  that,  all  else  equal, 
average transaction cost of an IP declines with an increase in the volume of IPs at the 

116 Such as Bizum in Spain. 
117  Presentation  by  ETPPA  (European  Third  Party  Providers  Association)  at  the  PSMEG  meeting  of  16 
December 2021. 
118 Based on bilateral feedback from individual PSPs. The extent of reported decline in average cost per IP 
transaction  varied,  with  greater  declines  indicated  by  PSPs  where  the  starting  difference  between  the 
transaction cost for an IP and a regular credit transfer was greater. 

41 

 
 
                                                           
level of a PSP, to the extent that some PSPs report its convergence with the average 
cost  of  a  regular  credit  transfer.  As  a  result  of  this  initiative,  which  aims  to 
significantly  increase  the  uptake  of  euro  IPs,  this  effect  is  expected  to  materially 
mitigate any negative impact of this measure on the profitability of PSPs.  

In light of the PSP input referred above, the decline in the average transaction cost of an 
IP due to the expected increase in the overall uptake of IPs in the EU would also improve 
the profitability of PSPs that already provide IPs and regular credit transfers at the same 
transaction fee.  

With  respect  to  Member  States  outside  the  Euro  area,  the  global  impact  of  this  policy 
option on the local PSPs will be mitigated by the fact that only 13% of them would be 
covered by this initiative (under option 1.2). The PSPs that currently offer regular credit 
transfers in euro will have to ensure that fees for euro IPs are not higher. The impact of 
this policy option on those PSPs will depend on the pricing strategy they will adopt once 
they start offering euro IPs. In this regard, PSPs based in such Member States generally 
do  apply  transaction  fees  for  euro  credit  transfers.  This  provides  some  room  for 
recovering cost for offering euro IPs.  

As regards the  expected impact  on payment service users,  customers of PSPs currently 
charging premium prices for euro IPs are expected to experience a fall in transaction fees 
for euro  IPs.  For  customers of PSPs  which  currently  do not  charge premium  prices for 
euro IPs, there should be no change. Customers of PSPs which do not offer euro IPs at all 
are unlikely to experience a high level of  transaction fees for euro IPs, since PSPs would 
need to significantly increase the fees for regular euro credit transfers in order to charge 
the same level of fees for euro IPs. 

To mitigate any possible impact of this measure on the profitability of PSPs, it may be 
that  PSPs  may  raise  general  payment  account  maintenance  fees  or  transaction  fees  for 
regular credit transfers (which would then  allow them to charge the same fees for  IPs), 
which this option does not disallow. However, raising transaction fees for regular credit 
transfers  may  prove  to  be  very  unpopular  with  PSPs’  customers  and,  in  particular, 
consumers..  

Regarding PSPs which currently or in the future choose to offer euro IPs as the only form 
of  credit  transfer,  option  2.1  would,  in  principle,  leave  full  freedom  of  pricing  of  IPs. 
However, such PSPs would still be expected to compete with their peers, in terms of the 
pricing that the latter set for both euro IPs and euro regular credit transfers. This seems to 
be confirmed by the fact that, the small number of PSPs that are currently in this situation 
all offer IPs for free. Also, analysis of certain national markets shows that PSPs may face 
difficulties introducing fees for private customers once the IP service is initially offered 
for free.119 Hence, it can be expected that PSPs that in future would cease to offer non-
instant  credit  transfers  would  offer  IPs  at  a  very  competitive  price,  and  most  likely  for 
free.  

The advantage of option 2.2 (Obligation for PSPs to offer euro IPs at no transaction fee) 
compared  to  option  2.1  would  be  that  it  could  generate  greater  volume  of  IPs  and,  in 
particular, IPs at PoI, due to a greater offering of services by third party providers such as 
PISPs whose solutions are used to initiate/facilitate IPs at PoI. Hence, this option would 

119 Are instant retail payments becoming the new normal? (europa.eu) 

42 

 
 
                                                           
be marginally more  effective than option 2.2  in  contributing to the  specific objective  2 
aiming to address dissuasive fees for euro IPs compared to alternative payments means, 
and, in turn, the general objective to  improve the efficiency of the retail payments market 
so as to unlock the benefits for EU citizens and businesses by significantly increasing the 
uptake of euro IPs in the EU.  

Option  2.2  would  have  the  same  impact  as  option  2.1  on  PSPs  which  currently  do  not 
charge  for  regular  credit  transfers,  but  would  have  a  greater  impact  on  PSPs  which 
currently charge for regular credit transfers. As regards PoI payments facilitated by third 
party providers, those PSPs would have to bear a significantly higher cost of compliance, 
as the operational costs underlying IPs that would be transferred to third party providers 
under  option  2.1  would  under  option  2.2  effectively  remain  with  PSPs.  On  the  other 
hand, this option would be extremely favourable for the business model and profitability 
of third party providers. 

This option, compared to option 2.1, may lead to a greater possibility of PSPs attempting 
to  offset  the  decline  in  revenue  by  raising  general  fees  or  cutting  costs  in  other 
operational  areas.  However,  this  option  would  not  introduce    cross-subsidisation  in  the 
payments  sector,  as  it    is  already  well-established  practice.  For  example  cross-
subsidisation  of  different  products  is  common  practice  in  the  banking  sector,  where  a 
material  part  of  the  revenue  is  generated  from  the  interest  rate  differential  between  the 
interest  rate  offered  on  savings  accounts  and  that  charged  on  loans.  Currently,  many 
PSPs  offer  credit  transfers  for  free,  although  the  transaction  costs  are  not  zero,  thus 
necessarily  subsidising  them  from  other  revenue  sources.  Estimating  a  more  precise 
impact of this policy option on cross-subsidisation in quantitative terms was not feasible 
given that the cross-subsidisation could take a number of different paths and forms.  

Most Member States are expected to be supportive of an intervention on transaction fees 
for euro IPs. In the context of discussions with national experts120, representatives from 
12  Member  States  expressed  support  for  option  2.1,  while  three  more  Member  States 
were  also  open  to  some  form  of  quantitative  limit  on  the  pricing  of  IPs.  Only  four 
Member States stated their disagreement with any intervention in the area of pricing with 
remaining  Member  States  reserving  their  position.  Consumers  and  merchants,  like 
fintechs/third party providers, have expressed a very strong preference for option 2.2 in 
the long run, but could be willing, in the medium run, to settle for option 2.1121. 

As regards the coherence of the above options with other policies of the EU, both options 
2.1  and  2.2  are  seen  as  being  coherent  with  the  Commission’s  agenda  of  promoting 
digital  transformation  of  finance  and  the  EU  economy,  and  supporting  open  strategic 
autonomy,  with  option  2.1  being  marginally  more  coherent  from  the  point  of  fostering 
competition in the internal market. 

Option 2.1 is therefore selected as a preferred policy to achieve the specific objective 2 
aiming to address dissuasive fees for euro IPs compared to alternative payment means. 

120  CEGBPI  of  30  November  2021,  minutes  available  here:  https://ec.europa.eu/transparency/expert-
groups-register/screen/meetings/consult?lang=en&meetingId=33915&fromExpertGroups=true . 
121 
available 
meeting 
https://ec.europa.eu/transparency/expert-groups-
register/screen/meetings/consult?lang=en&meetingId=38474&fromExpertGroups=true . 

December 

minutes 

PSMEG 

2021, 

16 

of 

here 

43 

 
 
                                                           
Comparison  of  options  aimed  to  address  dissuasive  fees  for  euro  IPs  compared  to 
alternative payment means 

Option 

Effectiveness 

2.1 Obligation for PSPs to 
offer IPs in euro at fees not 
higher than fees for regular 
credit transfers 

2.2 Obligation for PSPs to 
offer euro IPs at no 
transaction fee 

++ 
Given the price-
sensitivity of users 
to payments, it 
should achieve 
higher uptake of 
IPs 

++ 
Given the price-
sensitivity of users 
to payments, it 
should achieve 
higher uptake of 
IPs 

Efficiency 
(cost-effectiveness) 
≈ 
Creates possibility 
of cross-
subsidisation 
between products 
but this is already 
common practice 
in banking 
– 
Goes beyond the 
minimum 
necessary to 
achieve greater 
uptake of IPs 

Coherence 

Overall score 

++ 

+ 

++ 
Permits 
price 
competition 
between 
PSPs on 
euro IPs 

+ 
Eliminates 
any 
possibility of 
price 
competition 
on euro IPs 

Magnitude of impact as compared with the baseline scenario (the baseline is indicated as 0): ++ strongly positive; + 
positive; – – strongly negative; – negative; ≈ marginal / neutral; ? uncertain; n.a. not applicable. 

6.3 Simplify  and  enhance  the  efficiency  of  the  sanctions  screening  process  of 

euro IPs 

Option  3.1  (Eliminate  overlaps  in  transaction-based  screening)  could  potentially  bring 
about some reduction in the rate of ‘flagged’ (and therefore rejected) IP transactions as it 
would remove the  current  duplication of screening, whereby  each cross-border (and, in 
some Member States, domestic) IP transaction is screened twice with regard to the names 
of a payer and a payee, i.e., first, by the payer PSP and, again, by the payee PSP.  

With the removal of the duplication of screening of the same data elements, the chances 
of generating a flag would be naturally reduced as well. However, as soon as the payer 
PSP  would  be  faced  with  a  flag,  the  transaction  would  need  to  be  rejected  since  there 
would  not  be  sufficient  time  to  ensure  manual  verification.  Theoretically,  a  potential 
solution  to  this  could  be  to  start  the  10  second  timer  only  upon  the  completion  of  the 
sanctions screening verification of ‘flagged’ transactions by the payer PSP. However, it 
would  still  be  impossible  for  the  payer  PSP  to  manually  review  them  in  a  time  short 
enough to ensure that the transaction is completed fast enough to be considered instant. 

As  in  the  baseline,  due  to  the  persisting  presence  of  the  significant  number  of  ’false 
positive’  flags  that  cannot  be  dealt  with  sufficiently  quickly  to  ensure  the  successful 
transmission  of  the  transaction,  the  approach  under  this  option  would  also  remain 
problematic for the successful uptake of IPs, including at PoI.  

The  approach  described  under  option  3.2  (Replace  transaction-based  screening  with 
regular  updates  by  PSPs  of  own  customers  lists  against  applicable  EU  sanctions  lists 
(‘SEPA  domestic’  approach))  is  already  used  by  PSPs  in  some  Member  States  for 
domestic IPs (as well as domestic regular credit transfers)122. The cross-border SEPA IPs 

122 The other Member States may be inspired to apply the same approach also to domestic regular credit 
transfers. 

44 

 
 
                                                           
would  be  treated  in  the  same  way  hence  the  description  of  this  option  as  a  ‘SEPA 
domestic' approach. It would replace the approach based on transaction-based screening, 
against  the  EU  sanctions  lists,  of  all  individual  domestic  and  cross-border  euro  IP 
transactions. 

Replacing the transaction-based screening approach with the ‘SEPA domestic’ approach 
to comply with PSPs’ screening obligations vis-à-vis the EU-wide sanctions lists would 
ensure that sanctions screening obligations are complied with by PSPs as effectively as is 
currently  the  case.  By  accurately  and  timely  reflecting  in  their  systems  the  latest 
information  on  all  the  applicable  sanctions  lists  they  would  be  able  to  i)  prevent  the 
initiation  of  transactions  from  payment  accounts  belonging  to  designated  persons  or 
entities, and ii) immediately freeze funds made available to them.  

In  terms  of  compliance  costs,  this  policy  option  is  expected  to  deliver  significant 
operational savings for PSPs, which would not occur under the baseline or would occur 
at a substantially lower scale under option 3.1. Those savings, depending on the level of 
IP uptake, could be estimated to fall in the range of EUR 5.5 to 7.6 billion per year (see 
Annex 4). 

Therefore, this approach would ensure that the compliance with the sanctions screening 
obligations  is  more  efficient.  It  would  lead  to  a  material  reduction  of  ‘false  positive’ 
hits123 and, thus would significantly reduce the rejection rates currently observed for euro 
cross-border IPs (and, in some Member States, also euro domestic IPs). Thus, this option 
would be more effective than option 3.1 in contributing to the specific objective aiming 
to simplify and enhance the efficiency of the sanctions screening process of euro IPs. It 
would also be more conducive than option 3.1 to promoting the use of IPs at PoI, while 
not lowering the quality of the sanctions screening overall.  

Overall,  this  option  would  introduce  important  efficiency  improvements  in  terms  of 
reducing  frictions  to  IPs  due  to  sanctions  screening  obligations,  without  any  adverse 
effect  on  the  effectiveness  of  PSPs’  compliance  with  their  obligations  in  terms  of 
sanctions screening or the tracing of transactions for AML purposes.  

In terms of coherence of the above policy options with the other initiatives and policies 
of the EU, options  3.1 and 3.2 would be coherent  with  the effective compliance of EU 
PSPs with GDPR as well as the EU sanctions regulations and AML legislation, as they 
would set a clear and harmonised set of rules that all PSPs would have to comply with, 
and  do  not  introduce  any  practices  which  have  not  been  successfully  tested  in  certain 
Member States. In sum, as per the table below option 3.2 is the preferred option in this 
area. 

123 As evidenced by responses from PSP (that apply this approach to the sanctions screening of domestic 
IPs) to the targeted consultation. 

45 

 
 
 
 
 
                                                           
Comparison of options aimed to  simplify and enhance the efficiency of the sanctions screening 
process for euro IPs 

Option 

Effectiveness 

Efficiency 
(cost - effectiveness) 

Coherence 

3.1 Eliminate overlaps 
in transaction screening 

3.2 ‘SEPA domestic’ 
approach (replace 
transaction-based 
screening with regular 
updates by PSPs of own 
customers lists against 
applicable EU sanctions 
lists)  

+ 
It may slightly 
reduce false 
positive hits for 
IPs 
++ 
Likely to 
eliminate false 
positive hits for 
IPs 

+ 
Creates some 
limited savings for 
PSPs compared with 
current practice 
+++ 
Generates major 
cost savings for 
PSPs compared with 
current practice 

+ 
Fully coherent 
with sanctions 
screening 
obligations 
+ 
 Fully coherent 
with sanctions 
screening 
obligations 

Overall 
score 

+ 

++ 

Magnitude  of  impact  as  compared  with  the  baseline  scenario  (the  baseline  is  indicated  as  0):  +++  very  strongly 
positive; ++ strongly positive; + positive; – – strongly negative; – negative; ≈ marginal/neutral; ? uncertain; n.a. not 
applicable. 

6.4 Increase payer confidence in euro IPs with regard to risk of fraud and errors  

Under option 4.1 (An obligation for PSPs to ensure the availability of a service allowing 
a payer to have an immediate check of the ‘match’ between the IBAN and the name of a 
payee, before confirming an IP), the rate of transactions sent to a wrong payee as a result 
of social engineering fraud or errors is expected to be reduced. According to the provider 
of  the  IBAN-name  check  solution  in  the  Netherlands,  there  has  been  an  81%  drop  in 
fraud/scams taking the form of invoice fraud, and a 67% drop in misdirected payments 
due  to  payer  errors  since  the  setup  of  the  IBAN-name  check  service  in  2017124.  Given 
that the extent of APP fraud in 2020 for all SEPA euro credit transfers, including IPs, in 
the EU is estimated  at  approximately EUR  323  million, there is  enormous capacity  for 
reduction of losses incurred by EU citizens and businesses resulting from such solutions. 
In  the  UK125  between  Q3  2019  and  Q4  2020,  on  a  trend-adjusted  basis,  for  the  largest 
PSPs offering the Confirmation of Payee (CoP) service to their clients, there has been a 
31% drop of payments sent to a wrong payee in terms of number of transactions, and a 
28% drop in terms of value. It is considered that the reduction would be more significant 
if all PSPs implemented the service as currently, CoP checks cannot be done in around 
15%  of  IP  transfers  in  the  UK.  This  means  fraudsters  can  easily  find  out  which 
institutions currently do not offer the CoP service and direct their activities to customers 
of those institutions. This confirms that for the solution considered under this option to 
be effective, it must be required with respect to all PSPs offering IPs. It should be noted, 
that in view of the evidence of effectiveness of the CoP service, the UK authorities are 

124  https://www.surepay.nl/en/about-surepay/factsheet/;  see  also  brochure  available  here:  SurePay  - 
Brochure SurePay Confirmation of Payee  
125 CP21/6 Confirmation of Payee call for views (psr.org.uk). 

46 

 
 
                                                           
considering  to  invite  smaller,  non-participating  PSPs  to  start  providing  the  service  to 
their clients.126  

Based  on  the  feedback  from  the  Netherlands  and  UK  markets,  it  seems  that  an  IBAN-
name  verification  service  would  be  highly  effective  in  preventing  errors  and  reducing 
certain types of APP scams, in particular invoice fraud. In cases of impersonation scams,  
the  payer  is  more  likely  to  disregard  the  warning  of  no  match  and  proceed  with  the 
payment. It also must be recognised that there may be some instances of fraud where the 
name given to the victim will match the account and the CoP service will not be able to 
prevent it127. Despite these limitations, a service allowing a payer to have an immediate 
check of the ‘match’ between the IBAN and the name of a payee, before confirming an 
IP, would be an important building block in the overall errors and fraud prevention and 
consumer  protection  efforts    and  very  importantly,  would  be  effective  in  enhancing 
consumers’ and corporates’ trust in IPs. 

Such a solution would respond to consumer expectations, giving them greater assurance 
that  they  are  sending  payments  to  the  intended  recipient.  A  clear  majority  (93%)  of 
consumer  respondents  to  the  open  public  consultation  considered  it  being  important  to 
have  safeguards  regarding  the  risk  of  fraud  or  error,  in  the  form  of  IBAN  name  check 
service,  either  free  or  for  a  fee.  This  is  supported  by  the  feedback  received  from 
consumer  organisations.  The  absence  of  a  solution  whereby  PSPs  would  enable 
verification  of  the  match  between  the  name  of  the  payee  account  and  the  IBAN  was 
described as “absurd” by BEUC, who considers that it is essential that such verification 
be made compulsory128. 

This solution is likely to be supported by Member States, as reflected by national experts 
in  the Commission expert group129, and also  in point  16 of the ECOFIN conclusions130 
issued on 22 March 2021 which supported the idea that the Confirmation of Payee is an 
important element of consumers’ trust. 

Given  that  IBAN-name  check  solutions  are  still  very  rare  (applied  on  a  broader  scale 
only  in  one  Member  State  or  provided  by  individual  banks  in  others),  it  is  difficult  to 
provide  exact  estimates  of  the  implementation  cost.  The  costs  would  depend  on  the 
implementation method opted for by PSPs, which would not be imposed in the legislative 
proposal,  and  the  level  of  integration  of  such  solutions  with  other  fraud  prevention 
measures of PSP.  

With  respect  to  the  solution  implemented  in  the  Netherlands,  the  two  main 
implementation efforts required from PSPs involved (i) integrating an API, allowing for 
account name verification, into the PSP’s online / mobile banking environment, and (ii) 
adjusting  own  customer  databases  to  ensure  that  the  algorithm  can  match  the  payment 

https://www.psr.org.uk/media/ktonkca3/psr-rp21-1-confirmation-of-payee-response-paper-oct-

126 
2021.pdf . 
127 For example, in case of the use of money mules (innocent victims who are duped by fraudsters into 
laundering  defrauded  money  via  their  bank  accounts;  or  in  case  of  accounts  opened  following  identity 
theft). 
128 https://www.beuc.eu/publications/beuc-x-2021-027_consumers_and_instant_payments.pdf.  
129 Commission Expert Group on Banking, Payments and Insurance (payments formation). 
130 https://data.consilium.europa.eu/doc/document/ST-7225-2021-INIT/en/pdf. 

47 

 
 
                                                           
data provided by the payer with the payee’s PSP customer data. In addition to these one-
off investment costs, the service provider charges fees per check performed (with the fee 
level decreasing as the volume of checks increases). PSPs are also likely to have running 
costs associated with maintenance and support.  

Based on the data obtained from one UK PSP offering the CoP service and  four out of 
five Dutch PSPs offering the IBAN-name check service, there appears to be a correlation 
between the level of the (one off and ongoing) costs and the size of a PSP. The one-off 
implementation  cost  ranged  between  EUR  10 000  and  EUR  2  million,  which  can  be 
explained  by  the  fact  that  some  of  the  larger  PSPs  tend  to  have  many  more  legacy 
systems that require adjustments, while smaller, challenger PSPs have newer, more agile 
technological  capabilities.    In  terms  of  the  ongoing  cost,  they  ranged  between  EUR 
several thousand per year to EUR 350 000 per year, with fees paid to the service provider 
per check performed constituting the largest chunk. 

Under  this  option,  EU  PSPs  would  be  allowed  to  decide  on  the  best  implementation 
approach. Solutions already provided by fintech companies in some Member States could 
be  used  by  PSPs  in  other  Member  States,  and  this  could  open  up  the  market  for  more 
providers of such services. Solutions could also be collectively implemented through an 
industry-wide  arrangement  or  scheme,  which  could  to  a  certain  extent  leverage  on 
advances made in the context existing industry-wide initiatives.131  

Costs of implementation of this option are expected to be eased by the fact that the PSPs 
are  likely  to  leverage  on  their  previous  investments  and  experience  gained  when 
developing  open  banking  APIs  under  PSD2.  Those  costs  could  be  further  mitigated  by 
extending the scope of application of the measure since the solutions put in place could 
be  also  used  for  the  verification  of  payee  of  regular  credit  transfers  (representing 
synergies  between  different  products  offered  by  the  same  PSP).  Moreover,  with  the 
strengthened consumer protection leading to  an increased use of  IPs, which carry more 
detailed customer data compared to cash or cheques, PSPs would be able to develop and 
use  more  sophisticated  fraud  prevention  tools.  Finally,  costs  would  also  be  partially 
offset by operational savings arising from reduced number of complaints to be processed 
by PSPs which are costly to investigate and may even involve goodwill payments (e.g. 
made by some PSPs to avoid reputational damage).  

Approximately 3 200 PSPs would incur implementation costs, the level of which would 
depend  on  their  size  as  indicated  above.  Some  compensatory  internal  administrative 
savings can be envisaged in PSPs, due to a reduced number of complaints and requests 
for refunds for fraudulent and erroneous IPs; over time, these savings can be expected to 

131 Examples include potential changes to the SCT Inst. Scheme, which  are currently under consultation 
(https://www.europeanpaymentscouncil.eu/sites/default/files/kb/file/2021-09/ECP190-
21%20_Press%20Release_%20Public%20consultation%20on%20the%20change%20requests%20for%20th
e%202023%20SEPA%20payment%20scheme%20rulebooks_0.pdf) and which, inter alia, include  using, in 
addition  to  IBANs,  attributes  such  as  aliases  or  proxies  in  the  payment  messages;  the  ERPB  work  on 
increasing transparency for retail payments end-users, which includes investigation of possible solutions 
to  tackle  the  challenges  related  to  the  difference  between  commercial  names  and  legal  names  of 
companies  acting  as  payees;  or  the  work  on  the  SEPA  Payment  Account  Access  Scheme,  which  may 
include solutions related to IBAN-name check of the payer. 

48 

 
 
                                                           
offset the one-off investment cost. The reduction in fraud would be a benefit to society as 
a whole. 

PSPs would be free to offer the service for a fee, however, it is expected that competitive 
forces,  consumer  expectations  and  a  possibility  of  the  abovementioned  operational 
savings  (which  would  increase  in  step  with  a  greater  use  of  the  service)  would  help  to 
keep its level low. Finally, introducing a harmonised solution at this juncture would save 
the  costs  which  would  otherwise  be  incurred  at  a  later  stage  in  order  to  ensure 
interoperability  of  purely  national  solutions  that  are  developed  by  national  PSP 
communities  or  individual  PSPs.  Thus,  the  efficiency  of  this  solution  is  assessed  as 
neutral/marginal. 

This option would be coherent with the EU policy goals of ensuring effective consumer 
protection  and  empowering  consumers  to  effectively  protect  their  economic  interests. 
Moreover, the experience with the existing solutions (offered to EU PSPs by SurePay or 
SWIFT, or imposed on PSPs in the UK while it still formed part of the EU) demonstrates 
that  such  solutions  can  be  designed  in  full  compliance  with  GDPR.  This  option  would 
thus be coherent with the EU data protection requirements. 

Under option 4.2 (Grant payers the right to ask for a refund under certain circumstances, 
e.g. where a payer can prove that there was a fraud or a mistake as their intention was to 
authorise an IP to a different payee), payers would have the right to ask for a refund of an 
IP transaction where they can prove that their intention was to send the funds to another 
beneficiary.  

This would be in line with the expectation of consumer representatives. Some form of a 
refund right for the consumer has been called for by BEUC in its response to the public 
consultation.  

In cases where the payer can provide such evidence, the solution  would be effective in 
providing  adequate  protection.  However,  in  other  cases,  such  as  person-to-person 
payments  without  a  pre-existing  contractual  relationship,  providing  sufficient  evidence 
could  be  very  difficult.  Moreover,  in  order  for  the  solution  to  have  any  meaningful 
effectiveness,  the  period  during  which  the  refund  could  be  requested  should  be 
sufficiently long to reflect the amount of time it may take a payer to discover that funds 
were  paid  to  a  wrong  payee  in  error  or  as  a  result  of  fraud  (which  can  take  several 
weeks132).  

In terms  of efficiency, this option would not  require any major upfront  implementation 
costs  from  PSPs,  in  contrast  to  setting  up  of  a  solution  that  would  be  required  under 
option 4.1. On the other hand, since in such cases the funds are unlikely to stay on the 
account  of  the  payee  long  enough  for  the  funds  to  be  recovered,  PSPs  would  incur 
ongoing losses, which could represent a substantial share133 of the estimated APP fraud 
for all SEPA credit transfers, estimated at EUR 323 million in 2020. Also, this figure is 

132 According to the industry, the average time to discover that the transaction was made to a fraudster 
can range between approx. 2 and 6 weeks.  
133 According to the EBA, 80% of fraud in relation to three types of payment means (credit transfers, cash, 
card payments) resulted in losses in the second half of 2020 for a sample of 14 EEA countries [Discussion 
Paper on payment fraud data received under PSD2 (europa.eu)]. 

49 

 
 
                                                           
likely to be under-estimated given that consumers, being aware of the onerous conditions 
for a refund under current legislation, may not always complain to the PSP. Importantly, 
more  lenient  refund  conditions  may  give  rise  to  greater  moral  hazard  in  the  form  of 
unfounded  refund  claims  (e.g.  where  the  payer  changed  their  mind,  did  not  like  the 
product, etc.) and the associated compliance costs for PSPs. 

While  this  option  would  be  coherent  with  the  EU  policy  goals  of  ensuring  effective 
consumer protection, it would not be consistent with the principle of irrevocability of all 
credit  transfers,  including  IPs,  as  laid  out  in  PSD2.  The  initiative  on  IPs  would  not  be 
appropriate to  introduce  changes to  the very nature of credit transfers, including  IPs.134 
As  clarified  above,  this  option  would  not  create  any  consequences  in  terms  of  data 
protection.  

Overall, this option is considered to be more effective than the baseline, but less effective 
than option 4.1, both with respect to domestic and cross-border payments. Efficiency is 
assessed as neutral, considering that on the one hand, unlike in case of option 4.1, there 
would  be  no  implementation  costs,  but  on  the  other  hand  the  ongoing  costs  could  be 
significant,  especially  if  the  rate  of  fraud  increases  or  moral  hazard  is  not  effectively 
contained. Coherence is assessed as overall neutral. On the basis of this analysis, option 
4.1 is selected as a preferred policy option. 

Comparison of options aimed at reducing the risk of IPs being sent to the wrong payee due to 
fraud and errors 

Option 

Effectiveness 

Efficiency 
(cost-effectiveness) 

Coherence 

4.1. Obligation for PSPs to 
provide an "IBAN 
verification" service, before 
confirming an IP 

4.2. Payer’s right to a refund 
under certain circumstances  

++ 
Positive results in 
countries where 
such a system 
has been 
implemented 

+ 
An ex-post 
mechanism does 
not prevent 
fraud/errors (ex-
ante approach 
better) 

≈ 
One-off 
implementation  cost 
for PSPs, but they 
may charge for the 
service 

+ 
System already 
exists and has 
been tested 
domestically, no 
changes to other 
EU legislation 
needed 
≈ 
Incoherent with 
the principle of 
irrevocability of 
credit transfers 
(incl. IPs), as laid 
out in PSD2. 
Rejected at an early stage (see Section 2.5.2) 

≈ 
Recurrent costs for 
PSPs due to refund 
claims.  
Risk of moral 
hazard.  

4.3 Obligation for payee’s 
PSP to temporarily ‘freeze’ 
funds credited to payee’s 
account 
Magnitude of impact as compared with the baseline scenario (the baseline is indicated as 0): ++ strongly positive; + 
positive; – – strongly negative; – negative; ≈ marginal/neutral; ? uncertain; n.a. not applicable. 

Overall 
score 

+ 

≈ 

134 Issues such as the conditions for executing credit transfers, including IPs (such as the use of the name 
of the payee as an additional mandatory element for correct execution of the transaction, in addition to 
the IBAN of the payee),  or  PSP liability regime  related to  the execution of  credit  transfer transactions, 
including IPs, may be further assessed in the context of PSD2 review, due in 2023. 

50 

 
 
 
                                                           
7  PREFERRED OPTION 

7.1 Effectiveness 

The principal objective of the present initiative is to significantly increase the uptake of 
euro  IPs  in  the  EU.  Effective  achievement  of  this  objective  should  unlock  the  benefits 
and  efficiency  gains  for  EU  consumers,  corporates,  fintechs,  banks  and  society  in 
general. It would also help increase choice for electronic payments, particularly for cross-
border payments at PoI. The initiative has strong support from the EU SME association, 
SMEUnited135. 

The  proposed  set  of  preferred  options  complement  each  other  and,  taken  together, 
constitute a powerful package of measures that would, in the most effective manner, both 
boost  the  supply  of  euro  IPs  by  PSPs  and  facilitate  a  greater  demand  for  them  by 
payment  service  users, 
including  consumers,  corporates,  merchants  and  public 
administrations.136 More specifically, the obligation for most EU PSPs to offer euro IPs 
will ensure an EU-wide reachability and accessibility of euro IPs, doing away effectively 
with disincentives for PSPs to adhere to the SCT Inst. Scheme due to the current lack of a 
critical  mass of participating  PSPs  and  euro  IPs in certain  local  markets  and in  the EU 
more generally. The efforts of PSPs and fintechs to roll out IP-based services both as on-
line transfers and as payments at PoI will be aided by a harmonised sanctions screening 
approach that is based on the requirement to update, regularly and frequently, the internal 
records  of  a  PSP's  own  customers  against  the  latest  information  on  the  persons  and 
entities  that  are  subject  to  restrictive  measures.  This  new  sanctions  screening  approach 
will  be  effective  in  materially  driving  down  the  rate  of  incorrectly  rejected  IPs,  which 
generates unwarranted and significant operational burdens for the industry and weakens 
the reliability of IPs from the perspective of users. The obligation for PSPs to ensure that 
any fees related to IPs are not higher than fees applicable to euro regular credit transfers 
is  expected  to  be  highly  effective  in  generating  user  demand  for  IPs,  in  view  of  users' 
sensitivity to the absence of transaction-based fees for substitute payments means (cash, 
cards).  Last  but  not  least,  user  demand  for  euro  IPs  will  be  further  enhanced  by 
strengthening their confidence through protection against fraud and  errors, by requiring 
PSPs  to  offer  a  service  warning  them  about  cases  where  the  name  on  an  account 
identified through the IBAN provided by the payer and the name of a payee indicated by 
the payer do not match. 

It is reasonable to expect that with the set of the preferred options, IPs would become the 
most  prevalent  type  of  euro  credit  transfer  within  3-5  years  of  their  implementation. 
Achieving  this  will  deliver,  in  addition  to  the  benefits  for  specific  stakeholder  groups 
described  in  this  assessment,  certain  broader  societal  benefits.  A  mass  adoption  of  IPs 
can  act  as  a  supporting  factor  for  a  quicker  post-pandemic  recovery  of  the  European 

135 See this statement on the SMEUnited website, and the intervention by a Director of SMEunited at a 
CEPS/ECRI seminar on instant payments of 5 May 2022. 
136 While other combinations of policy options are theoretically possible (for instance, not taking an action 
in  one  of  the  areas  analysed),  their  effectiveness  would  be  considerably  lower.  The  analysis  has  shown 
that the most effective impact on increasing the uptake of euro IPs at the EU level could be achieved only 
when  all  identified  problem  drivers  are  addressed  with  directly  targeted  and  accordingly  designed 
regulatory measures. 

51 

 
 
                                                           
economy  as  money  is  reinjected  into  the  economy  at  a  faster  pace:  due  to  their  very 
nature, IPs induce a higher velocity of money circulation in the economy. High velocity 
of money is usually associated with a dynamic economy, whereas a low money velocity 
is  usually  found  in  economies  going  through  recessions.137  This  is  connected  to 
inefficiencies in the payment system  that are known as ‘payment float’ . In this regard, 
the  study  by  Deloitte138  argues  that  those  inefficiencies  limit  short  term  aggregate 
economic  activity  as  the  money  is  locked  in  the  financial  system  due  to  delay  in 
processing  payments.  If  this  money  were  “unlocked”,  it  could  boost  short-term 
consumption and investment. Based on the analytical approach developed by Deloitte, it 
is estimated that  IPs, depending on the extent of their eventual uptake in the EU, could 
reduce the payment float  and generate the  related annual  economic efficiency  gains  for 
PSP  clients  in  the  range  of  EUR  1.34  billion  (under  the  assumption  of  50%  uptake  of 
euro  IPs)  to  EUR  1.84  billion  (under  the  assumption  of  70%  of  uptake  of  euro  IPs).139 
See  Annex  8  for  a  more  detailed  analysis  of  the  payment  float  and  the  impacts  arising 
from its reduction. 

7.2 Efficiency 

The  preferred  options  have  been  designed  to  effectively  achieve  the  relevant  specific 
objectives in the most cost efficient and proportionate way. Most of the implementation 
costs  will fall upon PSPs, however, the impact  will vary significantly  from  one PSP to 
another due to the varying level of their ‘starting position’. 

The efficiency of the legal obligation to offer euro IPs rests in its focus on the estimated 
800-900 PSPs whose participation in the SCT Inst. Scheme is the most needed to ensure 
the widespread reachability and accessibility of euro IPs. PSPs falling in the scope of this 
obligation  will  have  discretion  to  alleviate  their  compliance  burden  by  spreading 
implementation efforts over time, by complying first with the obligation to receive, and, 
later, with the obligation to send IPs. Several factors are expected to make the obligation 
proportionate for PSPs operating in non-Euro area Member States (see Annex 3). 

The relative efficiency of the obligation for PSPs to ensure that any fees related to euro 
IPs are not higher than fees applicable to euro regular credit transfers is based on several 
factors They include the possibility for PSPs to apply fees on euro IPs that are the same 
as  those  for  regular  credit  transfers  (instead  of  being  obliged  to  offer  them  for  free). 
Moreover, the average cost per IP transaction declines with an increase in the uptake of 
IPs at the level of a PSP. Finally, in a number of Member States PSPs already, by way of 
their current pricing policy of IPs, effectively comply with this option. 

137 Study by Fidelis Consulting; https://op.europa.eu/en/publication-detail/-/publication/735d5b9d-0c5e-
11ec-adb1-01aa75ed71a1/language-en/format-PDF/source-228716981 . 
138  Economic  impact  of  real-time  payments,  July  2019  [deloitte-uk-economic-impact-of-real-time-
payments-report-vocalink-mastercard-april-2019.pdf ]. 
139 In the study of Fidelis Consulting these benefits are estimated to fall in the range of EUR 0.68 billion to 
considered; 
a 
EUR 
https://op.europa.eu/en/publication-detail/-/publication/735d5b9d-0c5e-11ec-adb1-
01aa75ed71a1/language-en/format-PDF/source-228716981 . 

scenarios 

broader 

billion 

range 

year, 

1.83 

due 

per 

to 

of 

52 

 
 
                                                           
Efficiency  of  the  preferred  option  to  offer  a  service  allowing  a  payer  to  have  an 
immediate check between the IBAN and the name of the payee rests in leaving discretion 
to PSPs to comply with the obligation in the most cost-effective manner, by choosing the 
most appropriate implementation option, e.g., develop the service internally, outsource it 
to  a  third  party  service  provider  or  to  come  up  with  an  industry-wide  solution.  The 
efficiency  of  this  option  is  further  underscored  by  the  possibility  that  EU  PSPs  may 
leverage  on  the  work  already  done  in  the  context  of  implementing  Application 
Programming  Interfaces (APIs) under PSD2 and development of various EPC schemes, 
and by the operational savings that would arise over time from not having to handle the 
prevented errors and fraud.  

Compliance  costs  related  to  the  proposed  harmonised  approach  for  the  sanctions 
screening of IPs are expected to be insignificant at the industry level due to the fact that 
most PSPs already today update their customer lists against all applicable sanctions lists 
on a daily basis and some Member States already apply the proposed approach for purely 
domestic  IP  transactions.  Importantly,  the  proposed  approach  would  generate  material 
operational cost savings that are estimated to fall in the range of EUR 5.5-7.6 billion per 
year, depending on the uptake of euro IPs and that should mitigate, if not offset,  at the 
industry level, the other compliance costs of this entire legislative initiative.  

A  widespread  adoption  of  IPs  is  also  expected  to  displace  cheque  payments.  In  this 
regard,  the  study  of  Deloitte140  showed  that  additional  IP  transactions  lead  to  a 
’significant decrease in the volume of cheque transactions per capita’. PSPs are expected 
to realise a significant share of the total estimated savings of EUR 2.3 billion per year to 
society, resulting from such displacement (please see section 2.2.1). 

7.3 Coherence 

In addition to the benefits of the preferred options in each of the areas (offering of IPs, 
level of fees on IPs, sanctions screening and payer protection against errors and fraud) as 
described in Section 6, the coherence and complementarity of the preferred options with 
each  other,  and  their  benefits  considered  as  a  package  should  be  emphasised.  It  is 
estimated  that  the  four  preferred  options  when  applied  together  will  interact  with  each 
other positively in such as a way as to magnify the benefits of each option individually. 

EU action to promote the uptake of euro IPs interacts with several EU strategic initiatives 
as well as sectoral policies. The  coherence of the proposed package of preferred policy 
options with those other EU policies and initiatives is assessed as follows:  

-  The initiative is  coherent  with  and  necessary to  complete the project  of the internal 
market  integration  for  euro  retail  payments,  branded  as  the  Single  Euro  Payments 
Area  (SEPA),  and  with  the  objectives  of  the  Commission’s  RPS  regarding 
increasingly  digital  and  instant  payment  solutions  with  pan-European  reach,  and 
competitive home-grown and pan–European payment solutions supporting Europe’s 
economic  and  financial  sovereignty141.  In  particular,  as  stated  in  section  1.3  above, 

140  Economic  impact  of  real-time  payments,  July  2019  [deloitte-uk-economic-impact-of-real-time-
payments-report-vocalink-mastercard-april-2019.pdf ]. 
141 https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52020DC0592&from=EN . 

53 

 
 
                                                           
based  on  a  political  decision  taken  at  its  adoption  in  2012,  the  SEPA  Regulation 
already  applies  to  payments  in  euro  in  all  EU  Member  States,  including  non-Euro 
area Member States, given the importance of the euro as the single currency under the 
EU  Treaties142,  and  the  need  for  all  EU  citizens  to  benefit  from  the  same  rights  as 
regards  payments  in  euro,  regardless  of  where  they  live  in  the  EU143.  The  present 
initiative does not change the pan-EU geographical scope of SEPA, but reflects and 
builds on it.  

-  The initiative is fully coherent with statements144 of EFIP, which stressed how critical 
it is for PSPs to implement IPs quickly so that they become available to end users at 
the  pan-European  level,  called  on  PSPs  to  offer  competitive  pricing  of  IPs  to 
merchants  and  users,  and  most  recently  explicitly  welcomed  the  European 
Commission’s intention to  put  forward an initiative to  increase the uptake of  IPs in 
the  EU,  by  ensuring  their  full  availability  to  consumers  and  businesses,  enhancing 
payer trust and removing operational frictions. 

-  This  initiative  is  coherent  with  the  ongoing  work  of  the  Euro  Retail  Payments 
Board145  focused on removing obstacles for cross-border acceptance of  IP solutions 
at  PoI,  such  as  the  work  on  an  interoperability  framework  for  mobile  payment 
solutions  based  on  SEPA  credit  transfers  including  IPs,  as  well  as  the  work  of  the 
European  Payments  Council  on  a  single  standard  for  QR-codes,  as  QR  solutions 
today  suffer  from  lack  of  standardisation  at  EU  level.  It  would  support  industry 
initiatives  for  developing  cross-border  PoI  solutions  based  on  IPs,  such  as  for 
example  the  European  Payments  Initiative  (EPI)146.  This  work  and  initiatives  have 
been supported by the Commission in its RPS as having the potential to add value to 
the  SEPA  Instant  Credit  Transfer  (SCT  Inst.)  Scheme,  improve  the  usability  of 
instant payment solutions and ultimately to support the uptake of instant payments.  

-  The initiative would be fully consistent with other Commission initiatives laid out in 
the  Commission’s  Digital  Finance  Strategy  for  the  EU  adopted  on  24  September 
2020, aimed at promoting digital transformation of finance and the EU economy and 
removing  fragmentation  in  the  Digital  Single  Market,  such  as  an  EU-wide 
interoperable  European  Digital  Identity  Wallet147  or  the  rules  set  out  in  the  Digital 
Markets  Act  proposal148.  The  former  could  be  used  as  a  means  to  distribute  IPs, 
including  for  payments  at  PoI,  while  the  latter  aims  to  address  the  current  issues 

EFIP 

2017 

142 Article 3(4) TEU and Articles 119 and 133 TFEU 
143  See  the  impact  assessment  accompanying  the  Commission’s  2010  proposal  for  a  SEPA  Regulation, 
SEC(2010) 1584 final. 
144 
[ 
https://www.ecb.europa.eu/paym/groups/pdf/efip/EFIP_statement_from_the_1st_meeting.pdf  ];  2019 
EFIP 
[ 
https://www.ecb.europa.eu/paym/groups/pdf/efip/EFIP_statement_from_the_2nd_meeting.pdf  ];  2022 
[ 
EFIP 
https://www.ecb.europa.eu/paym/groups/pdf/efip/EFIP_statement_from_the_3rd_meeting.pdf ] 
145 The Euro Retail Payments Board (ERPB) is a high-level body chaired by the ECB, bringing together the 
supply and demand side of the European payments industry. 
146 https://www.epicompany.eu/ . 
147 resource.html (europa.eu). 
148 https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52020PC0842&from=en . 

statement 

statement 

statement 

54 

 
 
                                                           
 
faced  by  PSPs  and  fintechs  when  developing  IP-based  PoI  solutions  and  trying  to 
access  near  field  communication  (NFC)  antennas  available  on  certain  mobile 
platforms (such as phones or tablets) and used for effective contactless payments.  

-  The  initiative  is  expected  to  be  coherent  with  the  ongoing  work  on  Central  Bank 
Digital Currency (‘digital euro’). The potential issuing of digital euro will enable the 
co-existence  of  digital  euro  holdings  and  of  commercial  bank  money  funds.  Users 
will  require  to  transfer  at  par  funds  held  in  payment  accounts  at  their  Account 
Servicing PSP  to  the digital  euro holdings in  the ECB/Eurosystem  books and make 
their day-by-day payments in digital euro, and, in the opposite direction, to transfer 
amounts  of  digital  euro  at  par  to  their  payment  accounts.  These  transfers  in  both 
directions  are  the  equivalent  digital  form  of  the  current  physical  convertibility  that 
takes place from the commercial bank euro to the central bank euro and vice versa, 
for  instance  when  banknotes  and  coins  are  credited/withdrawn  to/from  a  payment 
account at the ATM or in a branch. In practical terms, it will be necessary to set-up a 
mechanism  able  to  fund  and  defund  the  holdings  in  digital  euro  of  the  users  in 
exchange  of  their  commercial  bank  payment  account  funds.  With  the  evolutions  in 
the  retail  payments  landscape  and  expectations  of  users,  it  would  seem  difficult  to 
imagine  that  transactions  with  a  digital  euro  would  not  have  the  potential  to  be 
instant. Other synergies between  IPs and digital  euro are also possible but their full 
assessment depends on the final design features of CBDC. 

-  The initiative is coherent with Member States’ efforts to limit the size of the shadow 
economy  by  improving  tax  collection.  To  this  end,  a  number  of  EU  governments 
(e.g.,  Greece,  Italy,  Hungary,  where  reliance  on  cash  is  relatively  high149)  recently 
announced  various  measures  that  incentivize  economic  actors  to  use  digital 
payments,  including  IPs.  45%  of  all  types  of  respondents  to  the  open  public 
consultation  who  expressed  their  view  on  this  matter,  also  thought  that  IPs  would 
have fiscal benefits by limiting the extent of tax fraud and tax evasion. According to 
Deloitte150,  the  shadow  economy  accounts  for  about  7-12%  of  GDP  in  developed 
countries. Based on the analytical model developed by Deloitte, it could be estimated 
that IPs, depending on the extent of their eventual uptake in the EU, could lead to an 
increase  in  annual  tax  receipts  in  the  range  of  EUR  0.25  billion  to  EUR  1.59 
billion.151 Another study152 of 25 EU countries estimated that 10 additional cashless 
transactions  per  capita  per  year  reduce  the  VAT  gap  (defined  as  the  difference 
between  theoretical  VAT  liability  and  actual  VAT  revenue)  by  0.69  percentage 
points. The projections by ACI Worldwide153 for the relative growth of various types 
of  payment  means  for  a  number  of  EU  Member  States  broadly  support  such 

in 

of 

the 

consumers 

149 A recent ECB study showed that 73% of all transactions in the Euro area were carried out using cash, 
representing  48%  of  the  total  value  of  all  payments  made  by  consumers.  ECB  study  on  the  payment 
attitudes 
2020 
[https://www.ecb.europa.eu/pub/pdf/other/ecb.spacereport202012~bb2038bbb6.en.pdf ]. 
150  Economic  impact  of  real-time  payments,  July  2019  [deloitte-uk-economic-impact-of-real-time-
payments-report-vocalink-mastercard-april-2019.pdf ]. 
151 Study by Fidelis Consulting; https://op.europa.eu/en/publication-detail/-/publication/735d5b9d-0c5e-
11ec-adb1-01aa75ed71a1/language-en/format-PDF/source-228716981. 
152  Immordino,  G.,  &  Russo,  F.  F.,  Cashless  payments  and  tax  evasion;  European  Journal  of  Political 
Economy, Volume 55, December 2018, Pages 36-43. 
153 2021-Prime-Time-Report.pdf (aciworldwide.com). 

December 

area. 

Euro 

2 

55 

 
 
                                                           
estimated  benefits,  as  they  predict,  in  relative  terms,  decreases  in  paper-based 
payments  by  2025  which  would  be  offset  by  increases  in  IPs  and  other  electronic 
payments. 

-  The  initiative  is  coherent  with  the  other  sectoral  legislation  in  the  area  of  financial 
services (such as the Settlement Finality Directive, which currently excludes Payment 
Institutions and Electronic Money Institutions from participation in payment systems 
designated under that Directive and also PSD2154) as well as broad horizontal policies 
and objectives of the Commission such as effective consumer protection, application 
of  EU  sanctions  against  designated  persons  and  entities,  competition  in  the  internal 
market,  broader  financial  inclusion155,  enhanced  public  health156  and  environmental 
protection.  The  initiative  introduces  a  targeted  and  limited  derogation  in  the 
Regulation  on  cross-border  payments157  to  ensure  the  achievement  of  the  policy 
objective to address the dissuasive fees for euro IPs. 

-  The  initiative  is  fully  consistent  with  Commission’s  Communication  Towards  a 
stronger international role of the euro158, in which the Commission supported a fully 
integrated  instant  payment  system  in  the  EU,  to  reduce  the  risks  and  the 
vulnerabilities  in  retail  payment  systems  and  to  increase  the  autonomy  of  existing 
payment solutions. It is also consistent with the Commission’s 2021 Communication 
on “The European economic and financial system: fostering openness, strength and 
resilience”,  which  reiterated  the  importance  of  its  retail  payments  strategy  and  of 
digital  innovation  in  finance  as  means  to  strengthen  the  Single  Market  of  financial 
services and thereby reinforcing its open strategic autonomy in the macro-economic 
and financial fields, as  well as with the Council Conclusions on the EU’s economic 
and financial strategic autonomy: one year after the Commission’s Communication 
(see section 1.2). 

-  The initiative is coherent with fundamental rights, in particular data protection rules 
in  the  General  Data  Protection  Regulation  (GDPR).159  It  is  not  anticipated  that  the 
overall  amount  of  personal  data  processing  taking  place  will  increase  as  a  result  of 
this initiative, except to the extent that cash payments may be replaced by electronic 

154  Directive  (EU)  2015/2366  of  the  European  Parliament  and  of  the  Council  of  25  November  2015  on 
payment services in the internal market. 
155  IPs  would  enable  users,  especially  low  income  households,  to  keep  better  track  of  expenses  and 
maintain  a  positive  account  balance.  Low-income  households  who  are  more  likely  to  manage  their 
finances from pay check to pay check would have greater visibility of their budget and are less likely to 
incur penalties for late or missed payments. The benefits for financial inclusion arising from the uptake of 
IPs  were  considered  as  likely  by  51%  of  all  types  of  respondents  to  the  open  public  consultation  who 
expressed their view on this matter. 
156 Due to IP-based payment solutions being predominantly based on contactless technology, which could 
contribute to limiting the transmission of infectious diseases and provide benefits for public health in face 
of future pandemics. 
157 Taking into account the approach described in section 5.2.2 to resolve potential conflicts.  
158 
contribution-european-council-13-14-december-2018_en. 
159  Regulation  (EU)  2016/679  of  the  European  Parliament  and  of  the  Council  of  27  April  2016  on  the 
protection of natural persons with regard to the processing of personal data and on the free movement 
of such data. 

https://ec.europa.eu/info/publications/towards-stronger-international-role-euro-commission-

56 

 
 
                                                           
transactions (which is  a  long-term trend in  any case).  PSPs already apply GDPR in 
the  context  of  all  electronic  payments;  this  initiative  will  not  create  any  new 
challenges for them in this regard. Regarding implementation of the preferred option 
for  reducing  the  number  of  fraudulent  and  erroneous  euro  IPs  and  increasing  user 
confidence  in  IPs  (a  service  allowing  a  payer  to  have  an  immediate  check  of  the 
‘match’  between  the  IBAN  and  the  name  of  a  payee,  before  authorising  the 
transaction), PSPs will have to implement such a service in full compliance with the 
applicable data protection requirements. Experience with the existing services of this 
kind  provided  in  the  Netherlands  and  the  UK  demonstrates  that  the  service  can 
indeed be designed and implemented in full compliance with GDPR. 

The  initiative  would  contribute  to  the  EU  achieving  the  G20  objectives  (section 
1.2)160. 

7.4  Summary of impacts of selected options 

                 Objectives 
Policy  
option  

Increase the supply of euro IPs in the EU 

EFFECTIVENES
S 

EFFICIENCY 
(cost-
effectiveness) 

COHERENCE 

OVERALL 
SCORE 

Option 1.2 
Legal obligation to offer sending and receiving of IPs in 
euro for PSPs offering the service of regular euro credit 
transfers to users (with targeted exclusions) 
Address dissuasive fees for euro IPs compared to alternative payment means 

++ 

+ 

+ 

Option 2.1 
Obligation for PSPs to offer IPs in euro at fees not 
higher than fees for regular credit transfers 
Simplify and enhance the efficiency of the sanctions screening process for euro IPs 

≈ 

++ 

++ 

Option 3.2 
‘SEPA domestic’ approach (replace transaction-based 
screening with regular updates by PSPs of own 
customers lists against applicable EU sanctions lists) 
Increase payer confidence in euro IPs with regard to risk of fraud and errors 

+++ 

++ 

+ 

++ 

++ 

++ 

Option 4.1 
Obligation for PSPs to provide an "IBAN verification" 
service, before confirming an IP 

7.5 “One In One Out” 

++ 

≈ 

+ 

+ 

By  means  of  the  “one  in  one  out  principle”  the  Commission  has  committed  to  offset 
administrative costs of new initiatives by correspondingly reducing administrative costs 
of  other  initiatives161.  However,  the  present  initiative  does  not  involve  administrative 

160 Targets for Addressing the Four Challenges of Cross-Border Payments: Final Report (fsb.org). 

161  
Administrative  costs  are  defined  as  “costs  borne  by  businesses,  citizens,  civil  society 
organisations  and  public  authorities  as  a  result  of  administrative  activities  performed  to  comply  with 

57 

 
 
 
                                                           
 
 
costs  for  businesses,  citizens  or  public  authorities,  as  the  initiative  will  not  lead  to  any 
increased oversight or supervision of PSPs, or to specific reporting obligations. There are 
also no regulatory fees and charges arising from the initiative.  

Although  adjustment  costs  do  not  need  to  be  offset  according  to  the  “one  in  one  out 
principle”,  it  is  worth  recalling  that  the  recurrent  cost  savings  for  PSPs  from  the  new 
approach to sanctions screening are likely to more than offset adjustment costs generated 
by the other components of this initiative, giving negative adjustment costs (i.e. savings) 
for  the  initiative  overall  (see  Annexes  3  and  4  for  more  details).  Any  fees  charged  by 
PSPs,  either  for  all  credit  transfers  or  for  IBAN  verification  services,  are  outside  the 
scope of “one in one out”. It is therefore considered that this initiative is not relevant for 
the "One In One Out" principle. 

7.6 Climate and sustainability 

No negative implications of the initiative for climate have been identified. To the extent 
that euro IPs will contribute to the replacement of paper-based means of payment such as 
cheques or plastic cards and chips with fully digital ones (e.g. mobile apps), or reduce the 
use  of  paper-based  invoices  and  receipts  for  companies  and  users  that  adopt  IP-based 
solutions and services, some environmental benefits can be expected. 

The initiative will contribute to target 8.2 of the UN Sustainability Development Goals: 
“To achieve higher levels of economic productivity through diversification, technological 
upgrading  and  innovation,  including  through  a  focus  on  high-value  added  and  labour-
intensive sectors”. 

7.7 REFIT (simplification and improved efficiency) 

The present initiative is not a REFIT initiative. Although it is effected via an amendment 
to the existing SEPA Regulation, which lays down requirements for credit transfers and 
direct debits in euro, it is not based on an evaluation of that Regulation and  it does not 
amend that Regulation beyond what is necessary to incorporate new specific provisions 
regarding  IPs,  which  are  a  sub-category  of  credit  transfers  and  which  did  not  exist  in 
2012,  when  the  SEPA  Regulation  was  adopted.  All  current  provisions  in  the  SEPA 
Regulation regarding credit transfers continue to apply to IPs. 

8  HOW WILL IMPACTS BE MONITORED AND EVALUATED? 

The general objective of increasing the uptake of euro IPs relatively to euro regular credit 
transfers can be monitored on an ongoing basis based on data from the EPC, the owner of 
the SCT and SCT Inst. Schemes. Monitoring the uptake of euro IPs in various use cases 
(incl.  at  PoI)  and  of  volumes  of  euro  IPs  compared  to  cash  or  cards  will  require 
synthesising data from a number of different sources, with the assistance of the ECB and 
the EBA. 

Regarding the specific objectives, the following comments on monitoring and evaluation 
can be made: 

administrative obligations included in legal rules”. « Adjustment costs » such as implementation costs, are 
not covered by this commitment, and in any case the adjustment costs of the present initiative are overall 
negative due to the savings generated by the new approach to sanctions screening. See Annex 3. 

58 

 
 
                                                                                                                                                                            
  The  EPC  maintains  a  public  register  of  PSPs  participating  in  the  SCT  and  SCT 

Inst. Schemes.  

  Regarding pricing, breaches by banks of the requirement of pricing for  euro IPs 
not exceeding the pricing of regular credit transfers will be sanctioned by national 
competent  authorities.  Complaints  by  citizens  and  monitoring  by  consumer 
organisations such as BEUC will also be a useful source of information. 

  The  proposed  solution  for  sanctions  screening  can  be  expected  to  entirely 
eliminate  rejection  of  euro  IPs  due  to  sanctions  screening  false  hits,  if  it  is 
effectively  implemented.  PSPs  can  be  expected  to  implement  it  given  the 
significantly reduced costs for them. The legislation will not allow Member States 
to require transaction-based sanctions controls for IPs in euro. 

  For fraudulently and erroneously misdirected payments, the body or bodies which 
organise  the  future  IBAN-name  check  service  can  be  expected  to  collect  data 
from  participating  PSPs  on  the  effects  of  the  system,  although  there  is  no  legal 
requirement to do so. In addition, fraud data relating to IPs will be published by 
the ECB, the first year to be covered being 2022. There is no specific quantitative 
target for reductions. 

Objectives 
General objective 
Increase  the  uptake  of  euro  IPs 
in the EU 

Operational objectives 
Increase  the  number  of  PSPs 
offering euro IPs in the EU 

Eliminate  higher  fees  for  euro 
IPs  than  fees  for  euro  regular 
credit transfers 
Reduce  the  rate  of  incorrect 
rejections  of  euro  IPs  due  to 
sanctions screening 
Reduce  the  rate  of  fraudulently 
or erroneously misdirected euro 
IPs 

Indicator 

Source of information 

%  of  IPs  in  all  EU  credit 
transfers (by volume). 

EPC 

and 

national 

competent 
citizens' 

EPC, 
authorities 
complaints 
National  competent  authorities  / 
citizens' complaints / BEUC 

No  monitoring  needed  other  than 
implementation 
new 
screening approach 
Organiser  of  the  future  IBAN-
name check service 

the 

of 

ECB   

compliance  with 

Full 
obligation for PSPs in scope 

the 

Full 
the 
compliance  with 
obligation  for  all  PSPs  offering 
IPs 
%  of  cross-border  EU  euro  IPs 
incorrectly  rejected  because  of 
sanctions concerns 
%  of  IPs  subject  to  a  dispute 
procedure for error or fraud 
Evolution 
of 
amount of IP fraud 

volume 

and 

59 

 
 
 
 
 
 
 
 
 
 
 
ANNEX 1: PROCEDURAL INFORMATION 

LEAD DG, DECIDE PLANNING/CWP REFERENCES  

This Impact Assessment Report was prepared by Directorate B "Horizontal Policies" of 
the  Directorate  General  "Directorate-General  for  Financial  Stability,  Financial  Services 
and Capital Markets Union" (DG FISMA).  

The Decide Planning reference is: 

  PLAN/2021/10249: Initiative on IPs in the EU, proposal for a Regulation. 

The initiative on IPs was included in the 2022 Commission Work Programme published 
on 19 October 2021. 

ORGANISATION AND TIMING 

Four  Inter-Service  Steering  Group  (ISSG)  meetings  were  held,  chaired  by  SG,  on  9 
March  2021,  17  November  2021,  7  April  2022,  and  6  September  2022  (the  first  three 
meetings  to  discuss  draft  impact  assessment  and  the  fourth  meeting  to  discuss  draft 
legislative text). In addition, a written consultation was held from 29 June to 4 July 2022 
on  the  draft  Impact  Assessment  as  revised  for  resubmission  to  the  Regulatory  Scrutiny 
Board (RSB). The  ISSG consisted of representatives from  various Directorates-General 
of  the  Commission:  COMP,  JUST,  CNECT,  ECFIN,  GROW,  REFORM,  TAXUD, 
TRADE,  and  SJ.  The  contributions  of  the  members  of  the  Steering  Group  have  been 
taken into account in the content and shape of this impact assessment. 

CONSULTATION OF THE REGULATORY SCRUTINY BOARD 

The  Impact  Assessment  report  was  examined  by  the  RSB  on  24  May  2022.  The  RSB 
issued a negative opinion on 25 May 2022. The report was resubmitted to the RSB on 8 
July  2022;  the  RSB  then  issued  a  positive  opinion  (with  comments)  on  7  September 
2022. 

The principal areas in which this Impact Assessment was reinforced following the RSB 
negative opinion of 25 May 2022 are the following: 

  More  explanation  about  the  market  failures  underlying  the  initiative  in  light  of 
network externalities, particularly on the supply side (including in Section 2.3 and 
its subsections, as well as new Annex 10). 

  Addition of further detail on the nature of the ’payment float’ and impacts of its 
reduction  on  payment  service  users,  providers  and  financial  stability  (including 
new Annex 8). 

  Clarification on why and to what extent the initiative will apply in non-Euro area 
Member  States  (e.g.  in  Section  5  when  describing  options,  in  Section  6  when 
assessing  impacts  of  options,  in  Annex  3  when  assessing  impacts  on  various 
stakeholders). 

  Clarification  that  market  concentration  is  not  among  the  main  problem  drivers, 
and  that  greater  choice  of  means  of  payment  at  PoI  (rather  than  greater 
competition among PSPs) is an indirect expected consequence of the initiative. 

60 

 
 
 
  Greater  breakdown  of  the  impact  of  the  initiative  on  different  categories  of 

stakeholders, including SMEs, particularly in Annex 3. 

  Consideration of additional options not included in the Impact Assessment as first 

 

submitted, namely Options 1.1 and 4.3. 
Inclusion of more information about IP systems in non-Euro area Member States 
and worldwide (see Annex 6). 
 
Inclusion of a more granular description of the EU PSP sector (see Annex 7). 
  Further explanations regarding the risk of fraud and refund rights with respect to 

IPs, regular credit transfers and other means of payment (see Annex 5). 

  More background information on the functioning of cross-border credit transfers 

in the EU (see Annex 9). 

  Clarification of the specific and operational objectives of the initiative. 
  Structural and presentational improvements (e.g. presentation of baseline options, 
explanation of scoring of options; treatment of drivers 3 and 4 and related options 
in the main report not in annexes). 

Following the positive opinion of 7 September 2022, in light of the comments attached to 
the opinion, further clarifications were introduced in the report in three areas: 

  The distribution of the impacts of the initiative, particularly with regard to  PSPs, 
arising  from  the  obligation  to  send  euro  IPs  which  has  a  reducing  effect  on  the 
payment float (section 6.1), and consumers (section 6.2). 

  The impact of this initiative in non-Euro area Member States, and its interaction 

with the CBPR (sections 5.2.2 and 6.1). 

  The  application  of  the  “one  in  one  out  principle”  as  regards  adjustment  costs 

(section 7.5). 

EVIDENCE, SOURCES AND QUALITY 

A  number  of  inputs  and  sources  of  data  were  used  in  the  preparation  of  this  impact 
assessment, including the following: 

  Evidence supplied in the various consultations described in Annex 2. 
  A  study  carried  out  by  a  contractor,  Fidelis  Consulting,  "IPs,  Current  and 

 

 

foreseeable benefits" delivered in 2021162. 
Information  provided  by  the  EPC  on  the  membership  and  use  of  the  SCT  and 
SCT Inst. Schemes. 
Information  provided  by  the  ECB  on  the  use  of  its  TIPS  real  time  settlement 
system, ECB Statistical Data Warehouse, National Payment Committees. 

  ORBIS database. 
  EBA Register of payment and electronic money institutions under PSD2163. 
  Discussion  Paper  on  the  EBA’s  preliminary  observations  on  selected  payment 

fraud data under PSD2, as reported by the industry164. 

162  Available  at  this  link:  https://op.europa.eu/en/publication-detail/-/publication/735d5b9d-0c5e-11ec-
adb1-01aa75ed71a1/language-en/format-PDF/source-228471178. 
163 
under-PSD2  
164 Discussion Paper on payment fraud data received under PSD2 (europa.eu) 

https://www.eba.europa.eu/risk-analysis-and-data/register-payment-electronic-money-institutions-

61 

 
 
                                                           
  Evidence  provided  by  PSPs,  especially  on  costs,  in  the  course  of  targeted 

consultation and bilateral contacts. 

With regard to quality of evidence, the following observations can be made: 

 

 

Information  on  costs  incurred  by  PSPs,  either  in  offering  IPs  or  in  offering  a 
service of IBAN checking, was provided by various PSPs themselves, and could 
not  be  independently  verified.  Many  PSPs  declined  to  provide  this  information, 
and  the  ones  that  did  provide  it,  did  so  under  the  condition  of  strict 
confidentiality. The data points used in the analysis reflects the significant efforts 
by  the  Commission  services  to  obtain  cost  information,  as  many  PSPs  and 
industry associations were not  constructive in sharing the necessary data.  It was  
observed  that  the  reported  costs  varied  considerably,  and  were  generally  in 
proportion to the size of the PSP, in terms of geographical reach and number of 
accounts serviced. 
Information on the numbers of EU PSPs offering IPs is available via the EPC, as 
participation in the SEPA SCT Inst. Scheme confers this capability.  

  The  Fidelis  Consulting  study,  completed  in  2021,  was  based  on  the  analysis  of 
market  studies  and  interviews  with  relevant  stakeholders,  including  PSPs, 
providers of technical services, consumer organisation, merchants and corporates, 
to  obtain  their  insights  into  the  actual  and  expected  benefits  of  a  widespread 
adoption of IPs. 
Information  on  usage  and  market  shares  of  various  payment  instruments  and 
means  (used  for  example  in  Annex  7  and  in  section  2)  was  compiled  by 
Commission  services  from  sources  such  as  the  ECB,  National  Payment 
Committees,  studies,  and  information  provided  by  market  participants,  in  most 
cases in confidence. Commission services collated the data and made calculations 
on this basis. 

 

62 

 
 
 
 
ANNEX 2: STAKEHOLDER CONSULTATION  

1. CONSULTATION PLAN 

In  order  to  ensure  that  the  Commission’s  proposal  adequately  takes  into  account  the 
views  of  all  interested  stakeholders,  the  consultation  strategy  supporting  this  initiative 
was built on the following components: 

1.  An open public consultation, open from 31 March to 23 June 2021165; 
2.  A  public  consultation  to  prepare  the  Commission’s  Retail  Payments  Strategy 

(RPS), open from 3 April to 26 June 2020166; 

3.  A  public  consultation  on  the  inception  impact  assessment  for  the  present 

initiative, open from 10 March to 7 April 2021167; 

4.  A targeted written consultation of the payments industry, open from 24 March till 

12 June 2021;  

5.  Consultation  of  stakeholders  in  two  Commission  groups  the  Financial  Services 
User Group (FSUG), and the Payment Systems Market Expert Group (PSMEG); 
6.  Ad hoc contacts with various stakeholders, either on their initiative or that of the 

Commission; 

7.  A FISMA webinar on IPs organised on 10 June 2021; 
8.  Consultation  of  Member  States’  experts  in  the  Commission  Expert  Group  on 
Banking Payments and Insurance and ad hoc workshops on sanctions screening. 

The results of each component are presented below. 

2. OPEN PUBLIC CONSULTATION ON IPS 

Introduction  

On 31 March 2021, the European Commission launched a dedicated public consultation 
on  IPs.  In  line  with  the  Better  Regulation  Principles,  the  Commission  invited 
stakeholders to express their views on  remaining obstacles as well as possible enabling 
measures to ensure a wide availability and use of IPs in the EU.  

The  consultation  was  open  until  23  June  2021  and  yielded  170  replies,  165  of  them 
submitted  online  via  Have  Your  Say  portal  and  5168  by  email  to  Commission  services. 
The questionnaire focused on four areas: 

1.  Payment services user perspective 

a.  Consumer preferences 

b.  Retailer preferences 

c.  Corporate user preferences 

https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12931-Instant-

165 
Payments/public-consultation_en . 
166 https://ec.europa.eu/info/consultations/finance-2020-retail-payments-strategy_en . 
167 
payments_en . 
168  From  ETPPA,  EMA,  EBA  Clearing,  Danish  Ministry  for  Business,  Industry  and  Financial  Affairs,  and 
Bundesarbeitskammer Ӧsterreich. 

https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12931-Instant-

63 

 
 
                                                           
2.  Payment Service Provider (PSP) perspective  

3.  Technical standardization, and 

4.  Horizontal aspects 

The  feedback  to  this  consultation  has  been  used  to  inform  the  assessment  by  the 
Commission services of impediments to the widespread availability and use of IPs in the 
EU and of possible enablers ensuring a full uptake of pan-European IPs. 

This  annex  provides  a  factual  overview  of  all  responses  received.  Therefore,  any 
opinions expressed reflect the views of the respondents and do not reflect the position of 
the European Commission or its services.   

Who responded?  

Out  of  the  170  responses  received,  almost  half  (46%)  came  from  IP  users  (35%  EU 
citizens  /  consumers,  8%  merchants  and  3%  corporate  users),  43%  from  IPs  providers 
(including PSPs, technical service and infrastructure providers) and 11% from other type 
of respondents (public authorities, NGOs, academics and other).  

Respondents  came  from  24  Member  States  and  9  countries  outside  the  EU.  Inside  the 
EU,  the  highest  number  of  responses  came  from  Belgium  and  Germany.  17  responses 
came from outside the EU. 

SMEs were encouraged to participate in the public consultation via the Enterprise Europe 
Network  (EEN).  18  respondents  identified  themselves  as  SMEs,  of  which  7  were 
business  associations  and  consumer  organisations,  and  11  individual  companies  (9 
provider side representatives, 1 merchant and 1 other).  

Key messages  

Overall,  the  consultation  responses  revealed  that  a  majority  within  all  categories  of 
stakeholders,  on  both  user  and  provider  side,  considered  that  IPs  can  respond  to  their 
payment  or  business  needs  and  bring  about  broader  benefits  in  terms  of  e.g.  financial 
inclusion or fiscal benefits. 

64 

 
 
 
On the user side, consumers and merchants considered that IPs can offer them payment 
means  which  are  convenient,  fast,  and  easy  to  use.  In  terms  of  benefits  of  IPs  for 
corporates, respondents put emphasis on the improved ability to more efficiently manage 
cash flows and meet payment obligations on time.  

All  categories  of  payment  service  users  were  nearly  unanimous  that  IPs  must  allow 
making  and  receiving  payments  anywhere  in  the  EU  and  not  only  within  one  Member 
State.  

A vast majority of consumers and merchants considered cost of  IPs, compared to other 
alternatives  such  as  regular  credit  transfers  or  cards,  to  be  an  important  factor. 
Furthermore, majority of consumers indicated that they would not be willing to pay for 
IPs more that they pay for regular credit transfers. 

The responses on the provider side also  reflect  the recognition  of important  benefits  of 
IPs in terms of allowing them to remain competitive on the market.  

Respondents considered that certain potential risks related to IPs, in terms of e.g. fraud or 
liquidity, may require special consideration, but were not seen as a hindrance to rolling 
out  pan-European  IPs.  There  was  an  overall  support  for  ensuring  EU-level 
standardization of relevant technologies.  

Summary of Responses  

Payment services user perspective 

Consumer preferences  

EU consumers were invited to indicate the main features, which they consider important 
when selecting a payment method. Overall, 60 responses were received from individual 
EU citizens and consumer organizations. 

The  vast  majority  of  consumers  considered  that  it  was  important  that  the  funds  are 
credited  instantly  to  the  account  of  the  beneficiary  (88%)  and  that  the  service  was 
available  24  hours  a  day,  any  day  of  the  year  (90%).  88%  considered  that  cost  of  IPs 
(compared with a regular credit transfer) would be an important factor: 67% would not 
be willing to  pay  any premium  fee for the instant  version of credit transfers, and those 
who would be open to paying more, could agree to an increase of up to 50% compared to 
a fee for regular credit transfers.  

The existence of safeguards regarding the risk of fraud or error was considered important 
by  90%  of  respondents.  The  majority  (83%)  expected  their  banks  to  offer  a  service 
allowing,  prior  to  the  initiation  of  the  transfer,  for  the  immediate  verification  of  the 
‘match’ between the IBAN of the beneficiary and the name on the beneficiary account, 
automatically and free of charge.  

Regarding the important features of IPs when used at Point of Interaction (PoI), 88% of 
respondents  pointed  to  convenience  (e.g.,  no  need  to  carry  cash  or  a  card  if  used  via  a 
mobile  payment  app/digital  wallet);  88%  to  price  of  using  an  IP  at  PoI;  85%  to 
possibility to pay not only in one’s own country but also anywhere in the EU, as well as 
to  the possibility to  ask  for a refund; 75% to  the possibility to  pay in  a broad range of 
places  and  situations  (shops,  restaurants,  gas  stations,  public  administrations,  etc.)  and 
75% to the speed with which the funds are credited to the beneficiary.   

65 

 
 
Global  acceptance  was  important  for  63%  of  consumer  respondents  and  a  common 
recognizable label by 55%. Just under half (48%) considered the possibility to integrate 
loyalty points in the payment app/wallet to be an important feature (with one consumer 
specifically  raising  concerns  about  the  impact  of  integrating  loyalty  points  on  their 
privacy).  

Other benefits of IPs identified by respondents included inter alia the possibility to better 
identify transactions compared to card transactions which appear on the account with  a 
delay. 

Features of IPs at PoI 
considered important by consumers

Convenience (no need to carry cash or cards)

Price of instant credit transfer at PoI

Possibility to pay anywhere in EU

Possibility to ask for refund

Possibility to pay in broad range of places

Speed of transfer

Global acceptance

Presence of visible label

Possibility to integrate loyalty points

0%

20%

40%

60%

80%

100%

Retailer preferences 

Stakeholders were invited to rate the importance of various factors for  merchants when 
deciding on whether to offer customers the possibility to pay with IPs at PoI.  

Merchants and retailer associations (13 responses) were unanimous on the importance of 
ensuring  the  ability  to  accept  payments  from  customers  from  other  Member  States; 
ensuring  the  seamlessness  at  check-out;  and  availability  of  reconciliation  service169.  A 
similar extent of support for the above factors was given by all types of stakeholders who 
expressed their view on the subject.  

The  vast  majority  of  EU  merchants  (92%)  and  nearly  the  same  proportion  of  all 
stakeholders  considered  it  important  to  ensure  a  lower  cost  of  IPs  at  PoI  compared  to 
cards;  and  the  possibility  to  accept  payments  without  (or  with  very  little)  acceptance 
hardware. Moreover, 77% of merchants (and even higher proportion of all stakeholders) 
considered  speed;  the  availability  of  an  omni-channel  point  of  sale  (POS)  solution 
offering payers means of selecting their preferred means of payment; and the ability to 
set up a default selection of payment applications, to be important features. Availability 
of services allowing the incorporation of loyalty points was considered important by 54% 
of merchants but only 43% of all stakeholders.  

169 The process of matching a payment recorded in the bank account of the merchant with the sales of 
the merchant. 

66 

 
 
 
                                                           
Other  important  features  considered  by  merchants  when  deciding  on  whether  to  start 
accepting  a  pan-European  payment  solution  or  new  scheme  based  on  IP  included: 
ensuring  appropriate  fraud  prevention,  availability  of 
instant  confirmation  of 
authorisation  and  payments,  availability  of  dispute  resolution  mechanism,  instant 
refunds,  capability  to  cater  for  recurring  payments  for  subscription-based  services,  and 
affordable fees for consumers. 

Corporate user preferences 

Overall, respondents  argued that  IPs  could  be the first  step towards real-time corporate 
treasury,  ensuring  more  accurate  and  secure  management  of  available  balances  and 
reducing  the  need  for  liquidity  buffers,  with  surplus  cash  available  to  be  reinvested  by 
corporates in their operations.  

80% of corporate users considered that being able to manage cash flows more efficiently 
was  an  important  benefit  of  IPs  (down  to  77%  if  responses  from  all  categories  of 
stakeholders  are  considered).  80%  of  corporate  users  (or  86%  of  all  stakeholders  who 
pronounced  their  opinion  on  this  point),  considered  that  an  important  benefit  would  be 
derived  from  the  ability  to  ensure  timely  payment  of  invoices  or  other  payment 
obligations. The majority of corporate users (60%) and vast majority of all respondents 
(83%)  considered  that  IPs  would  help  corporates  offer  services  to  their  clients  more 
efficiently (e.g. by providing instant refunds).  

67 

 
 
 
80%  of  corporate  users  (and  75%  of  all  respondents)  considered  that  immediate 
availability of funds would enable corporate users to fulfil their obligations (e.g. instant 
shipment  of  the  order)  sooner,  compared  to  the  situation  when  the  funds  are  not 
immediately available. 

Other types of benefits for corporate users identified by respondents included  inter alia 
being able to be more agile in terms of managing payment needs at a very short notice, 
also outside the banking business hours, e.g., booking cargo or manufacturing capacity, 
or  purchasing  on-demand  computing  services  (such  as  cloud  services);  facilitating 
logistics  (e.g.  no  need  to  hold  goods  until  payment  is  cleared);  reduced  need  for 
borrowing; reduced risk of not being paid by customers and business partners; and being 
able to make payments for higher amounts compared with cards.  

Respondents considered that IPs could be useful for paying employees, suppliers and tax 
authorities,  paying  late  fees  and  invoices,  payments  of  dividends,  reimbursements  to 
customers,  recovering  debt.  IPs  were  seen  as  a  substitute  for  existing  ‘payment  against 
delivery’ solutions, improving the process of digitalization of EU companies.  

In terms of the readiness of corporate users to accept IPs, respondents pointed to the need 
to  adjust  the  internal  operations  of  corporate  users,  such  as  related  to  treasury 
management  system,  warehouse  operations,  customer  support  system,  etc.  However, 
corporate users, including SMEs, did not express major concerns about the cost of such 
adaptations. In terms of the readiness of corporate users to pay a premium fee for an  IP 
compared to regular credit transfer, the view of all respondents was split 50% in favour 
and 50% against. 

Only a handful of respondents pronounced their views on whether the current EUR 100k 
cap on euro IPs constitutes an obstacle to their use by corporates and whether it should be 
modified  or  removed.  Respondents  considered  that  both  types  of  processing:  per 
individual  transaction  and  in  bulk  (for  multiple  payment  transactions  bundled  together) 
should  be  available  for  corporate  users  to  choose  depending  on  their  specific  needs.  In 
terms  of  the  type  of  Value  Added  Services  (VAS)  which  were  considered  useful  for 
corporates, Request  to Pay  and/or Confirmation  of Payee (CoP),  as well  as e-invoicing 
were mentioned most often. 

68 

 
 
 
Perspective of payment service providers 

As  regards  benefits  for  Payment  Service  Providers  (PSPs)  which  would  derive  from 
offering  IPs,  ‘provider-side’  respondents  to  the  consultation  (representing  43%  of  all 
respondents  and  comprising  PSPs,  technical  service  providers  and  payment  systems) 
thought  that  the  important  benefits  would  lie  in  the  ability  of  PSPs  to  preserve  their 
existing customers (90% of provider-side respondents who expressed an opinion on this 
point) and to attract new customers (88%).  

In  terms  of  other  types  of  benefits,  67%  of  provider-side  respondents  thought  that  IPs 
would  present  important  benefits  in  terms  of  ability  to  (cross)  sell  other  services,  59% 
thought that important benefits would arise from the opportunity for PSPs to provide an 
alternative to other widely used means of payment such as cards and therefore generate 
cost  savings  and  become  more  independent  from  other  providers,  47%  saw  important 
benefits linked to IPs being a new source of revenue, while 41% considered that with IPs 
PSPs could generate cost savings in other operational areas (e.g., cash management and 
distribution, ATM maintenance, security costs and other).  

As regards provider-side respondents that identified themselves as SMEs and expressed 
their  view  on  benefits  deriving  from  IPs,  88%  thought  that  there  would  be  important 
benefits with respect to the ability of PSPs to preserve their existing customers, 88% - to 
attract  new  customers,  75%  -  to  provide  an  alternative  to  other  widely  used  means  of 
payment such as cards and therefore generate cost savings and become more independent 
from other providers, 75% - to (cross) sell other services, 63% - to have a new source of 
revenue and 50% - to generate cost savings in other operational areas.  

Out  of  82  respondents  representing  various  types  of  stakeholders  who  expressed  their 
opinion on whether  IPs could aggravate bank runs and thus contribute to bank failures, 
71% did not see such risk. They argued that important safeguards already exist, such as 
the  pre-funded  nature  of  IP  settlement  accounts  with  Clearing  and  Settlement 

69 

0%20%40%60%80%100%Cost savings in other operational areasNew source of revenueLower costs due to independence fromother providersOpportunity to cross sellAttracting new customersPreserving existing customersTypes of important benefits for PSPs (from perspective of provider-side respondents)SMEsAll provider side 
 
 
 
 
Mechanisms (CSMs) or various daily or transaction limits that PSPs tend to apply (which 
may  not  pertain  specifically  to  IPs).  On  the  other  hand,  29%  of  respondents,  primarily 
PSPs, thought that such risk is possible. In terms of mechanisms and tools that this group 
of  respondents  considered  could  be  effective  to  contain  intense  liquidity  outflows 
prompted  by  IPs,  67%  thought  that  a  daily  limit  for  the  amount  which  could  be 
transferred  via  IPs  could  be  useful;  54%  supported  a  discretionary  power  allowing 
competent authorities to suspend IP obligations of the PSP concerned for a certain period 
of time and 50% thought that other mechanisms or solutions, available to either PSPs or 
competent  authorities,  could  be  useful,  such  as  application  of  limits  for  the  number  of 
consecutive  IPs  (in  addition  to  a  daily  limit  for  the  amount  that  can  be  transferred), 
introduction  of  a  notification  mechanism  by  central  banks  in  case  of  a  bank  run  or 
discretion for PSPs, under certain exceptional circumstances, to redirect  IPs to ‘regular’ 
credit transfers.  

Technical standardization 

The  consultation  sought  stakeholder  views  on  whether  a  single  European  QR  (Quick 
Response) code standard for IPs should be available to relevant market participants. 70% 
of  all  respondents  who  expressed  their  view  on  this  subject  thought  that  a  single 
European QR code should be available while 30% disagreed. 

The  majority  (63%)  of  those  who  were  in  favour  of  a  single  standard  thought  that  it 
should be developed by a European standardisation organisation, and 30% said that this 
should be done by market participants.  

Out  of  those  who  disagreed  with  the  need  for  a  single  standard,  38%  thought  that  the 
same  objective  could  be  achieved  through  the  interoperability  of  existing  QR  codes, 
while 24% said that other technologies (e.g. Near Field Communication) are safer and/or 
more convenient.  

Broader societal aspects 

The  consultation  also  included  questions  on  broader  risks  and  benefits  to  the  society, 
arising from the widespread use of IPs in the future. 

In terms of risks that could negatively affect operations of a particular financial sector or 
pose  broader  societal  costs,  70%  of  respondents  who  expressed  their  opinion  on  this 
subject did not see such risks, while 30% believed that such risks exist, referring to risks 
related to online scams and fraud, additional pressure on PSPs to ensure real-time fraud 
prevention,  costs  arising  from  parallel  maintenance  of  different  payment  methods  and 
their integration into applications. 

In terms of broader societal benefits, among all types of respondents who expressed their 
opinion  on  various  types  of  benefits,  68%  believed  that  benefits  accrue  in  the  area  of 
financial inclusion, 65% thought there would be fiscal benefits, 44% saw benefits related 
to  public  health  and  43%  believed  that  there  would  be  benefits  linked  to  better  data 
protection. 21% of all respondents to the consultation indicated that benefits would also 
accrue in a number of other areas, e.g. societal costs of cash handling and management. 

It should be observed that EU citizens / consumers had a more favourable outlook on the 
likelihood of societal benefits than the overall sample of respondents who expressed their 
opinion on this subject, as evidenced by a consistently greater proportion of EU citizens / 
consumers agreeing to the possibility of various societal benefit types. 

70 

 
 
As  regards  respondents  that  identified  themselves  as  SMEs,  they  had  a  marginally  less 
favourable  outlook  on  the  likelihood  on  the  various  types  of  societal  benefits  that  the 
overall sample of respondents who expressed their opinion on the subject. 

3. OTHER CONSULTATIONS OF STAKEHOLDERS  

3.1  Public  consultation  in  preparation  of  the  Commission’s  Retail  Payments  Strategy 
(RPS) 

The public consultation preparing the RPS was open from 3 April to 26 June 2020, and 
received a total of 189 responses from market players and consumers (17 responses from 
citizens). The following is an extract from the published summary of that consultation.170 

A  large  share  of  respondents  supported  EU  legislation  making  payment  service 
providers’  adherence to  the' SCT  Inst.  Scheme  mandatory. Respondents who supported 
mandatory  adherence to  SCT Inst.  Scheme suggested very diverse end dates for such a 
requirement, ranging from between the end of 2021 until the end of 2025. Approximately 
half the respondents did not  indicate any date. 

In addition, a large proportion supported additional standardisation measures, pointing to 
a  variety  of  areas,  including  inter  alia,  QR-codes,  clearing  transmission  protocols,  data 
protocols,  APIs,  supporting  payment  initiation  and  account  information  services, 
authentication, e-identification, cash registry systems and e-receipts, etc. 

A number of respondents also supported the development of new payment schemes, such 
as SEPA instant direct debit, one leg-in transactions, European electronic identity based 
on LEI, etc. A smaller number of respondents supported EU legislation adding IPs to the 

170 https://ec.europa.eu/info/consultations/finance-2020-retail-payments-strategy_en . 

71 

0%10%20%30%40%50%60%70%80%90%Data protectionPublic healthFiscal benefitsFinancial inclusionTypes of societal benefitsarising from widepread use of instant paymentsEU consumersAll respondentsSMEs 
 
 
 
 
 
 
                                                           
list  of  services  included  in  the  payment  account  with  basic  features  under  the  Payment 
Accounts Directive or EU legislation mandating replacement of SCT with SCT Inst. 

Amongst  additional  measures  which  might  contribute  to  the  successful  rollout  of  pan-
European payment solutions based on  IPs, respondents also referred to a wide range of 
possible  measures,  including:  identifying  schemes  to  which  adherence  should  be 
mandatory;  ensuring  open  access  to  Near  Field  Communication  (NFC)  on  mobile 
devices;  common  branding  of  interoperable  digital  wallets;  mandating  that  IPs  are 
charged  as  a  standard  service;  and  effective  regulation  of  global  payment  scheme 
operators to ensure a level playing field.  

A  large  proportion  of  respondents  considered  that  IPs  may  pose  some  degree  of 
additional or different risks compared to  regular credit transfers. These risks, according 
to respondents, may derive from inter alia the speed and immediacy of IPs making them 
irrevocable,  the  lack  of  clear  expectations  and  standards  from  regulators  concerning 
compliance  with  payment  screening  obligations,  etc.  These  factors  could,  according  to 
the respondents,  lead to  fraud (e.g. authorised push payment scams), money laundering 
and  terrorist  financing  (e.g.  mule  accounts),  cybercrime,  liquidity  risk  for  financial 
institutions, operational and legal risks from processing errors, higher cost for merchants 
and  insufficient  consumer  protection.  Many  respondents  emphasized,  however,  that 
solutions  already  exist  to  mitigate  those  risks  or  that  they  could  be  developed. 
Respondents acknowledged that such solutions could be costly, but also considered that 
modern technologies (such as artificial intelligence) could be useful.  

Respondents  pointed  to  the  need  for:  dedicated,  real-time  fraud  monitoring  and 
prevention tools;more  focus on pre-transaction initiation  controls  (such as confirmation 
of  payee);  a  maximum  threshold  for  instant  transactions;  a  market-wide  digital  identity 
program;  consumer  communications  campaigns  to  raise  awareness  about  differences 
with  other instruments  such as  cards . A number of respondents  considered that an ad-
hoc  stopgap  mechanism  would  be  useful  for  emergency  situations,  as  IPs  can  quickly 
stress  the liquidity situation  of a payment service provider and current  mechanisms  are 
insufficient if a bank run takes place outside normal office hours. 

When invited to identify the most advantageous solutions for EU merchants, other than 
cash,  respondents  where  almost  equally  spread  over  three  possibilities:  card-based 
solutions, SCT Inst. solutions, and other (such as Central Bank Digital Currencies, SEPA 
Direct  Debit  (SDD)  or  various  solutions  based  on  a  combination  of  smart  cards,  IPs, 
request  to  pay  schemes,  etc.).  When  asked  what  the  most  important  factor(s)  for 
merchants were when deciding whether or not to start accepting a new payment method, 
the  majority  of  respondents  pointed  to  the  proportion  of  users,  the  seamlessness  of 
consumer experience, level of merchant fees, fraud prevention, reconciliation and refund 
services.  Other factors included, for example, the implementation  cost,  time and  effort, 
maintenance cost, speed of the payment solution, international acceptance, security, and 
system stability. 

In  response  to  the  question  regarding  whether  they  accept  foreign  SDD  payments,  the 
majority  of  respondents  indicated  that  they  accepted  both  domestic  and  foreign  SDD, 

72 

 
 
 
 
 
 
 
whereas a very small number of respondents did not accept SDD at all, or only accepted 
domestic SDD. 

3.2 Consultation on inception impact assessment 

The consultation on an inception impact assessment on the Commission's Have Your Say 
portal171  ran  from  10  March  2021  to  07  April  2021,  and  drew  41  responses  from  a 
diverse  range  of  stakeholders,  showing  broad  support  for  a  regulatory  action  to  put  in 
place relevant enablers. 

3.3 Targeted written consultation of market participants 

The  targeted  consultation  with  PSPs  and  providers  of  technical  services  supporting  the 
provision of IPs focused on matters of more technical or confidential nature; 51 replies 
were received from a wide spectrum of payments market participants. 

3.4 Consultation of stakeholder groups 

The  Financial  Services  User  Group  (FSUG)  discussed  IPs  on  23  April  2021172.  FSUG 
members stressed that for IPs, an account should at a minimum be reachable, IPs should 
not require a smartphone and are digitally excluded, and that fees should be affordable. 
The  importance  of  consumer  confidence  in  IPs  with  regard  to  consumer  protection 
against fraud was underlined. 

The  Payment  Systems  Market  Expert  Group  (PSMEG)  discussed  IPs  on  16  December 
2021.  As  regards  the  nature  of  PSPs  that  should  be  mandated  to  offer  sending  and 
receiving  of  IPs,  the  general  view  shared  by  most  stakeholders  was  that  the  obligation 
should  cover  all  PSPs  offering  retail  payment  services  to  consumers  and  corporates.  In 
terms of sequencing of the possible obligations to receive and send euro IPs, there was an 
overall  support  for  a  one-step  approach  from  consumers,  retailers,  corporates  and  non-
banking  PSPs.  As  regards  the  level  of  transaction  fees  for  euro  IPs,  the  views  of  the 
stakeholders  diverged.  Among  the  PSP  community,  account  servicing  (AS)  PSPs  were 
not  in  favour of a  regulatory intervention on  fees, while non-AS  PSPs  supported either 
equal transaction fees for euro IPs and regular credit transfers, or a free provision of euro 
IPs.  Consumers  and  retailers  also  expressed  preference  for  no  ‘per  transaction’  fees  of 
euro  IPs.  As  regards  protecting  consumers  by  way  of  requiring  their  PSP  to  provide  a 
service allowing, prior to the initiation of a transfer, for the immediate verification of the 
match between the IBAN of the beneficiary and the name on the beneficiary account held 
with the beneficiary’s PSP, consumer representatives and academics considered that such 
service would be very important and beneficial for consumers. 

3.5 Bilateral contacts with stakeholders 

A  wide  range  of  bilateral  contacts  were  held  with  various  stakeholders  during  the 
preparation  of  this  initiative,  essentially  by  videoconference,  including  BEUC  -  the 
European  consumer  organisation),  providers  (banks,  banking  associations,  European 

https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12931-Instant-

171 
payments_en . 
172 https://ec.europa.eu/info/publications/fsug-meetings-2021_en . 

73 

 
 
 
                                                           
Payments Council, FinTechs, third party providers (TPPs)), Euro Retail Payments Board 
(ERPB),  ECB,  National  Payments  Committees,  national  central  banks  and  supervisors, 
etc. 

3.6 FISMA webinar on 10 June 2021 

The  DG  FISMA  webinar  on  "Exploring  the  potential  of  IPs  for  EU  consumers  and 
businesses",  held  on  10  June  2021173,  brought  together  consumers,  payment  service 
providers,  merchants  and  corporates,  including  SMEs.  The  event  garnered  significant 
stakeholder  interest,  with    767  pre-registrations  and  2,884  connections  to  the  live  web-
streaming, from both within the EU and globally, and demonstrated a very strong support 
from the user community for the greater availability of IPs.  

4. CONSULTATION OF MEMBER STATES 

National authorities were consulted in the framework of the Commission Expert Group 
on Banking Payments and Insurance (CEGBPI), which discussed IPs in a number of its 
meetings and provided input on the positions of Member States on specific elements. The 
CEGBPI discussed IPs on 22 October 2020, 25 March and 30 November 2021174.  

With  regard  specifically  to  sanctions  screening,  two  workshops  were  held,  on  23  June 
and  10  December  2021,  with  Member  State  experts  in  the  area  of  application  of 
“sanctions  screening”,  focusing  on  the  frictions  to  the  processing  of  cross-border  IPs 
which are caused by national and international sanctions screening obligations and on the 
possible solutions to overcome those frictions. 

173 https://ec.europa.eu/info/events/finance-210610-instant-payments_en . 
174  Minutes 
link: 
register/screen/expert-groups/consult?do=groupDetail.groupDetail&groupID=2885&Lang=EN . 

https://ec.europa.eu/transparency/expert-groups-

available 

this 

at 

74 

 
 
 
 
 
 
 
 
 
 
                                                           
ANNEX 3: WHO IS AFFECTED AND HOW? 

1. PRACTICAL IMPLICATIONS OF THE INITIATIVE 

1.1 Introduction 

The costs of the initiative are mainly one-off implementation (adjustment) costs, and fall 
largely on PSPs. They consist of a) the costs of offering euro IPs for those PSPs covered 
by the initiative which are not already participants in the SCT Inst. Scheme; b) the costs 
of  implementing  an  EU-level  IBAN  verification  system  in  order  to  reduce  fraudulently 
and erroneously misdirected euro IPs and thus promote payer confidence in IPs. Ongoing 
incremental per euro IP transaction costs for PSPs, where reported, are mainly connected 
to having active processing capacity 24/7/365. However at high volumes overall per euro 
IP transaction costs are comparable to transaction costs for euro regular credit transfers. 

The  benefits,  on  the  other  hand,  are  ongoing  benefits  and  accrue  to  a  wide  range  of 
stakeholders,  including  consumers,  businesses,  merchants  and  public  administrations, 
fintechs as well as PSPs themselves. The proposed solution for sanctions screening will 
lead  to  significant  savings  for  all  PSPs  on  an  ongoing  basis  with  anticipated  higher 
volumes of IP.  

1.2 Payment Service Providers (PSPs) 

In  terms  of  distribution  of  adjustment  costs  and  benefits  across  the  industry,  they  are 
expected to vary depending on the following factors: 

-  At a more general level, by Member State. 

o  Regarding the euro area: 

(i) 

(ii) 

For PSPs operating in national markets (such as the three Baltic States, 
Finland, the Netherlands) that are already well advanced in application 
of at least several of the measures proposed under this initiative (e.g., 
high  level  of  adherence  to  the  SCT  Inst.  Scheme,  equalised  fees  for 
euro IPs and regular euro credit transfers, IBAN verification service in 
place), the adjustment costs are expected to be limited and, therefore, 
greater net benefits from the initiative could be expected; 
PSPs operating in the Member States that have been lagging behind in 
promoting  euro  IPs  are  expected  to  incur  greater  initial  or  recurrent 
adjustment costs, but over time are also expected to see them offset by 
benefits generated by the initiative. 

o  Regarding non-Euro area Member States, the volume of euro IPs is expected 
to be lower (in view of the share of credit transfers in a national currency for 
domestic  transactions),  reducing  potential  revenue  and  thus  negatively 
impacting  the  overall  cost-and-benefit  balance  for  PSPs  operating  therein. 
Nevertheless,  a  number  of  market  factors  and  deliberate  proportionality 
measures  are  expected  to  provide  a  counter-balancing  mitigatory  effect.  For 
instance: 

(i)  Only 13% of PSPs operating in non-Euro area would be subject to the 
measures included in this initiative, as the remaining ones do not carry 
out regular credit transfers in euro; 
Two Member States (Bulgaria and Croatia) will have adopted the euro 
by the time this initiative will apply;  

(ii) 

75 

 
 
(iii)  Domestic  IP  systems  in  national  currencies  exist  in  all  non-Euro 
Member States. For PSPs already offering  IPs in  national  currencies, 
investments in these systems can be leveraged for providing euro IPs, 
thus reducing the initial adjustment costs, in view of the fact that the 
domestic approaches are often  heavily based on the rules of the SCT 
Inst. Scheme  (please see Section 6.1),  and in  some of those Member 
States the same settlement system  would be used for  IPs in euro and 
national  currencies  (e.g.,  Sweden  and  Denmark  intend  to  use  TIPS). 
Similar synergetic effects are expected with respect to ongoing costs, 
such as providing 24/7/365 customer support for both types of IPs; 

(iv)  A  considerably  extended  implementation  deadline  of  the  measures 
included  in  the  package  is  expected  to  serve  a  dual  purpose.  First,  it 
will  allow  the  local  PSPs  to  optimise  their  implementation  costs,  by 
giving  them  a  possibility  to  spread  their  internal  resources  over  a 
longer  period  of  time175.  Second,  it  is  expected  that  greater  euro  IP 
network  effects  would  be  set  in  motion  by  such  later  deadline,  as  a 
higher volume  of euro  IPs would be attained due to  earlier deadlines 
applicable to the Euro area PSPs.  

-  Existing  provision  of  euro  IPs:  PSPs  that  already  offer  euro  IPs  (2 300)  will  incur 
initial  adjustment  costs  only  for  the  measures  of  this  initiative  other  than  offering 
euro  IPs,  unlike  PSPs  that  do  not  currently  offer  IPs  (800-900),  which  would 
potentially  incur  some  costs  for  implementation  of  all  four  components  of  this 
initiative. The remaining group of some 300 PSPs that are excluded from the scope of 
obligation to offer euro IPs under the preferred option 1.2 would be directly impacted 
by the initiative only if they were to decide to offer euro IPs on a voluntary basis. 

-  Size of a PSP: The collected evidence on the initial adjustment costs with respect to 
offering  IPs and  IBAN  verification service shows that those costs are proportionate 
and,  in  absolute  terms,  vary  with  the  size  of  a  PSP  (i.e.,  they  are  lower  for  smaller 
PSPs  and  higher  for  larger  PSPs).  This  will  greatly  facilitate  implementation  of  the 
proposals  for  PSPs  which  are  SMEs  (many  of  which  are  fintechs  and  enthusiastic 
about  IPs).  Importantly,  benefits  of the initiative, such as operational  savings in  the 
area  of  sanctions  screening,  are  also  estimated  to  vary  with  the  size  of  a  PSP  (i.e., 
higher for larger PSPs). Therefore, in this regard both the costs and benefits appear to 
be distributed in a comparable fashion. 

Even though the cost-benefit analysis may be negative for certain individual PSPs in the 
short term, the overall benefits of the initiative will lead to a more efficiently functioning 
payment  system,  with  direct  and  indirect  benefits  to  all  stakeholders,  including  PSPs 
themselves. The indirect benefits include the stimulus to innovation in payments markets, 
especially  as  regards  PoI  payment  solutions  based  on  IPs,  with  the  potential  to  reduce 
costs for retail purchases and to increase choice of PoI payment means. 

175 Some PSPs that adhere to the SCT Inst Scheme indicated that a share of incurred implementation costs 
was driven by the need to rely on external resources in order to ensure timely implementation.  

76 

 
 
 
 
 
                                                           
1.3 SMEs  

Regarding SMEs specifically, they are concerned by this initiative in two capacities, as 
users of euro IPs (such  as merchants or business users) and as providers of euro  IPs or 
related services, such as PSPs or payment fintechs (smaller PSPs, start-ups etc.).  

As  users  of  IPs,  the  costs  for  SMEs  are  not  expected  to  be  material.  For  SMEs  as 
corporate  users,  receiving  IPs  is  not  expected  to  require  any  significant  adaptation  and 
sending IPs in most cases only requires familiarisation with the new customer interface 
of their PSP.  

Benefits for SMEs as corporate users and merchants, in terms of cash-flow management, 
can  be  significant  given  the  quicker  reception  of  payments.  In  relation  to  this,  SMEs 
would realise  a significant  share of the estimated efficiency  gains  of EUR 1.34 to  1.84 
billion per year related to the reduction in  the payment  float (see section 7.1).176 SMEs 
which are merchants have the potential to benefit from any future increased choice of the 
means  of  payment  at  PoI,  which  could  drive  down  fees  charged  to  merchants  by  PSPs 
(see section 2.2.2. above). As observed by SME United, “Improving the functioning and 
the  usability  of  Instant  Payment  solutions  can  make  this  new  payment  instrument  an 
attractive payment solution for small merchants in online and offline business”177. 

As for SMEs which are PSPs or payment fintechs, they are normally not encumbered by 
complex legacy IT systems as large well-established PSPs may be (legacy IT systems or 
presence of different payment platforms for different brands are a significant generator of 
implementation  costs178); their implementation  costs therefore  are  expected  to  be at  the 
lower  end  of  the  identified  ranges  (see  section  6.1).  This  has  been  confirmed  by  data 
received from certain smaller PSPs, including SMEs, as part of the consultation and fact 
finding.  It  has  been  observed  that  innovative  start-ups  PSPs  and  payment  fintechs 
normally  want  to  offer  euro  IPs,  or  services  ancillary  to  euro  IPs,  as  a  key  element  of 
their business strategy and they tend to recognise benefits of IPs for providers to a greater 
extent compared to the overall payments provider community (see Annex 2). In addition, 
they also supported the view that IPs could generate certain types of benefits at a broader 
society level (see Annex 2).  

SMEs are therefore expected to be among the net gainers from this initiative, whether as 
users or as PSPs/fintechs.  

176 Given that over 99% of non-financial sector companies in the EU are small companies  [EU small and 
medium-sized enterprises: an overview - Products Eurostat News - Eurostat (europa.eu)]  
177 Instant payment can become an attractive option for SME merchants | SMEunited  
178 Studies on implementation of instant / faster payments in other jurisdictions identified these factors as 
an 
[ARCHIVED  CONTENT] 
(nationalarchives.gov.uk) 

implementation  costs 

important  driver  of 

for  PSPs, 

instance 

for 

77 

 
 
 
 
 
 
 
                                                           
Impact on SMEs by SME type (summary table) 

Type of SME 

Costs 

Benefits 

PSP 

Merchant* 

Corporate SMEs* 

very 

- 
limited 
implementation  costs  to 
receive IPs  (comparable 
to consumers) 

-  improved  cash  flow 
and 
liquidity 
management:  reduction 
in 
payments, 
late 
availability 
immediate 
of  transferred  funds  due 
to  reduction  in  payment 
the 
reduces 
float 
of 
cost 
financing 
working capital 

-  implementation  costs 
near  the  bottom  of  the 
range  between  EUR 
10 000  and  EUR  1.3 
mln  (only  if  the  PSP 
does not yet offer IPs) 

comparable 

-  ongoing 
transaction 
to 
costs 
regular  credit  transfers, 
declining  as  volume  of 
IPs increases  

linked 

to 
costs 
- 
of 
implementation 
IBAN 
verification 
system  proportionately 
the  costs 
lower 
incurred by larger PSPs 

than 

-  forgone  earnings  on 
the payment float 

- cost savings  from  new 
approach 
to  sanctions 
screening  (reducing  or 
outweighing 
other 
implementation costs) 

savings 

-  cost 
from 
displacement of cheques 
(in selected markets) 

benefits 

- 
from 
successful  prevention  of 
IP  fraud  and  errors  (no 
need to investigate) 

new 

market 
- 
opportunities 
(on 
payments  market  and 
PoI market) 

- possible adaptations of 
PoI 
payment 
infrastructure needed for 
physical  shops  (depends 
new 
on 
solutions 
existing 
payment terminals) 

access 

of 

to 

to 

-  lower  costs  than  those 
related 
accepting 
other  payment  means 
(cash, 
and 
cheques 
cards),  in  particular  for 
cross-border 
transactions  where  the 
range 
available 
payment  means  is  very 
narrow  

of 

-  improved  cash  flow  
management:  reduction 
payments, 
late 
in 
immediate 
availability 
of  transferred  funds  due 
to  reduction  in  payment 
the 
reduces 
float 
financing 
of 
cost 
working capital 

faster 
-  potential  for 
to 
despatch  of  goods 
consumers 
(where 
payments  are  currently 
made with regular credit 
transfers)  and  offering 
instant refunds 

*  Types  of  costs  and  benefits  for  SMEs  which  are  merchants  and  other  commercial  businesses  are  not 
different  from costs and benefits for larger  merchants and  businesses. The  relative extent of some of the 
benefits  (e.g.,  cost  savings  related  to  accepting  other  payments  means  such  as  cards),  can  be  greater  for 
SMEs due to their inferior negotiating position with acquirers.  Certain types of benefits for merchants are 
contingent on future development of PoI payment solutions based on IPs and are therefore to be considered 
as indirect benefits of this initiative. 

78 

 
 
1.4 Consumers 

Consumers will experience almost no costs in order to be able to receive and send  euro 
IPs. Receiving a euro IP will not require any additional effort compared with receiving a 
euro regular credit transfer, while sending an IP will require, at most, familiarisation with 
options  available  through  the  interface  of  the  PSP  of  the  consumer,  such  as  a  banking 
app.  

Due  to  the  pricing  provisions  in  the  present  initiative,  customers  of  PSPs  currently 
charging premium prices for euro IPs are expected to experience a fall in transaction fees 
for euro  IPs.  For  customers of PSPs  which  currently  do not  charge premium  prices for 
euro IPs, there should be no change. Customers of PSPs which do not offer euro IPs at all 
are unlikely to experience a high level of  transaction fees for euro IPs, since PSPs would 
need to significantly increase the fees for regular euro credit transfers in order to charge 
the same level of fees for euro IPs. 

On the other hand, consumers will experience the benefits of immediate reception of due 
funds 24/7/365 in all types of daily life situations, including emergencies, (as payees) and 
ability to settle bills or make late payments more rapidly (as payers). Available evidence 
confirms  that  users  do  rely  on  the  possibility  to  send  and  receive  IPs  around  the  clock 
(see Section 2.2.1).  

As  for  purchasers  of  goods  and  services,  consumers  will  potentially  benefit  indirectly 
from any innovations permitting the use of IPs at PoI, such as quicker dispatch of goods 
and services, and possible pass-on of savings accruing to merchants in the form of lower 
retail prices (depending on competitive forces between merchants). 

79 

 
 
 
 
2. SUMMARY OF COSTS AND BENEFITS 

The  tables  below  summarise  the  costs  and  benefits  described  above,  based  on  the 
package of preferred options. 

Description 

Reduction of funds in transit 
and unavailable for 
economic use (’payment 
float’) 

Greater convenience for 
users from ability to 
instantly send/receive funds 

I. Overview of Benefits (total for all provisions) – Preferred Option 

Amount 

Direct benefits 

Comments 

Economic benefits from reduction of payment 
float in the range of EUR 1.34 to EUR 1.84 
billion per year, depending on the uptake of IPs. 

Not quantifiable 

Funds currently held in PSPs will be available 
sooner to consumers and businesses for 
consumption or investment. See Section 7 and 
Annex 8. 

Benefits for all categories of payment services 
users, consumers and businesses. 

Improved cash-flow 
management for businesses, 
especially merchants and 
corporates 

Not precisely quantifiable, but 63% of 
businesses in the EU maintain a cash 
contingency to cover the time it takes to receive 
payments, indicating savings potential. 

Benefit for businesses 

Accelerated and improved 
collection of fines and taxes 
if paid using IPs 

In the range of EUR 0.25-1.59 billion per year 

Benefit for public administrations and society 
overall. See section 7. 

Cost savings for PSPs from 
new approach to sanctions  

Potentially  in the range of EUR 5.5 -7.6 billion 
per year,  of IPs depending on the uptake 

Benefits for all PSPs.  

Cost savings linked to 
handling of cheques 

Potentially up to EUR 2.3  billion per year 

Financial inclusion, public 
health, environment 

Not quantifiable 

PSPs and merchants (in Member States where 
cheques are used). See sections 2.2.1 and 7. 

Benefits for society overall. Section 7 and 
Annex 2 (on public consultation). 

Reduction in losses related 
to fraudulently misdirected 
IPs 

Potentially up to EUR 209 million per year, 
based on experience in the Netherlands and 
assuming 100% uptake of IPs.  

Benefits for payment service users (consumer 
and businesses); benefit for PSPs from reduced 
need to investigate fraud and errors in IPs. 

Stimulus for innovation in 
PoI payment solutions 

Not quantifiable 

Indirect benefits 

Market opportunity for PSPs and fintechs with 
potential benefits for retail merchants, and 
savings for consumers 

Potential to reduce 
concentration in PoI 
payments 

Difficult to quantify, but the evidence of high 
merchant fees for card payments in section 2.2.2 
indicates potential for cost savings from greater 
choice of payment means at PoI. 

Could lead to reduced fees to merchants for 
receiving PoI payments; competition forces 
should lead to such savings being passed on to 
consumers. 

80 

 
 
 
 
 
 
 
II. Overview of costs – Preferred option 

Citizens/Consumers  

Businesses179 

Administrations 

One-off 

Recurrent 

One-off 

Recurrent 

One-off 

Recurrent 

None 

None 

Direct 
adjustment 
costs 

None 

None 

Per PSP in the 
range 
between EUR 
10 000 and 
EUR 1.3 
million. On 
the industry 
level between 
EUR 36 ml 
and € 477 ml. 

For PSPs, 
average 
transaction cost 
comparable to 
the cost of a 
regular credit 
transfer, 
declining as 
volume of IPs 
increases 

Indirect costs  None 

None  

None 

None 

None  

Loss of 
earnings for 
PSPs due to 
reduction in the 
payment float 
in the range of 
EUR 1.34 to 
1.84 bn per 
year, depending 
on the uptake 
of IPs 

Wider 
availability of 
IPs   

Elimination of 
dissuasive fees 
for IPs   

Enforcement 
costs 

Direct 
adjustment 
costs 

None 

None  

None 

None  

None 

Enforcement of 
compliance 

None 

None 

None 

None 

None 

Loss of revenue 
if IPs currently 
priced higher 
than regular 
credit transfers 
(if  no 
compensating 
account charges 
are introduced) 

None 

None 

None 

Indirect costs  None 

Transaction fees, 
only if PSPs 
introduce or 
increase fees 
currently charged 
for regular credit 
transfers or 
increase account 
fees 

Transaction 
fees, only if 
PSPs introduce 
or increase fees 
currently 
charged for 
regular credit 
transfers or 
increase 
account fees 

179 This category includes both business users of IPs and the PSPs. 

81 

 
 
 
 
 
 
 
 
 
 
 
 
 
                                                           
Enforcement 
costs 

Direct 
adjustment 
costs 

Improvement 
of sanction 
screening for 
IPs 

None 

None  

None 

None  

None 

Enforcement of 
compliance 

None 

None 

None  

None 

None 

Small one-off 
costs for PSPs 
for switching 
to new system 

Indirect costs  None 

Enforcement 
costs 

Direct 
adjustment 
costs 

None 

None 

Reduction of 
fraudulently 
and 
erroneously 
misdirected 
IPs 

None 

None 

None 

None 

Enforcement of 
compliance 

Possible fees as 
users of the 
service 

None 

None  

None 

None 

None 

None  

Possible fees for 
the service  

Per PSP in the 
range of EUR 
10 000 and 
EUR 2 
million, 
depending on 
the size of the 
PSP and the 
extent to 
which costs 
are recovered 
through fees. 

Per PSP in the 
range of several 
thousand EUR 
and EUR 350 
000, depending 
on the size of 
the PSP and the 
extent to which 
costs are 
recovered 
through fees.  

Possible fees 
for businesses 
as users of the 
service. 

Indirect costs  None 

Risk of unduly 
aborted payments 

None 

None 

None 

None 

Total   

Enforcement 
costs 

Direct 
adjustment 
costs  

Indirect 
adjustment 
costs 

Administrative 
costs (for 
offsetting) 

None 

None  

None 

None  

None 

Enforcement of 
compliance 

Costs related to the ‘one in, one out’ approach 

None 

None 

None 

Possible 
increases in 
general fee levels 
(see above) 

Implementati
on costs in the 
ranges given 
above 

Net cost 
savings overall 
(see above) 

None 

None 

None 

None 

None 

None 

82 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ANNEX 4: SANCTIONS SCREENING  

This annex discusses in more detail the problem driver 3, High rate of rejected IPs due to 
‘false  positive’  hits  in  sanctions  screening,  identified  in  section  2.3.3  of  the  impact 
assessment. 

Operational frictions arising in sanctions screening of IPs 

In  the  process  of  executing  IPs,  PSPs  have  to  comply  with  sanctions  screening 
requirements a) not to make funds or economic resources available, directly or indirectly, 
to  persons or entities  that are  ’designated’ (i.e., included on  EU sanctions lists);  and  b) 
freeze the assets owned, held or controlled by designated persons and entities.  Sanction 
designations  applicable  in  the  EU,  including  the  UN  sanction  designations  that  are 
transposed into EU law, are covered by EU sanctions Regulations.180 In addition to such 
EU-wide sanctions, some Member States also apply national sanctions lists.  

EU legislation does not  prescribe in  what way, in terms of the procedure or tools to be 
used, the PSPs are to ensure compliance with the aforementioned sanctions requirements. 
Therefore,  PSPs  apply  various  methods,  based  on  their  own  individual  approach  or  on 
the guidance provided by the relevant national authorities.  

In  relation  to  domestic  IPs,  in  some  Member  States  PSPs  comply  with  their  sanctions 
obligations by updating their customer lists regularly and frequently (usually daily). This 
ensures  that  the  latest  information  on  all  the  applicable  sanctions  lists  is  reflected 
accurately  in  their  systems  and,  as  a  result,  transactions  from  payment  accounts 
belonging to designated persons or entities are not initiated, and funds made available to 
them are frozen immediately.  

A different, transaction-based, approach is employed in some other Member States where 
the  names  of  a  payer  and  a  payee  of  each  transaction  are  screened  twice,  by  both  the 
payer’s PSP and the payee’s PSP, reflecting duplication of screening activities.  

Importantly,  for  cross-border  euro  IPs,  in  absence  of  a  harmonised  sanctions  screening 
approach  all  EU  PSPs  apply  the  above  transaction-based  screening  of  individual 
payments. 

When  the  transaction-based  screening  approach  is  applied,  the  initial  automated 
screening  system  flags  transactions  that  are  suspected  of  involving  sanctioned  persons. 
Given  the  incomplete  quality  of  the  data  on  the  lists,  similarly  sounding  names, 
misspellings and other deviations (different word order, use of initials instead of full first 
names,  concatenation,  etc.),  the  flagging  will  happen  not  only  when  the  automated 
screening  tools  detect  a  100%  match  between  the  name  of  a  payer  or  a  payee,  and  the 
name of a designated person or an entity on a sanctions list, but also where they detect a 
lower level  of match, such as 85% or 95%.  The  side effect  of this  approach  is  that the 
screening tools  flag a  lot of transactions that do  not  contain the sanctioned entity itself 
but  only  strings  of  data  similar  to  the  sanctioned  entity.  Such  ‘flagged’  transactions 
require further, manual investigation. However, unlike regular credit transfers, IPs cannot 
be put on hold to allow for a manual investigation, without losing their instant nature. As 

180 www.sanctionsmap.eu . 

83 

 
 
 
                                                           
a result, all ‘flagged’ IPs are immediately rejected, even if such ‘flags’ turn out to have 
been false.  

In  this  regard,  PSPs  estimate  that  in  as  much  as  99.8%  of  transactions  flagged  by  the 
initial automated screening system are ‘false positives’, i.e. in theory they should not be 
rejected as they turn out to not involve designated persons or entities. 

Based on the feedback from PSPs to the targeted consultation, the problem is particularly 
acute with respect to cross-border IPs, where all EU PSPs currently rely on transaction-
based screening. The reported share of cross-border IPs that were rejected in the process 
of  transaction-based  screening  over  the  period  of  last  12  months  were  in  the  range  of 
0.4% to 9.4%181. This was many times higher182 than the observed rejection rate for all 
regular  credit  transfers  which  tended  to  hover  around  0%,  given  that  there  is  sufficient 
time to manually verify the initial flagging without the need to reject the transfer.183 With 
the  estimated  annual  volume  of  euro  cross-border  IPs  in  2020  of  approximately  15 
million184, each percentage point of rejected transactions is equivalent to 150,000 cross-
border  IPs  that  did  not  reach  the  intended  beneficiary.  Assuming  the  volume  of  cross-
border  euro  IPs  will  go  up  as  a  result  of  the  current  initiative,  the  number  of  rejected 
cross-border transactions would increase in proportion with it, if no measures are taken to 
reduce the rejection rate. 

It should also be observed that this problem is not limited to cross-border euro IPs, as a 
number  of  rejected  IP  transactions  could  occur  with  respect  to  purely  domestic  IPs  in 
those Member States185 where PSPs currently use the above described transaction-based 
approach to screen them.  

Estimation of operational savings under the preferred policy option 

In  terms  of  compliance  costs,  the  preferred  policy  option  (option  3.2)  is  expected  to 
deliver  significant  operational  savings  for  PSPs,  which  would  not  occur  under  the 
baseline or would occur  at  a substantially lower  scale under option  3.1. Those savings, 
depending on the level of IP uptake, could be estimated to fall in the range of EUR 5.5 to 
7.6 billion per year.  

In this regard, the obligation to update customer lists against all the applicable sanctions 
lists  on  a  frequent  and  regular  (daily)  basis  is  not  expected  to  generate  material 
compliance  costs,  because  for  most  EU  PSPs  this  is  already  a  part  of  their  current 
practice.186 At the same time, the elimination of the need to carry out manual follow-up 

181 Based on 11 quantitative submissions from PSPs; the average rejection rate was equal to 3.5%. 
182 The ratio between the two rejection rates (i.e., for cross-border IPs and for regular credit transfers) at 
the level of the same PSP ranged from single digits to hundreds and, in some cases, thousands. 
183 It should be noted that the low share of rejected purely domestic euro regular credit transfers in some 
Member  States  is  driven  by  the  practice  of  complying  with  sanctions  obligations  by  way  of  regular  and 
frequent updates of PSPs’ customer lists to accurately reflect the latest information on all the applicable 
sanctions lists.  
184 ECB, National Payment Committees; calculations by the European Commission. 
185 Based on the feedback from the market participants, PSPs in almost half of Member States apply this 
approach for domestic IPs. 
186  For  instance,  in  the  workshop  of  10  December  2021  with  Member  State  experts  in  the  area  of 
sanctions screening, experts from 11 out of 19 participating Member States confirmed that all or majority 
of PSPs in their national markets already perform regular updates of customer lists. 

84 

 
 
                                                           
investigations  on  ‘flagged’  transactions  would  deliver  material  operational  savings.  In 
this  regard,  the  study187  by  LexisNexis  Risk  Solutions  on  financial  firms’  compliance 
cost with AML and sanctions screening obligations in five European markets found that 
74% of that compliance cost is driven by labour resources and, within the latter, 62% of 
the overall number of FTEs were involved in sanctions screening activities. On the basis 
of  the  findings  of  that  study  and,  depending  on  the  level  of  IP  uptake,  it  could  be 
estimated that the operational savings for EU PSPs would fall in the range of EUR 5.5 to 
7.6  billion  per  year,  as  per  the  following  table.  If  the  eventual  uptake  of  IPs  is  higher 
operational savings would be accordingly greater. 

Operational savings arising from the application of ‘SEPA domestic’ approach for the sanctions 
screening of euro IPs188 

187 The True Cost of AML Compliance – European Survey | LexisNexis Risk Solutions . 
188 Assumptions and calculation: (i) increase in the uptake of euro IPs (50% and 70% uptake considered) 
eliminates  ‘false  positive’  rejections  that  would  otherwise  occur  in  the  process  of  transaction-based 
sanctions  screening  of  regular  credit  transfers  that  are  substituted  by  IPs.  Based  on  the  feedback  from 
national authorities about current practices applied in various Member States, it is assumed that 53% of 
regular credit transfers are screened per transaction, (ii) estimates of AML/sanctions costs as % of total 
assets  (for  each of the size buckets),  share of labour costs (74%) in total AML/sanctions costs,  share of 
FTEs  working  on  sanctions  screening  (62%)  in  all  FTEs  working  in  AML/sanctions  area,  share  of  FTEs 
working on both sanctions and AML (40%) taken from LexisNexis Risk Solutions study [The True Cost of 
AML  Compliance  –  European  Survey  |  LexisNexis  Risk  Solutions],  (iii) 
‘FTEs  reflecting  shared 
AML/sanctions  work’  assumes  that  FTEs  that  work  on  both  subjects  dedicate  50%  of  their  time  to 
sanctions screening, and is derived as follows 62%*60%*100%+62%*40%*50%= 49.6%; (iii) allocation of 
PSPs  across  the  size  buckets  based  on  analysis  of  information  in  ORBIS  database.  PSPs  for  which  the 
information on asset size was not found (258) in ORBIS database were assumed to be small and added to 
the smallest category (representing the most conservative assumption), (iv) PSPs included in the analysis 
include PSPs that provide IPs (2282) and PSPs that are expected to fall in the scope of the obligation to 
offer IPs under this initiative (760). 

85 

Total assets, billion euroEstimated number of PSPsAverage assets, 000sAML costs, as % of assetsShare  of labour costsFTEs envolved in sanctions screeningFTEs, reflecting shared AML / sanctions work% of regular credit transfers screened per transactionOperational savings, 000s            (50% uptake of IPs)Operational savings, 000s            (70% uptake of IPs)>5084241 425 8900.08%74%62%49.6%53%1 578 0202 209 227>10 and <5022321 300 1610.27%74%62%49.6%53%1 247 4151 746 380>1 and <101 0243 085 7710.51%74%62%49.6%53%1 567 4482 194 427<1 or n/a1 711360 7011.77%74%62%49.6%53%1 062 5021 487 5033 0425 455 3847 637 538 
 
 
 
 
                                                           
ANNEX 5: PAYER CONCERNS ABOUT SECURITY OF IPS (WITH REGARD TO 
FRAUD AND ERRORS)   

This annex discusses in more detail the problem driver 4, Payer concerns about security 
of  IPs  (with  regard  to  errors  and  fraud),  identified  in  section  2.3.4  of  the  impact 
assessment. 

When  a  payer  requests  its  PSP  to  send  a  credit  transfer  (regular  or  IP),  for  example 
through online banking, the payer is required to indicate the name of the payee as well as 
the  account  number  of  the  payee  (for  payments  in  euro,  the  account  number  is  the 
standardised  International  Bank  Account  Number,  IBAN).  According  to  the  rules  of 
PSD2189, the PSP executing any type of a credit transfers, be it regular or IP, has no legal 
obligation to verify the name of the payee provided by the payer and the PSP has no legal 
liability towards the  payer if it turns out  later that  the  account  to  which the funds were 
sent  did  not  belong  to  the  payee  named  by  the  payer.  This  situation  may  arise  due  to 
errors made by the payer or due to the payer falling victim of certain types of fraud. 
According to  the feedback from consumer organisations190, over the recent  years  many 
consumers  have  been  tricked  into  transferring  money  using  credit  transfers  (regular  or 
IPs)  to  fraudulent  accounts.  Such  types  of  fraud,  involving  payer  manipulation,  is  not 
prevented  by  measures  laid  out  in  PSD2,  such  as  the  Strong  Customer  Authentication 
(SCA)191, which aims to ensure that it is the payer him- or herself who is requesting the 
transaction. Where the payer is manipulated into authorising  a credit transfer (regular or 
IP) such types of fraud are referred to as Authorised Push Payment fraud, or APP fraud. 
There is an important distinction to be made in this regard between payment fraud, when 
the  criminal  (through  theft  or  cyberattack)  is  able  to  perform  the  payment  transaction 
instead of the genuine payer (which should be prevented by the application of SCA), and 
pre-payment fraud, where the criminal manipulates the genuine payer and that the payer 
then makes a payment compliant with payments legislation. 

There  is  a  wide  variety  of  APP  scams  affecting  credit  transfers  (regular  and  IPs), 
including so called invoice fraud where the scammer tampers with an invoice, physically 
or  digitally,  and  changes  the  payee’s  account  number,  as  well  as  various  types  of 
impersonation scams. Impersonation scams include, for example, a CEO fraud (where an 
e-mail  that  appears  to  come  from  the  payer’s  employer  requests  a  payment);  phone 
spoofing  (where,  by  imitating  the  phone  number  of  a  bank,  the  scammer  impersonates 
bank  staff  and  urges  the  payer  to  transfer  their  funds  to  a  different  account  due  to 
fictitious  security  concerns);  a  marketplace  fraud  or  website  spoofing  (where  the 
scammer  is  pretending  to  be  a  seller  of  products  or  services  and/or  creates  a  website 
which uses the names, logos, graphics or even URL of genuine website).   
All credit transfers, regular and  IPs, have been found by the EBA192 to be the payment 
method for which the manipulation of the  payer  by the fraudster is  the most  prevalent, 
compared  with  the  other  payment  instruments  (such  as  cards,  for  which  the  more 

189 Art 88 of PSD2, which  applies to all types of payment  transactions executed between two  accounts, 
including IPs. 
190 https://www.beuc.eu/publications/beuc-x-2021-027_consumers_and_instant_payments.pdf . 
191 Article 97 of PSD2. 
192 Discussion Paper on payment fraud data received under PSD2 (europa.eu). 

86 

 
 
                                                           
common type of fraud is making unauthorised payments, now substantially prevented by 
SCA). Based on the fraud data collected by the EBA for 18 EEA countries, the average 
fraud rate for all credit transfers (regular and IPs), in terms of value, in the second half of 
2020 was 0.0011%, of which 43% was due to manipulation of the payer to initiate SCA-
authorised transactions. On this basis the extent of APP fraud in 2020 for all SEPA euro 
credit transfers, including IPs, in the EU is estimated at approximately EUR 323 million.  

The problem is more common with respect to cross-border (both inside and outside EEA) 
credit transfers, regular and IPs, whose overall fraud rate exceeds that of domestic credit 
transfers by more than 20 times. As a result, despite the fact that, according to the EBA 
analysis, cross-border credit transfers (regular and IP) represented only around 2% of all 
credit  transfers,  their  share  in  the  total  volume  of  credit  transfer-related  fraud  reached 
31% in the second half of 2020 for the 18 EEA countries.  

Country specific data show this trend as well. For example, in Belgium, the Ministry of 
Economy  in  2020  received  784  reports  from  consumers  and  businesses  concerning 
invoice fraud, with the total losses amounting to EUR 5.2 million193. In the Netherlands, 
between  January  and  October  2021,  the  impersonation  scams  (where  the  fraudster 
impersonates  bank  staff)  increased  in  terms  of  value  by  nearly  50%  compared  to  the 
whole  of  2020194  and  reached  nearly  EUR  40  million.  In  the  UK,  in  2020  APP  scams 
reached GBP 479 million. In the opinion of the UK’s Payments Services Regulator, the 
actual  extent  of  APP  fraud  is  likely  to  be  much  higher  if  unreported  losses  were  to  be 
included.195  The  average  value  of  a  fraudulent  credit  transfer,  regular  and  IPs  (43%  of 
which are due to payer manipulation) is substantially higher (at EUR 4 191) than for the 
other payment instruments such as cards (e.g. between EUR 45 and 73)196.  

Apart from fraud, when the payer manually inputs the IBAN number to place a payment 
order for a regular credit transfer or IP, which in the EU can be up to 28 characters long, 
errors  can  occur.  The  check  digit  system  embedded  in  the  ISO  standard  on  which  the 
IBAN  is  based197  allows  to  prevent  the  majority  of  typing  errors  that  would  make  the 
IBAN number incoherent (e.g. substituting a single digit with a different one). However, 
check digits do not eliminate the risk entirely (e.g. an error made by the payer produces a 
valid and coherent IBAN, belonging to a different beneficiary). Moreover, other types of 
human errors can also be made by the payer (e.g. an employee using the wrong client’s 
file). Moreover, erroneous transactions may result from the reassignment by a PSP of an 
IBAN of an unused account to a different customer198.   
Partial data provided by PSPs in their responses to the targeted consultation199 also seem 
to confirm the existence of the problem of funds sent to a wrong beneficiary  through a 
regular credit transfer or an IP as a result of errors or APP fraud: for instance, one bank 
reported having received nearly 17 000 such complaints in the course of the preceding 12 
months  with  respect  to  IPs  and  nearly  28 000  with  respect  to  regular  credit  transfers;  

193 Source: SPF Economie. 
194 Source: Dutch Payments Association. 
195 CP21/6 Confirmation of Payee call for views (psr.org.uk). 
196 EBA. 
197 Check digits are in position 3 and 4 of the IBAN. 
198 In the Netherlands in particular, IBAN numbers of closed accounts are reattributed to new accounts 
relatively quickly, thus leading to a high number of errors due to funds being sent to a reattributed IBAN. 
199 https://ec.europa.eu/info/consultations/finance-2021-instant-payments-targeted_en . 

87 

 
 
                                                           
another - more than 8 700 with  respect  to  IPs  and 55 300 with  respect  to regular credit 
transfers.  Some  responses  received  from  PSPs  to  the  public  consultation  carried  out  in 
the context of the development of the Retail Payments Strategy also referred to a rising 
trend of social engineering fraud where PSPs’ security systems are not violated but rather 
fraudsters manipulate the customer. 

Refunds in case of fraud and errors in different payment methods 

Payment  fraud:  genuine  payer  did  not  authorise  the  transaction,  instead  transaction 
performed by a fraudster as a result of e.g. cyberattack, theft of the payment instrument, etc. 

  PSP obligation to refund the transaction in case of all payment methods (regular credit 

transfers, IPs, direct debits, cards, etc.)200 

Pre-payment  fraud/error:  genuine  payer  did  authorise  the  transaction  under    false 
pretences or as a result of a mistake. 

  Euro direct debits: by law, the payer has a right to a refund within 8 weeks from the 
day the payment was made201, which is justified by the fact that the payer authorises 
the  transaction(s)  in  advance  by  giving  the  payee  a  mandate  to  pull  funds  from  the 
payer’s account at a later stage and the actual transaction is initiated at a later stage 
by the payee; 

  Cards:  card  schemes  offer  a  possibility  of  a  chargeback  on  a  contractual/commercial 
basis (for a fee paid by the card holder), in case for example there is a dispute with 
the  seller  or  seller  went  out  of  business  (conditions  defined  by  card  schemes,  there 
are no refund rights defined by law);  

  PoI  solutions  based  on  regular  credit  transfers  or  IPs:  refund  rights  defined  on  a 
commercial basis by PoI solution providers similarly to cards; no refund rights defined 
by law; 

  Regular credit transfers initiated via online banking (or in a branch): no refund rights 
under EU law. If the payer realises that fraud or error occurred, they can contact their 
PSP, which should make ‘reasonable efforts’ to recover the funds.202 If the funds have 
been  deducted  from  the  payer’s  account  (which  is  done  instantly  also  in  the  case  of 
regular credit transfers ordered on a business day) but the funds have not yet left the 
payer’s  PSP  there  may  be  chances  for  the  payer  of  recovering  funds  (but  the  payer 
must  realise  the  problem  within  few  hours  and  still    there  is  no  guarantee  and  no 
obligation for the PSP to offer a refund); if the funds already left the payer’s PSP, the 
payee  who  received  the  funds  must  agree  to  returning  them.  The  PSP  has  no  legal 
obligation  to  cancel  the  order  or  to  refund  the  amount  to  the  payer  if  its  efforts  to 
recover the funds are unsuccessful203. 

  IPs initiated via online banking (or in a branch): the situation is the same as in case of 
regular credit transfers, with the only difference that the funds are deducted from the 
account of the payer and credited to the account of the payee  almost simultaneously 
(within  10  seconds).  If  the  payee  received  the  funds  in  error,  they  must  agree  to 
return the funds as in the case or regular credit transfers. If the payee is a fraudster, 
this  is  unlikely.  In  the  UK,  the  payers  were  able  to  recover  their  funds  in 
approximately  half  of  the  Faster  Payments204  transactions,  mainly  where  the  payee 
was willing to confirm that they received the funds in error. 

200 Art 72-74 PSD2 
201 Art 76 and 77 PSD2. For all direct debits the refund right applies to cases where the authorisation did 
not specify the exact amount of the payment and the amount of the payment exceeded the amount the 
payer could reasonably have expected taking into account the previous spending pattern. For euro direct 
debits, the refund right during the same period of 8 weeks is unconditional. 
202 Art 88 PSD2 
203 This is without prejudice to possible contractual arrangements between PSUs and PSPs. 
204 Faster Payments in the UK are not IPs in the meaning of this initiative but can normally be executed 
within minutes. 

88 

 
 
                                                           
BEUC  argues  that  “Payment  by  instant  payment  in  face-to-face  situations  or  at  a 
distance will never flourish if consumer protection rules are not improved”205. And there 
seems  to  be  a  growing  recognition  by  the  industry  of  the  need  to  provide  additional 
assistance  to  payers  to  protect  themselves  from  pre-payment  fraud  and  errors.  Services 
have  been  developed  and  put  in  place  in  certain  countries  inside  and  outside  the  EU 
whereby  payers,  before  confirming  their  payment  order  for  a  credit  transfer  (regular  or 
IP),  are  provided  with  feedback  about  the  level  of  the  match  between  the  name  of  the 
payee  and  the  IBAN  of  the  payee,  as  provided  by  the  payer.  In  the  Netherlands,  a 
national market initiative was launched in 2017 by a fintech company sponsored by one 
of  the  Dutch  banks  and  currently  the  service  is  available  to  the  majority  of  payment 
account holders in the Netherlands206. The service consists of an algorithm that needs to 
be  integrated  into  individual  PSP’s  online  environment  through  an  Application 
Programming Interface (API). The payer’s PSP sends a request containing the name and 
IBAN  of  the  payee  that  the  payer  has  entered  through  the  online  banking  or  mobile 
banking interface. The algorithm verifies  these details  against the data registered at  the 
PSP of the payee and on that basis the payer’s PSPs receives feedback on whether there 
is a match, close match or no match. In case of a non-match, the payer’s PSP can show a 
warning message to  the  payer, upon which the payer can decide whether to  proceed or 
abort the payment207.   In France, a similar solution verifying the reliability of IBAN of 
the payee (for credit transfers) or payer (for direct debit) has been introduced and is used 
by more than 100 PSPs208. In Estonia, PSPs check the match between the payee’s IBAN 
and name before the funds are credited to the payee’s account209. 

In Belgium, a legislative proposal for mandatory provision of IBAN-name check free of 
charge  for  the  consumer  has  been  put  forward  by  one  of  the  political  groups  in  the 
Parliament  on  27  October  2021210.  Preliminary  assessments  by  public  authorities  of 
possible  introduction  of  such  a  service  are  ongoing  in  other  Member  States,  such  as 
Austria  and  France.  In  Poland,  a  recommendation  to  provide  such  a  service  has  been 
made  by  the  Payment  System  Council211.  Outside  the  EU,  a  similar  service  (called 
Confirmation of Payee, or CoP) has also been imposed on the biggest UK PSPs by the 
UK regulator.  

In addition, in some Member States (Czechia, Finland, Italy, Romania, Latvia, Lithuania) 
certain individual PSPs offer a service of a more limited application, e.g. only for intra-
bank transfers where both a payer and a payee hold accounts with that same PSP, or only 
for  limited  use  cases  (e.g.  when  the  payer  is  a  tax  authority),  which  addresses  the 
problem only to a very limited extent.  

205 https://www.beuc.eu/publications/beuc-x-2021-027_consumers_and_instant_payments.pdf . 
206  Service  is  provided  by  5  PSPs  holding  the  vast  majority  of  payment  accounts  in  the  Netherlands: 
Rabobank, ING Bank, De Volksbank (SNS Bank, Regiobank, ASN Bank), ABN AMRO  and Knab. 
207  More  information  on  how  the  solution  works  in  available  on  the  website  of  the  service  provider, 
SurePay, here: https://www.surepay.nl/en/services/iban-name-check-for-banks/ . 
208 Presentation-DIAMOND-International-Web.pdf (sepamail.eu)  
209 Country profile: digital and instant payments are the norm in Estonia | European Payments Council  
210  Proposition  de  Loi  modifiant  le  Code  de  droit  économique  afin  d’introduire  un  contrôle  du  nom  du 
titulaire de l’IBAN en vue de lutter contre la fraude bancaire sur Internet, La Chambre des représentants - 
Document parlementaire 55K2296. 
211  A  coordination  and  advisory  body  of  the  national  central  bank,  involving  payment  industry 
representatives. 

89 

 
 
                                                           
Since  2021  an  API-based  pre-validation  service  is  available  from  the  Society  for 
Worldwide  Interbank  Financial  Telecommunications  (SWIFT).  It  allows  PSPs 
participating in the service verification, within maximum 3 seconds, to verify the match 
between the name of the payee and the IBAN of the payee provided by the payer, and it 
can  be  used  for  transactions  within  one  country  or  globally212.  It  is  currently  used  by 
more than 100 PSPs globally, including in the EU. 

Finally,  confirmation  of  payee  is  part  of  the  Bank  for  International  Settlements  (BIS) 
Innovation Hub project dubbed ‘Nexus’, aimed at ensuring cross-border interoperability 
of  IPs  available  in  more  than  60  global  jurisdictions213.  BIS  considers  that  the 
confirmation of payee solution is particularly important in cross-border payments, where 
users  may  be  entering  account  numbers  or  aliases  in  unfamiliar  formats,  or  long 
international bank account numbers (IBAN) that can be difficult to check character-by-
character. 

212 https://www.swift.com/our-solutions/global-financial-messaging/payments/payment-pre-validation  
213 Nexus: a blueprint for instant cross-border payments (bis.org) 

90 

 
 
 
 
                                                           
ANNEX 6: BACKGROUND ON FUNCTIONING OF INSTANT PAYMENTS  IN 
EU AND GLOBALLY 

(1) IPs in euro: SEPA IPs 

For  an  IP  transaction  to  be  carried  out,  appropriate  end-to-end  arrangements  are 
necessary at two levels: (i) scheme rules; and (ii) settlement infrastructures.  

In  addition,  in  order  to  ensure  that  IPs  can  be  used  at  PoI,  an  additional  level  (iii)  is 
needed,  i.e.  payment  solutions  allowing  end  users  (e.g.  consumers  or  businesses)  to 
initiate and accept IPs at PoI.   

Scheme level 

In  order  to  ensure  that  any  type  of  payment  transaction  can  be  successfully  carried  out 
between two accounts, PSPs holding those accounts for customers must agree to follow a 
set of common rules, practices and procedures (a so-called ‘payment scheme’). Payment 
schemes  ensure  that  when  PSPs  exchange  payment  messages  between  each  other  and 
with the relevant Clearing and Settlement Mechanism (CSM), they use same terminology 
and  formats,  provide  the  same  data  sets  and  follow  a  commonly  agreed  sequence  of 
steps. For euro IPs, i.e. SEPA instant credit transfers, EU PSPs apply the SEPA Instant 
Credit Transfer Scheme (SCT Inst. Scheme) agreed upon by EU PSPs in 2017. It sets out 
rules  for  carrying  out  IPs  in  euro,  including  the  requirement  to  ensure  that  funds  are 
available  on  the  account  of  the  beneficiary  within  maximum  10  seconds.  There  are  no 
alternative schemes for carrying out IPs in euro, either at EU, or at domestic level. Thus, 
currently any PSP wishing to  offer these types of euro transactions  must adhere to  this 
particular SEPA scheme214. 

Settlement infrastructure level 

A CSM, or a payment system, facilitates the fund movements between the PSPs resulting 
from  the  payment  transactions  ordered  by  the  customers  of  PSPs  (i.e.  consumers  and 
businesses  holding  payment  accounts  with  the  PSPs).  PSPs  must  set  aside  part  of  their 
liquidity  on  a  dedicated  account  opened  with  their  CSM.  When  the  PSPs  exchange 
payment  messages  in  accordance  with  the  payment  scheme  rules  with  each  other  and 
with  their  CSMs,  the  latter  move  the  funds  between  the  dedicated  accounts  of  PSPs  to 
ensure  the  discharge  of  the  obligations  (settlement).  In  order  to  carry  out  an  IP,  PSPs 
must be connected to a CSM providing instant settlement, which – unlike the settlement 
for regular credit transfers – must be operational 24/7/365.  

Today, CSMs handling IPs in euro are provided within the EU by the ECB (TARGET IP 
Settlement,  or  TIPS215),  and  various  Automated  Clearing  Houses  (ACH),  e.g.,  EBA 
Clearing (RT1), Bankcart (SI), CENTROlink (Lithuania), DIAS (EL), EquensWorldline 

214 Other local payment schemes do exist for IPs in EU currencies other than euro (e.g. in PLN, HUF, SEK). 
215 As of May 2022 TIPS will also allow settlement of IPs in SEK 

91 

 
 
 
                                                           
(the  Netherlands),  IberPay  (Spain),  NEXI  (Italy),  SIBS  (Portugal),  STET  (France, 
Belgium).216  

Until recently, these CSMs have not been made interoperable, meaning that if two PSPs 
adhering  to  the  SEPA  scheme  for  IPs  in  euro  were  connected  to  different  CSMs 
providing instant settlement, IPs between these two PSPs were not in all cases possible. 
PSPs could not fully overcome this problem even by connecting to several CSMs. In July 
2020217, the ECB announced measures which would oblige all PSPs that have adhered to 
the  SCT  Inst.  Scheme  to  connect  to  TIPS  (directly  or  via  another  PSP),  and  all  ACHs 
offering IP services to migrate their technical accounts to TIPS, by 25 February 2022218. 
This ensures that a PSP adhering to the SEPA Inst. Scheme and using any CSM offering 
instant settlement in euro should be able to settle euro  IPs  with any other EU PSP also 
adhering to the SEPA scheme and using a CSM providing euro instant settlement. Hence, 
the barrier for cross-border euro IPs at the infrastructure level is being eliminated. 

End user level  

A  final,  third  layer  refers  to  solutions,  which  allow  end  users  (e.g.  consumers  and 
businesses)  to  initiate  and  accept,  e.g.  via  a  mobile  phone  application,  IPs  not  only 
through  online  banking  or  in  a  branch,  but  also  at  PoI  (in  physical  shops,  i.e.  physical 
point of sale, or in e-commerce), or between individuals (person to person, or P2P), etc. 
Currently such solutions are available on the market only at domestic level, e.g. Bizum in 
Spain,  Paylib  in  France,  Bancomat  Pay  in  Italy,  MB  Way  in  Portugal,  Payconiq  in 
Belgium, Bluecode in Austria and Germany, Kwitt in Germany219.  

(2) IPs in non-euro currencies 

National  systems  of  IPs  in  currencies  other  than  euro,  both  within  the  EU  and  outside, 
exist in around 60 countries worldwide220.  

(a) IPs in non-euro EU currencies 

Uptake  is  sometimes  reported  as  a  percentage  of  credit  transfers  and  sometimes  as  a 
percentage of all electronic payments (credit transfers + card payments) due to available 
data. 

Czechia 

An IP system, CERTIS, was launched in November 2018 with the uptake of IPs in CZK 
in 2020 estimated at 10%221.  The usage has been held back by limited use cases beyond 

Further 

216 There are also CSMs, which provide instant settlement of credit transfers in other EU currencies (e.g. 
in Poland, Hungary, Sweden, Denmark). 
217 https://www.ecb.europa.eu/paym/intro/news/html/ecb.mipnews200724.en.html. 
218 
available 
details 
https://www.ecb.europa.eu/paym/target/tips/profuse/shared/pdf/faq_tips_and_pan-
european_reachability_of_instant_payments.pdf. 
219 Outside the Euro area, solutions are limited to transactions at domestic level in local currencies, e.g. 
BLIK in Poland for IPs in PLN or Swish in Sweden for IPs in SEK. 
220 Developments in retail fast payments and implications for RTGS systems (bis.org)  
221  Sources:  ECB,  ACI  Worldwide  [Prime-Time-for-Real-Time-Report-2022.pdf  (aciworldwide.com)], 
Commission calculation 

here: 

are 

92 

 
 
                                                           
transfer of funds between accounts (there is no interbank app for IPs and PoI payments 
with  IPs  are  still  lacking)  .  Changes  in  those  areas  and  a  high  level  of  cash  usage  can 
provide further potential for the uptake growth.  

Denmark 

IPs in DKK were introduced in 2014. Since 2021, a rulebook222 of the Nordic Payments 
Council  is  used  (also  for  IPs  in  Sweden  and  Norway)223.  The  rulebook  is  based  on  a 
licence agreement signed with  the EPC to use SCT Inst. Scheme as foundation224. This 
means that in practice, Danish PSPs already de facto comply with majority of SCT Inst. 
Scheme rules. A national settlement infrastructure exists but the Danish Central Bank has 
already applied to use ECB’s TIPS from 2025 for IPs in DKK.  

At  the  level  of  the  end-user  solution,  MobilePay  is  a  mobile  payment  application 
developed by Danske Bank and offered now by other Danish banks.  More than 85% of 
the Danish population use MobilePay. IPs are replacing regular credit transfers and seem 
to be replacing cash to some extent.  The uptake of IPs in DKK in 2020 is estimated at 
37%225.  ACI  Worldwide  estimates  that  with  the  projected  growth  in  IP  volume,  net 
savings for consumers and businesses in 2026 would reach US$ 151 million and would 
help to generate an additional US$ 1 billion of economic output, equivalent to 0.23% of 
the country’s forecast GDP. 

Hungary 

The  Hungarian  IP  system  AFR  (Azonnali  Fizetési  Rendszer)  was  launched  in  March 
2020 on the basis of a decree226 of the governor of the Hungarian National Bank (MNB) 
requiring all PSPs in Hungary to participate in the system. Moreover, all transfers of up 
to  10  million  HUF  must  be  executed  as  IPs  which  by  law  replaced  regular  credit 
transfers.  There  is  also  price  regulation  forbidding  PSPs  to  charge  more  for  an  IP 
transaction in HUF than for a regular credit transfer. A transfer is made available to the 
beneficiary within five seconds, and the amount credited in the account of the beneficiary 
is both irrevocable and immediately at the disposal of the account owner. Proxies such as 
mobile phone number or tax number may be used as an alternative to  account  number. 
The growth in uptake of IPs is also expected to be aided by a requirement that all brick-
and-mortar stores accept electronic payments (from 2021).  

Already  in  the  year  of  their  launch  (2020),  the  uptake  of  IPs  in  HUF  is  estimated  at 
30%227.  According  to  ACI  Worldwide,  the  trend  is  growing  and  it  is  estimated  that 
further  growth  in  IP  volume,  in  2026  net  savings  for  consumers  and  businesses  would 
reach  US$  131  million,  generating  an  additional  US$  415  million  of  economic  output, 

222 npc010-01-2021-nct-instant-rulebook-version-11.pdf (nordicpaymentscouncil.org)  
223 One step closer to easier and faster payments across the Nordic countries (financedenmark.dk)  
224 PowerPoint-presentation (nordicpaymentscouncil.org)  
225  Sources:  ECB,  ACI  Worldwide  [Prime-Time-for-Real-Time-Report-2022.pdf  (aciworldwide.com)], 
Commission calculation 
226 decree-no-35-2017-xii-14.pdf (mnb.hu)  
227  Sources:  ECB,  ACI  Worldwide  [Prime-Time-for-Real-Time-Report-2022.pdf  (aciworldwide.com)], 
Commission calculation 

93 

 
 
                                                           
equivalent  to  0.19%  of  the  country’s  forecast  GDP.  Importantly,  due  to  the 
abovementioned setup features and support from  the authorities,  Hungary  is considered 
by  ACI  Worldwide  as  one  of  the  countries  for  which  IPs  could  provide  the  biggest 
economic growth opportunities.  

Poland 

Poland  was  among  the  very  first  European  countries  to  launch  two  IP  settlement 
infrastructures  in  national  currency,  known  as  Express  Elixir  and  BlueCash,  both 
launched in 2012. In terms of an end-user solution, Blik is a payment system launched in 
2015  that  allows  users  to  make  IPs  and  withdraw  cash  using  only  the  user's  standard 
mobile  banking  app;  it  now  has  nearly  9  million  users.  However,  the  uptake  of  IPs  in 
PLN remains low, and in 2020 is estimated at around 2%228. It has been observed229 that 
one of the factors that have restrained the growth rate in the uptake  of IPs was that the 
PSPs decided to position them as a premium service, thus charging relatively high fees to 
IP users. 

Sweden 

IPs  in  SEK  were  developed  by  the  banking  sector  without  regulatory  intervention  and 
launched  in  2013.  Since  2021  they  are  based  on  a  scheme  of  the  Nordic  Payments 
Council (see above for Denmark), based on a licence agreement signed with EPC to use 
SCT  Inst.  Scheme  as  foundation.  This  means  that  in  practice  Swedish  PSPs  already  de 
facto comply with majority of SCT Inst. Scheme rules. At present, IPs are available only 
via  the  interbank  Swish  app  in  Sweden  not  via  online  banking.  There  are  no  fees  for 
consumers  but  businesses  are  charged  fees  to  use  Swish.  Initially  launched  as  a  P2P 
service,  Swish  has  supported  payments  to  businesses  since  2014  and,  since  2017,  is 
increasingly used for e-commerce payments230. Since May 2022, SEK IPs are settled in 
the ECB’s TIPS (the same as that used for euro IPs).  80% of the adult population uses 
Swish and Swish transactions have overtaken cash transactions in number  (in 2021 778 
million  IP  transactions  took  place).  The  uptake  of  IPs  in  SEK  in  2020  is  estimated  at 
35%231, benefiting from  the pricing of  IPs, convenient  accessibility  for users  via Swish 
app and growing usage of IPs at PoI.  

Romania 

The IP settlement system in Romania in RON was developed in 2019 by Transfond. The 
Scheme  for  IPs  in  RON  was  developed  by  the  Romanian  Banking  Association,  who 
signed a license agreement with the EPC to use the SCT Inst Scheme as foundation for 
their  national  instant  credit  transfer  payment  scheme.  This  means  that  in  practice 
Romanian PSPs already de facto comply with majority of SCT Inst. Scheme rules. Five 

228  Sources:  ECB,  ACI  Worldwide  [Prime-Time-for-Real-Time-Report-2022.pdf  (aciworldwide.com)], 
Commission calculation 
229 Are instant payments becoming the new normal? A comparative study (europa.eu) 
230 Instant Payments at the POI in Sweden (europa.eu) 
231  Sources:  ECB,  ACI  Worldwide  [Prime-Time-for-Real-Time-Report-2022.pdf  (aciworldwide.com)], 
Commission calculation 

94 

 
 
                                                           
Romanian  banks  offer  IPs  in  RON  and  the  reported  uptake  as  of  May  2021  was  at 
1.25%232.  

There  are  no  well-established  end-user  PoI  solutions  based  on  IPs  originating  from 
Romania  at  the  moment.  However,  Transfond  is  developing  a  service  called  AliasPay, 
which  will  allow  the  initiation  of  payments  through  a  mobile  device  using  only  the 
payee's  mobile  phone  number  instead  of  their  IBAN.  This  is  expected  support  the 
Romanian banking community in developing and delivering innovative and competitive 
payment services. 

Croatia  

Croatia  launched  its  IP  system,  NKSInst,  in  October  2020,  and  a  proxy  lookup  service 
was added in March 2021. Croatia is set to join the Euro area on 1 January 2023. Like in 
Romania, both PSP communities already rely on scheme rules based on the EPC Scheme 
through a licence agreement. Because NKSInst  is  based on SCT Inst Scheme, it would 
only take a marginal investment for PSPs to process euro IPs according to the SCT Inst. 
Scheme.  Given  the  recent  nature  of  NKSInst,  the  uptake  of  IPs  in  Croatia  is  still 
marginal.   

Bulgaria 

In 2021 the national retail and card payment system operator BORICA AD implemented 
a  project  for  IPs  in  BGN  based  on  the  SCT  Inst  Scheme.  By  April  2023  all  banks 
operating in the country should be able to receive and process instant payments in BGN. 
Bulgaria announced its plans to join the Euro area on 1 January 2024.  

(b) IPs in global currencies 

Australia 

IPs  were  launched  in  Australia  in  2018  with  the  New  Payments  Platform  (NPP)  of  the 
Reserve  Bank  of  Australia  and  its  Payments  System  Board.  Participation  is  not 
obligatory  for  PSPs,  and  at  the  end  of  2021  over  100  PSPs  offered  IPs  for  almost  90 
million customer accounts. While most of those PSPs are banks, there are also a number 
of non-bank institutions that are using  IPs to offer their  customers faster payments  and 
innovative services.  

According  to  the  Reserve  Bank  of  Australia,  the  share  (uptake)  of  account-to-account 
credit  transfers  that  are  made  via  IPs  in  2021  has  risen  to  around  30%.  Notably,  the 
Australian  government  has also  become a significant  user of  IPs, with  more than  AUD 
12 billion of payments for COVID-related support and disaster relief made via IPs in the 
second  half  of  2021.  IPs  enabled  the  government  to  provide  support  to  households 
affected by bushfires and floods in near real time, including on weekends.233  

232 Source: National Payment Committee 
233 Real-time Payments in Australia (rba.gov.au) 

95 

 
 
 
                                                           
Brazil  

IPs were launched in 2020 by the Central Bank of Brazil via PIX, an account-to-account 
payment method, which is managed, owned and operated by it. PSPs with over 500 000 
customer  accounts  are  required  to  offer  PIX  but  many  smaller  ones  also  do  so.  As  of 
March 2022, there were over 1.6 billion PIX operations per month and over 124 million 
registered  users;  over  70%  of  the  adult  population  has  made  a  PIX  operation.234  The 
Central Bank mandated participation in PIX by banks and other payment institutions with 
more than 500 000 transaction accounts235. PIX transactions are required by regulation to 
be  free  for  individuals  but  banks  can  set  fees  for  merchants  and  corporate  customers 
freely (but it is estimated that more than half of participating PSPs do not apply charges 
to corporates). Consumers can pay at PoI using a PIX via QR code at checkout.  

According to ACI Worldwide, in 2021 Brazil recorded 8.7 billion IPs. Despite the recent 
launch of PIX, the uptake of IPs is estimated at around 90% of all credit transfers. The 
widespread adoption of real time payments resulted in estimated cost savings of US$ 5.7 
billion for businesses and consumers in 2021, which helped to unlock US$ 5.5 billion of 
additional economic output, representing 0.34% of the country’s GDP.  

Hong Kong 

Launched  in  2018,  IPs  (Faster  Payment  System,  or  FPS,  available  in  both  Hong  Kong 
dollar and Renminbi) have already achieved a significant uptake in Hong Kong, with 262 
million transactions in 2021, representing 19% of all electronic payments (including also 
other  payment  methods  such  as  card  payments).  By  end  2021,  the  FPS  recorded  9.62 
million registrations, up by 40% or 2.7 million registrations year-on-year. FPS payments 
at  PoI  with  QR  code  are  possible,  and  FPS  can  be  integrated  in  digital  wallets.  As  a 
result, the usage of FPS for merchant payments has been growing and in 2021 constituted 
17% of all transactions in HKD.236 . 

India 

IMPS (Immediate Payment Service) was launched in 2010 and it was upgraded in 2016 
via a Unified Payments Interface (UPI), allowing any consumer to initiate a payment via 
any payment app of any PSP. In 2021, India recorded 48.6 billion IP transactions, more 
than any other country.   The use of proxies such as  mobile phone numbers is  possible. 
Cross-border interlinkage of UPI to Singapore and UAE is planned.  

As of April 2022, the uptake of IPs (as a share of all retail credit transfers) was in excess 
of  90%237,  possibly  the  highest  in  the  world.  Moreover,  ACI  Worldwide  estimates  that 
with  consumers  increasingly  shifting  from  cash  to  mobile-based  real-time  payments, 

234 Pix Statistics (bcb.gov.br) 
235  BIS  Bulletin  no.52:  Central  banks,  the  monetary  system  and  public  payment  infrastructures:  lessons 
from Brazil’s Pix  
236 https://www.hkma.gov.hk/media/eng/doc/about-the-hkma/legislative-council-issues/20220207e1.pdf  
237 
Source: 
https://rbidocs.rbi.org.in/rdocs/Bulletin/PDFs/43T_160620224EB5478375DF4232A08C24AA8CB15963.PD
F  

96 

 
 
                                                           
skipping  payment  cards,  the  share  of  IP  volume  in  total  payments  (i.e.,  including  cash 
and cards) will rise from 31% in 2021 to more than 70% in 2026 which would deliver net 
savings  for  businesses  and  consumers  of  US$  92.4  billion,  helping  to  generate  an 
additional  US$  45.9  billion  of  economic  output  (equivalent  to  1.12%  of  the  country’s 
forecast GDP in 2026). 

Mexico  

The  SPEI  (Sistema  de  Pagos  Electrónicos  Interbancarios)  IP  system  was  launched  in 
Mexico  under  the  impetus  of  the  central  bank  as  early  as  2004.  Under  central  bank 
pressure, all banks participate and there are no charges. However, uptake has been slow, 
due  to  a  very  large  unbanked  population,  a  tradition  of  paper  transactions  (86%  of  all 
payments in Mexico are paper-based not electronic), and banks not actively advertising 
the system due to low revenue.  

In 2019, an overlay solution (Cobro Digital) permitting payment via QR codes, bar codes 
and NFC was added, which helped to gain some traction in the growth of  IPs in recent 
years. In 2021, IPs via SPEI constituted 22% of all electronic payments (including card 
payments) by volume and 82% by value, meaning that IPs tend to be used for high value 
payments in Mexico, probably B2B payments rather than retail payments. 

Singapore 

IPs (Fast And Secure Transfers, or FAST)  were introduced in Singapore in 2015 under 
the  impetus  of  the  Singapore  Monetary  Authority.  An  overlay  app,  PayNow238,  was 
introduced  in  2017,  facilitating  their  use.  In  2021  IPs  constituted  15%  of  all  electronic 
payments  (including  card  payments)  by  volume  and  37%  by  value  (which  implies  a 
significant B2B use of IPs). A cross-border linkage to the IP system of Thailand has been 
developed, allowing cross-border payments between the two countries. 

United Kingdom 

In  the  UK,  ‘faster  payments’  are  executed  within  15  seconds  but  may  take  up  to  two 
hours to be credited to the payee’s account by the payee’s PSP. They were developed by 
the  banking  sector  in  the  early  2000s,  and  launched  in  2008,  under  pressure  (but  not  a 
legal obligation) from the Office of Fair Trading239. Although limited numbers of banks 
participated  at  first,  in  2012  a  large  number  of  PSPs  joined  the  system,  as  the 
implementation of the first Payment Service Directive (PSD1) required transactions to be 
credited  to  the  payee  by  the  next  business  day,  and  the  previous  credit  transfer  system 
(BACS direct credits) could not guarantee this.  

238 PayNow Singapore (abs.org.sg)  
239  Office  of  Fair  Trading  (2003).  UK  payment  systems:  An  OFT  market  study  of  clearing  systems  and 
review of plastic card networks. Office of Fair Trading (2005). First annual progress report of the Payment 
Systems. Task Force: A report prepared for the Payment Systems Task Force. Office of Fair Trading (2007). 
Final report of the Payment Systems Task Force. 

97 

 
 
                                                           
By  the  first  quarter  of  2021,  the  uptake  of  faster  payments  in  GBP  in  the  UK  was 
exceeding  50%240.  Faster  payments  are  now  usually  the  default  for  credit  transfers 
ordered via online banking applications, and transaction fees  are rare (however there is 
no  regulation  of  pricing).  Credit  transfers  other  than  faster  payments  have  slightly 
declined  since  the  launch  of  faster  payments,  and  the  use  of  cheques  has  declined 
significantly (a long term trend which started before 2008). 

Sources for this Annex: 

  ACI  Worldwide  and  GlobalData:  Prime  Time  for  Real-Time,  April  2022 
(https://www.aciworldwide.com/wp-content/uploads/2022/04/Prime-Time-for-
Real-Time-Report-2022.pdf ) 

  Bank  for  International  Settlements,  Developments  in  retail  fast  payments  and 

implications for RTGS systems (available here) 

  ECB Occasional paper n° 229, Are instant payments becoming the new normal? 

A comparative study, August 2019. 

  Meeting  with  Carlos  Eduardo  Brandt  -  Central  Bank  of  Brazil  on  PIX,  14  June 

2022. 

  ECB academic paper: Instant Payments In Hungary – Central Bank’s Role In The 

Development, November 2019 

  Article on EPC website: AFR – the Hungarian Retail Instant Payment System, Dr 
Levente Kovács, Secretary General of the Hungarian Banking Association, April 
2020 (available here) 

  Online  article:  MINDSPIRE  Consulting’s  involvement  with  the  Hungarian 

Instant Payment System, András Linczmayer, April 2021 (available here) 

  Page on instant payments of the website of the Magyar Nemzeti Bank (available 

here) 

  Swedish  national  bank  (Riksbank):  Payments  in  Sweden  2020,  October  2020 

(available here) 

Department, 

  National Payment Committees of EU Member States 
  Speech  Real-time  Payments  in  Australia,  Ellis  Connolly,  Head  of  Payments 
Australia 
Reserve 

Policy 
(https://www.rba.gov.au/speeches/2022/pdf/sp-so-2022-05-03.pdf) 
  PIX statistics (https://www.bcb.gov.br/en/financialstability/pixstatistics) 
  Briefing  to  the  Legislative  Council  Panel  on  Financial  Affairs,  Hong  Kong 
(https://www.hkma.gov.hk/media/eng/doc/about-the-

Monetary 
hkma/legislative-council-issues/20220207e1.pdf )  

Authority 

Bank 

of 

  Payment  System  Indicators,  RBI  Bulletin  June  2022,  Reserve  Bank  of  India 
(https://rbidocs.rbi.org.in/rdocs/Bulletin/PDFs/43T_160620224EB5478375DF42
32A08C24AA8CB15963.PDF ) 

  European Automated Clearing House Association (EACHA) 

240 Source: European Automated Clearing House Association (EACHA) 

98 

 
 
 
                                                           
ANNEX 7: EU NON-CASH PAYMENTS MARKET AND CHARACTERISTICS OF 
PSPS PROVIDING CREDIT TRANSFERS IN EURO 

EU market shares of various non-cash payment instruments  

According  to  the  estimates  of  the  ECB,  slightly  less  than  three-quarters  (73%)  of  all 
payments at the Point of Interaction in the Euro area in 2019 were cash payments.241  

As  regards  the  market  for  non-cash  payment  instruments,  its  size  in  the  EU27  in  2020 
amounted to EUR 203.5 trillion, of which credit transfers in all currencies made up EUR 
189.7  trillion  (93.2%),  while  euro  credit  transfers  made  up  EUR  68.3  trillion.242 
Transactions  of  IPs  in  euro  amounted  to  an  estimated  EUR  1.6  trillion  (or  2.3%  of  all 
euro credit transfers).243   

In  terms  of  the  number  (volume)  of  transactions,  the  size  of  the  non-cash  payments 
market in 2020 was 127.3 billion transactions, of which credit transfers in all currencies 
made up 31.7 billion transactions (or, 24.9%), while credit transfers in euro made up 22.5 
billion transactions (or, 17.7%). Among the latter, transactions of IPs in euro amounted 
to 1.8 billion, resulting in the euro IP uptake of 7.9%.244  

Source: ECB, National Payment Committees, Commission calculation 

Characteristics of PSPs carrying out regular and instant credit transfers in euro 

Credit  transfers  (including  IPs)  can  be  carried  out  by  a  range  of  PSPs,  including  credit 
institutions,  electronic  money  institutions,  payment  institutions,  post  offices,  central 
banks,  regional  or  local  authorities,  finance  companies,  investment  firms,  clearing  and 
custody institutions, etc. These entities can carry out credit transfers as a payment service 
offered to users or on own account.  

241 Based on a  survey of 41 155 consumers carried out  in 2019. See  Study on the payment  attitudes of 
consumers in the euro area (europa.eu). 
242 Source: ECB. 
243 Source: National Payment Committees, ECB, Commission calculation. 
244 As of the last quarter of 2021, the estimated uptake of euro IPs increased to 10.97% (EPC). 

99 

2020% of all payments2020% of all paymentsCredit transfers (all currencies)31 73824.9%189 72793.2%    of which credit transfers in euro22 52317.7%68 33433.6%    of which instant payments in euro1 7831.4%1 6000.8%Direct debits23 08918.1%6 7813.3%Cheques1 3871.1%1 4270.7%Card payments63 68050.0%2 3351.1%Electronic money6 1494.8%2590.1%Other1 2851.0%2 9701.5%Total EU 27127 329100.0%203 498100.0%Payment instrument / serviceVolume, million of transactionsValue, billion euro 
 
 
                                                           
According to  the ECB,  at  the end of 2020 there were 6 917 entities  in  the EU  offering 
payment  services  in  various  currencies,  of  which  5 584  were  established  in  the  Euro 
areas, while the remaining 1 333 outside the Euro area. Of those 6 917 entities, 3 541 (or 
51%) adhered to the SCT Scheme and carried out regular credit transfers in euro. In the 
Euro area Member States, the proportion of PSPs carrying out regular credit transfers (in 
euro) was equal to 60%, while in the non-Euro area it was four times lower and stood at 
15%, as shown in the chart below: 

Chart: Participation of PSPs in SCT Scheme and SCT Inst Scheme 

Source: ECB, EPC, Commission calculation 

As  regards  the  size  of  PSPs  adhering  to  the  two  Schemes,  the  below  table  shows  the 
distribution  of  3 064  PSPs  that  adhere  to  the  SCT  Scheme  and  whose  total  assets  data 
was  available  in  the  ORBIS  database.  The  PSPs  are  segregated  in  5  buckets  of 
comparable size in terms of number of PSPs participating in the SCT Scheme, with the 
participation  in  the  SCT  Inst.  Scheme  within  each  of  those  buckets  being  indicated  in 
absolute and relative terms as well. The figures suggest that PSP size does not appear to 
be an important factor determining PSP’s decision to adhere to the SCT Inst. Scheme. In 
fact, a somewhat lower share of participation is observed both among the smallest PSPs 
and the largest PSPs (with the latter having the lowest share of participation in SCT Inst 
Scheme among all five buckets).  

Source: ORBIS (data as of October 2021), EPC, Commission calculation 

100 

51%60%15%33%41%1%0%10%20%30%40%50%60%70%80%90%100%EU - 27Euro AreaNon Euro AreaSCT Inst SchemeSCT SchemeTotal PSPsSize bucket, total assetsEUR mln1< 190 mln61740866%2>=190 mln and <520 mln60849281%3>=520 mln and <1450 mln61447277%4>=1450 mln and <4200 mln60846677%5>=4200 mln61738262%Total3 0642 22072%Size bucketPSPs in SCT SchemePSPs in SCT Inst Scheme% of PSPs in SCT Inst Scheme 
 
 
 
In  terms  of  trade  description  (or  specialisation)  of  PSPs,  the  below  table  shows  the 
breakdown of 3 400 PSPs that adhere to the SCT Scheme on the basis of the data in the 
ORBIS database. 

Source: ORBIS (data as of October 2021), EPC, Commission calculation 

101 

Specialisation / Trade DescriptionPSPs in SCT SchemePSPs in SCT Inst Scheme% of PSPs in SCT Inst SchemeCooperative Bank1 5991 47792%Commercial Bank52717233%Savings Bank49745291%Private Banking861922%Finance Company671116%Investment Bank / Security House481327%Real Estate / Mortgage Bank441534%Specialized Governmental Credit Institution361233%Central Bank20525%Securities Firm1000%Non Banking Credit Institution9222%Bank Holding Company5240%Clearing & Custody Institution500%Diverse / not available (incl. credit unions, EMIs, PIs)44710724%Total 3 4002 28767% 
 
 
 
 
 
ANNEX 8: REDUCTION OF PAYMENT FLOAT 

Background  

The  ‘payment  float’  represents  the  funds  in  transit  in  the  payment  system  between  the 
payment  accounts of the payer and the payee.  The float  occurs between  the time when 
the  funds  are  (i)  debited  from  the  payer’s  account  by  the  payer’s  PSP  (which  happens 
immediately after the payment order is received by the payer’s PSP) and (ii) credited to 
the payee’s account by the payee’s PSP (which can happen days later). It is considered 
by regulators as an inefficiency in the payment system which generates costs for payment 
service  users,  as  the  funds  caught  in  the  float  are  not  available  for  consumption  or 
investment.245  The  presence  of  the  ‘payment  float’  is  brought  about  by  technological, 
procedural  and  settlement  infrastructure  constraints.  Some  of  those  constrains  have 
evolved or eased markedly in the course of the recent years, in part due to the measures 
taken  by  the  policy  makers  internationally,  which  aimed  to  tackle  the  inefficiencies 
arising  from  the  float.  For  example,  as  from  1  July  2000,  Norwegian  banks  were  no 
longer  allowed  to  earn  float  income246.  In  2005  the  UK  authorities  requested  the 
elimination  of  the  float  for  credit  transfers  (settlement  of  which  at  the  time  was  up  to 
three business days) via the introduction of ‘faster’ payments.247   

In  the  EU,  the  impact  assessment  of  the  European  Commission  accompanying  the 
legislative  proposal  for  the  first  Payment  Services  Directive  2007/64/EC  (PSD1)  noted 
that for businesses, the delays related to float can have a substantial impact on cash flow, 
working  capital  and  processing  costs  causing  serious  problems,  and  this  situation  has 
been widely criticised by corporate customers and SMEs. The study argued that  the float 
represents  an  inefficient  drag  on  the  rest  of  the  economy  if  “artificial”  delays  in  the 
availability of funds negatively affect the cash flow of companies and individuals, finally 
impacting  on  the  efficient  allocation  of  capital  248.  As  a  result,  PSD1  harmonised  and 
gradually  reduced  the  maximum  execution  time  of  regular  credit  transfers,  initially,  by 
capping  it  at  three  business  days  for  electronically-initiated  transactions  and  four 
business days for the paper-initiated ones and, from 2012, at one and two business days, 
respectively, in order to improve the efficiency of payments throughout the EU.249 Prior 
to the implementation of the PSD1, the execution time for outgoing transactions varied 
considerably between PSPs, in some cases reaching up to as much as 10 days.250  

Moreover, since PSD1 Member States have discretion to impose even shorter maximum 
execution  timelines  for  national  payment  transactions  and  some  Member  States  have 
done so recently (e.g., Hungary). 

https://webarchive.nationalarchives.gov.uk/ukgwa/20131101202847/http://www.oft.gov.uk/news-

245 Economic impact of real time payments | Deloitte Luxembourg | Financial Services 
246 Act on Financial Contracts and Financial Assignments (Financial Contracts Act), No. 46 of 25 June 1999 
(in force 1 July 2000) [Microsoft Word – lov-19990625-046-eng.doc (uio.no)]  
247 
and-updates/press/2005/94-05  
248 st15625-ad01.en05.doc (europa.eu)  
249 
content/EN/TXT/PDF/?uri=CELEX:32007L0064&from=EN]  
250 study-impact-psd-24072013_en.pdf (europa.eu)  

[https://eur-lex.europa.eu/legal-

Article 

recital 

69(1) 

PSD1 

(43) 

and 

See 

of 

102 

 
 
 
                                                           
Instant payments and reduction of float 

Reduced float and its impact on payment services users 

IPs have the potential to reduce the payment float given that they are expected to displace 
payment  means  that  have  a  longer  settlement  cycle,  such  as  regular  credit  transfers  or 
cheques.  As  shown  in  Annex  7,  the  annual  value  of  regular  euro  credit  transfers  and 
cheques  in  2020  was  equal  to  EUR  68 161  billion251.  On  this  basis  it  can  be  estimated 
that  on  any  given  day  an  amount  equivalent  to  EUR  187  billion  was  locked  in  the 
financial system, assuming that their execution would take place only on a business day 
that follows the business day of their initiation252. Under the assumption of the uptake of 
IPs of 50% and a full displacement of cheques, it is estimated that the daily payment float 
would be reduced by EUR 96 billion253, whereas under the assumption of the uptake of 
IPs  of  70%254  and  a  full  displacement  of  cheques,  the  daily  float  would  be  reduced  by 
EUR 132 billion255.  

The main benefit of the reduced float is that the funds in transit would become available 
to  payees  (consumers,  businesses,  public  administrations)  much  sooner,  i.e.,  within  10 
seconds from the moment of being sent by the payer,  compared to one-to-two business 
days later in the case of regular credit transfers. This would enable those payees to realise 
the cost savings of financing their working capital or short-term spending, and make use 
of  the  funds  immediately  for  consumption  or  investment,  thus,  boosting  aggregate 

251 The assumption that IPs (and not regular credit transfers) will displace cheques is linked to the features 
of  these  payments  means  and  is  also  informed  by  the  findings  of  external  studies.  The  study  by  Fidelis 
Consulting 
[https://op.europa.eu/en/publication-detail/-/publication/735d5b9d-0c5e-11ec-adb1-
01aa75ed71a1/language-en/format-PDF/source-228716981] argues that one of the main reasons behind 
the use of cheques is that they provide the beneficiary with a seeming certainty of payment (since there 
is a risk that the payer wrote a cheque without sufficient funds available in their payment account). Thus, 
in  some  Member  States  cheques  are  commonly  used  to  make  a  deposit  /  down-payment  in  order  to 
reserve a rental agreement of an accommodation). IPs will provide an indisputable certainty of payment 
to  the  beneficiary,  with  a  strong  advantage  of  also  reaching  the  beneficiary’s  account  immediately  (as 
opposed  to  cheques  where  it  may  take  several  days)  which  could  be  verified  by  the  beneficiary  while 
concluding the agreement. A similar conclusion is reached in the study by Deloitte [Economic impact of 
real time payments | Deloitte Luxembourg | Financial Services ] which observes that cheques are time-
inefficient payment instrument and that IP features such as real time settlement and notification, as well 
as the greater ease of making payments efficiently and securely are likely drivers of the displacement of 
cheques. 
252 For cheques and paper-initiated regular credit transfers the float would be longer, while for the ‘on-us’ 
regular  credit  transfers  the  float  would  normally  be  shorter,  as  debiting  the  account  of  the  payer  and 
crediting the account of the payee could take place on the same day. For the calculation of the payment 
float,  it  was  assumed  that  in  all  these  instances  the  crediting  of  the  payee’s  account  takes  place  on  a 
business day that follows the business day of the initiation of the underlying payment transaction (which 
is the case with the electronically initiated regular credit transfers). 
253 Consisting of EUR 4 billion from the displacement of cheques and EUR 92 billion from the displacement 
of regular euro credit transfers. 
254 The assumption of the uptake of IPs of 50% is considered as a realistic and central assumption within 
3-5 years of implementation of measures included in this initiative, while the assumption of the uptake of 
70% represents a higher, more optimistic, level which is still attainable in view of the fact that the uptake 
in one Member State is already close to 70% in absence of EU legislation. 
255  Consisting  of  EUR  4  billion  from  the  displacement  of  cheques  and  EUR  128  billion  from  the 
displacement of regular euro credit transfers. 

103 

 
 
                                                           
economic activity. Based on the analytical model employed by Deloitte 256, such benefits 
are estimated to fall in the range of EUR 1.34 to 1.84 billion annually, depending on the 
eventual uptake of IPs (50%-70%) and assuming an annual interest rate of 1%. The study 
by  Fidelis  Consulting  estimated  those  benefits  to  range  between  EUR  0.68  billion  to 
EUR 1.83 billion per year, reflecting a broader range of scenarios considered257.  

Impact on PSPs  

Those benefits are assumed to be currently flowing to PSPs  as they are in a position to 
generate  revenues  by  placing  the  funds  arising  from  the  payment  float  in  short-term 
investments. It is estimated that at the industry level such revenues would represent less 
than 0.3% of the total annual net operating income.258 The above re-distribution of those 
benefits is not seen as an unintended consequence, as from the regulation point of view 
the  payment  float  is  considered  as  an  inefficiency  in  payments  to  the  detriment  of 
payment services users, rather than a deliberate policy targeted to aid PSPs’ profitability. 
Moreover,  the  possibility  for  PSPs  to  generate  earnings  from  the  payment  float  creates 
disincentives for PSPs to innovate and improve the efficiency of payments. 

In terms of the impact of the reduced payment float on liquidity and its management by 
PSPs, several aspects have been assessed. The abovementioned reduction of the payment 
float  is  assumed  to  be  predominantly  driven  by  the  displacement  of  regular  credit 
transfers by IPs. As a result of this, there could be an impact on the amount of liquidity 
that PSPs would have to hold in their settlement account in the relevant payment systems 
(such as TIPS or others) to facilitate a seamless settlement of IPs, in view of the fact that 
IPs are settled in real time individually on gross basis whereas regular credit transfers are 
settled in cycles (once or several times per business day) and where the payment owed to 
other PSPs represents a multilateral net liquidity need. In this regard, the study conducted 
by  the  Bank  of  Finland259  looked  into  the  additional  liquidity  that  PSPs  would  have  to 
hold in their settlement account under the scenario of a full migration from regular credit 
transfers  to  IPs  (i.e.,  100%  uptake  of  IPs).  The  study  estimated  that  under  such  a 
scenario,  the  aggregate  increase  in  daily  liquidity  needs  held  by  Finish  PSPs  would  be 
small, i.e., on average 2.7%, and would not exceed 8.7% in 95% of the cases. Under the 
IP uptake assumptions considered by this impact assessment (50%-70%), an accordingly 
lower increase of liquidity needs in settlement accounts can be reasonably assumed. The 
study also observed that the timing for a transition to IPs might be favourable as the high 
liquidity  levels  currently  held  by  PSPs  could  accommodate  any  temporary  increases  in 
liquidity needs.  

It should be pointed out that one of the implicit assumptions of the abovementioned Bank 
of  Finland  study  was  that  all  PSPs  both  send  and  receive  IPs.  The  main  driver  for  the 
increased  liquidity  balance  at  the  PSP  level  being  the  value  of  IPs  sent,  in  a  scenario 

256 Economic impact of real time payments | Deloitte Luxembourg | Financial Services 
257 Study of Fidelis Consulting,  https://op.europa.eu/en/publication-detail/-/publication/735d5b9d-0c5e-
11ec-adb1-01aa75ed71a1/language-en/format-PDF/source-228716981  
258 On the basis of the total annual net operating income of EUR 417 billion for banks covered by the 2021 
EU-wide stress test. The figure is grossed up to EUR 596 billion, to reflect the fact that only banks covering 
70%  of  the  total  industry  assets  were  included  in  the  exercise  (and  not  grossed  up  for  the  assets  of 
payment institutions and e-money institutions) [ 2021-EU-wide-stress-test-Results.pdf (europa.eu) ]. 
259 Instant payments as a new normal: Case study of liquidity impacts for the Finnish market (helsinki.fi)  

104 

 
 
                                                           
where  PSPs  only  receive  but  not  send  IPs  (which  is  reflected  under  option  1.1)  there 
would be no impact on additional liquidity needs of such PSPs. This would result in an 
asymmetric outcome as only the PSPs that both send and receive IPs would face possible 
increases  in  liquidity  needs,  while  the  PSPs  that  only  receive  IPs  would  have  no  such 
costs and, in addition, would continue to be able to benefit from the payment float arising 
from  the  regular  credit  transfers  sent,  which  is  likely  create  a  disincentive  for  them  to 
voluntarily migrate to the sending of IPs. 

Also, when assessing the impact on the increased liquidity needs due to the way that euro 
IPs are settled in TIPS, several measures that are being put in place by the ECB should be 
mentioned. First, PSPs are able to move funds from their account in TARGET2 to their 
IP settlement account in TIPS, while being able to count the sum of the two balances for 
the purposes of meeting the reserve requirement of the central bank, which should allow 
PSPs to manage their liquidity in accounts with the central bank more flexibly. Second, 
the  measures  included  in  the  Pan-European  Reachability  Package260  require  that  all 
Automated  Clearing  Houses  (ACHs)  that  offer  IP  services  migrate  their  technical 
accounts from TARGET2 to TIPS.  In turn, this  does also contribute to PSPs’ ability to 
settle IPs in a timely manner and optimise their liquidity management, as the funds that 
they may have in their accounts in TIPS and ACH(s) could be moved around as needed 
on  24/7  basis.  The  ECB  is  actively  monitoring  the  dynamics  in  this  area  and  could 
consider additional measures, if necessary, to ensure a smooth settlement of  IPs as their 
uptake increases. 

From  the  point  of  view  of  the  ability  of  PSPs  to  comply  with  prudential  liquidity 
requirements,  the  abovementioned  reduction  in  the  payment  float  is  not  expected  to 
weaken the overall liquidity position of individual PSPs, as with IPs the funds are simply 
moving  from  one  PSP  to  another  faster.  More  specifically,  with  an  IP,  the  transferred 
funds would reach the payee’s PSP already on the day of the transfer, while in case of a 
regular  credit  transfer  between  different  payer’s  and  payee’s  PSPs  those  same  funds 
would remain on the balance sheet of the payer’s PSP until the next business day. Since 
each PSP, for different IP transactions, acts both in the capacity of the payee’s PSP and 
the payer’s PSP (except  for option 1.1), this effect  should be evenly distributed among 
PSPs  and  cancel  itself  out.  For  intra-PSP  IP  transactions,  there  would  be  no  impact  on 
PSPs either, as funds remain with the PSP. 

In its targeted consultation with PSPs, the Commission services sought PSPs’ views on 
whether  there  would  be  a  risk  that  existing  liquidity  management  tools  and  relevant 
prudential  requirements  (such  as  the  Liquidity  Coverage  Ratio,  LCR)  may  not  be 
sufficiently  effective  or  adequate  in  view  of  the  increases  in  the  uptake  of  IPs.  The 
obtained feedback reflected a largely consensual view that IPs would not have an impact 
on PSPs’ compliance with LCR as the latter is calibrated to ensure that banks withstand 
at  all  times  (and  therefore  also  intra-day)  stress  conditions  computed  over  a  30-days 
period. Rather, for the management of the liquidity risk related to IPs, PSPs’ capacity to 
manage  intra-day  liquidity  was  deemed  to  be  relevant.  In  this  regard,  some  PSPs 
indicated that they manage their intra-day liquidity risk pertaining to IPs through internal 
forecasting / modelling and stress testing for various relevant scenarios.  

260 ECB takes steps to ensure pan-European reach of instant payments (europa.eu)  

105 

 
 
                                                           
As  concerns  credit  institutions261,  the  current  liquidity  framework  applicable  to  them 
includes  a  number  of  provisions  that  address  intra-day  liquidity  risk  arising  from  IP 
operations. More specifically, Article 86 of the CRD262 requires competent authorities to 
ensure that banks adopt policies to manage their intra-day liquidity risk, while the EBA 
Supervisory  Review  and  Evaluation  Process  (SREP)  guidelines263  require  banks  to 
closely  monitor  their  intra-day  liquidity.  In  addition,  credit  institutions  are  required  to 
meet the LCR at all times, including intra-day liquidity flows. Thus, the LCR captures all 
liquidity  inflows  and  outflows,  including  those  due  to  instant  payment.  The  LCR 
Delegated Act264 contains provisions that are able to capture the issues posed by instant 
credit transfers265 . 

On the basis of the above analysis and the feedback from the Member State experts in the 
context of discussions in CEGBPI, it was concluded that a regulatory intervention in the 
area  of  prudential  requirements  dealing  with  the  management  of  the  intra-day  liquidity 
risk is currently not warranted.  

Impact on financial stability  

The above analysis lends support to an assessment that, under normal market conditions, 
the  impact  of  a  greater  uptake  of  IPs  and  a  reduced  payment  float  on  liquidity  and  its 
management  by  PSPs  should  not  pose  major  risks  for  financial  stability.  Likewise,  it 
appears  that  the  gradual  reductions  in  the  payment  float  due  to  past  regulatory 
interventions such as PSD1 did not create any unintended systemic consequences and no 
such evidence is available in the national markets that are the ‘front-runners’ in adoption 
of  euro  IPs  and  that,  as  a  result,  substantially  reduced  the  float  domestically.  For  the 
remaining EU PSPs and individual Member States, the estimated increase in the uptake 
of  IPs  is  expected  to  be  gradual  and,  therefore,  would  allow  the  industry  to  make  any 
necessary  adjustments  over  time.  Globally,  by  now  IP  services  have  been  launched  in 
over  60  jurisdictions266  and  there  is  little,  if  any,  evidence  suggesting  their  negative 
impact on the financial stability. 

Nevertheless,  via  the  open  public  consultation  stakeholders  were  consulted  on  whether 
the  availability  of  IPs  could  aggravate  bank  runs,  by  possibly  facilitating  sudden  and 
substantial outflows of liquid funds from a PSP. The analysis of their feedback showed 
that the majority (71%) of respondents who expressed a view on the issue did not think 
that  IPs  could  aggravate  bank  runs  and,  therefore,  contribute  to  bank  failures.  This  is 
because  of  the  safeguards  that  already  exist,  such  as  the  pre-funded  nature  of  IP 

261 Prudential liquidity requirements applicable to payment institutions and e-money institutions are not 
analysed in the annex, as those entities are excluded from the scope of the preferred option 1.2. 
262 Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the 
activity  of  credit  institutions  and  the  prudential  supervision  of  credit  institutions  and  investment  firms, 
amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC  
263  Guidelines  for  common  procedures  and  methodologies  for  the  supervisory  review  and  evaluation 
process (SREP) and supervisory stress testing | European Banking Authority (europa.eu) 
264 Commission Delegated Regulation (EU) 2015/61 of 10 October 2014 to supplement Regulation (EU) No 
575/2013 of the European Parliament and the Council with regard to liquidity coverage requirement for 
Credit Institutions 
265 For instance, Article 5 on LCR stress scenarios envisages as “stress indicators” unscheduled draws on 
liquidity (lit. f). 
266 See annex 6. 

106 

 
 
                                                           
settlement accounts with CSMs (which act as an implicit cap of how much funds could 
leave a PSP  via  IPs  on  a given day) or various  daily/transaction limits  that  PSPs apply 
(for more details on the consultation feedback see Annex 2). The question of whether any 
unaddressed risk remains and, if so, whether any additional measures would be needed to 
deal  with  it  was  also  discussed  with  Member  State  and  industry  experts  in  two 
Commission  working  groups  (CEGBPI  and  PSMEG,  respectively).  Neither  group  of 
experts  expressed  support  for  additional  crisis  prevention  or  management  measures, 
given  the  robust  and  recently  introduced  European  crisis  management  framework 
(consisting  of  BRRD267  and  SRMR268)  and  the  presence  of  the  above  mentioned 
prudential requirements pertaining to the management of the ‘intra-day’ liquidity risk.  

When  assessing  whether  IPs  may  contribute  to  inter-PSP  contagion  and  thus  pose  any 
risk  for  financial  stability,  it  shall  be  recalled  that  the  existing  Settlement  Finality 
Directive (SFD)269 further  limits this risk, as it guarantees that  IP orders entered by the 
payer’s PSP into a ‘designated’ payment system cannot be revoked or invalidated even in 
the event of the PSP’s insolvency. However, it should be noted that given the real-time 
settlement  process  of  IPs,  the  risk  of  their  revocation  is  inherently  lower  compared  to 
regular credit transfers. 

267  Directive  2014/59/EU  of  the  European  Parliament  and  of  the  Council  of  15  May  2014  establishing  a 
framework  for  the  recovery  and  resolution  of  credit  institutions  and  investment  firms  and  amending 
Council  Directive  82/891/EEC,  and  Directives  2001/24/EC,  2002/47/EC,  2004/25/EC,  2005/56/EC, 
2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) No 
648/2012, of the European Parliament and of the Council 
268  Regulation  (EU)  No  806/2014  of  the  European  Parliament  and  of  the  Council  of  15  July  2014 
establishing  uniform  rules  and  a  uniform  procedure  for  the  resolution  of  credit  institutions  and  certain 
investment firms in the framework of a  Single Resolution Mechanism and a Single Resolution Fund and 
amending Regulation (EU) No 1093/2010 
269  Directive  98/26/EC  of  the  European  Parliament  and  of  the  Council  of  19  May  1998  on  settlement 
finality in payment and securities settlement systems 

107 

 
 
 
 
                                                           
ANNEX 9: BACKGROUND ON THE FUNCTIONING OF CROSS-BORDER 
TRANSFERS IN THE EU 

In  order  to  make  a  payment  cross-border  within  the  EU  (between  any  two  Member 
States),  EU  citizens  and  businesses  can  use  credit  transfers,  direct  debits  or  card 
payments.  

With regard to direct debits, it was not possible to set up cross-border direct debit until 
the adoption of the 2012 SEPA Regulation.  The only  cross-border direct  debit possible 
today is that denominated in euro (a SEPA direct debit). 

With regard to card payments, the only cross-border card payments possible are via the 
International Card Schemes (mainly Visa and Mastercard).  

With  regard  to  cross-border  credit  transfers  in  the  EU,  these  can  be  done  in  two  main 
systems: 

-  SWIFT270:  available  for  credit  transfers  denominated  in  nearly  all  global 
currencies, including non-euro EU currencies,  except  euro. SWIFT transfers are 
more  costly  for  the  PSPs,  who  need  to  rely  on  intermediaries  such  as 
correspondent  banks,  and  the  fees  applied  to  users  are  usually  several  times 
higher than the fees for SEPA transactions271. SWIFT transfers take  approx. 1 to 
5 working days (depending on the number of intermediaries involved, etc.);   

-  SEPA: available for credit transfers denominated only in euro (and mandatory for 
euro  transfers).  They  are  less  costly  for  PSPs  to  provide  as  they  do  not  need  to 
rely  on  intermediaries  and  they  are  executed  in  the  same  way  as  domestic  euro 
credit  transfers.  Pricing  varies  by  individual  PSPs,  who  tend  to  set  it  at  zero 
(practice  applied  by  many  PSPs  within  and  outside  Euro  area).  Where  a  fee  is 
applied,  it  is  many  times  lower  than  the  fee  for  a  SWIFT  transfer.  An 
electronically-initiated  cross-border  regular  SEPA  credit  transfer  normally  takes 
one business day to execute, and a cross-border instant SEPA credit transfer takes 
less than 10 seconds. 

It is an individual decision of every PSP (within and outside the Euro area) whether they 
wish  to  offer  credit  transfers,  and  in  which  currency.  A  PSP  wishing  to  offer  credit 
transfers denominated in euro must offer SEPA credit transfers (regular and/or instant). 

The  denomination  of  a  credit  transfer  is  not  dependent  to  the  denomination  of  the 
payment  account  from/to  which  a  credit  transfer  is  sent/received  (e.g.  it  is  possible  to 
send  and/or  receive  a  credit  transfer  denominated  in  euro  to/from  a  payment  account 
denominated  in  a  different  currency).  In  such  cases,  it  is  either  the  sending  or  the 
receiving  PSP,  or  both,  that  performs  the  currency  conversion  into/from  euro  before 
sending  the  SEPA  credit  transfer  or  after  receiving  it.  Even  in  cases  where  a  credit 

270 Homepage | SWIFT - The global provider of secure financial messaging services  
271 Based on desk research (e.g. in PL, PSPs tend to charge between zero and 5 PLN for a SEPA euro credit 
transfer initiated electronically, and 20-35% of the value of the transferred amount and up to 250PLN for 
a SWIFT transfer) 

108 

 
 
 
                                                           
transfer  involves  a  currency  conversion  between  euro  and  the  currency  of  a  Member 
State outside the Euro area, such a SEPA credit transfer must be executed by the end of 
the next business day, provided that the required currency conversion is carried out in the 
Member State outside the Euro area concerned272.  

Based on the above, the following examples can be provided for a credit transfer made 
from Denmark to Belgium: 

272 Article 82 and 83 of PSD2 

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ANNEX 10: NETWORK EFFECTS IN PAYMENTS  

Payments  is  a  well-known  example  of  a  network  industry.  Such  industries  feature 
positive  adoption  externalities273,  meaning  that  a  participant  joining  the  network  brings 
benefits  that  accrue  to  other  participants  in  the  network.  In  other  words,  the  value  of  a 
payment service to a payment service provider or payment service user increases with the 
number of other participating providers or users274.  When these positive effects are not 
internalized275,  market  demand  tends  to  be  too  low  at  any  price,  hence  the  equilibrium 
network  size  is  smaller  than  the  socially  optimal  network  size,  and  even  a  perfectly 
competitive equilibrium is not efficient.276  This market failure may result in a chicken-
egg  type  of  problem,  where  a  better  standard  may  fail  to  be  implemented277  due  to  the 
lack of willingness for any market participant to be the first to invest.278 

One  may  differentiate  between  one-sided  network  markets,  and  two-sided  network 
markets,  or  “platforms”.  While  one-sided  markets  have  homogeneous  users,  two-sided 
markets  feature  two  distinct  customer  groups  that  have  inter-related  demand  by  both 
customer  groups  imposing  a  positive  externality  on  the  other  group279.  The  literature 
often  defines  such  externalities  between 
two  sides  as  “indirect  network 
externality”280,  in  addition  to  “direct  network  externalities”  that  arise  in  one-sided 
network markets (e.g. telephones). A much-analysed two-sided market is that of payment 
cards,  where  the  cardholder  (consumer)  is  typically  in  the  payer  position,  while  the 
merchant  is  typically  the  payee.  In  the  context  of  payment  cards,  an  indirect  network 
externality is driven by the fact that the more consumers have payment cards, the more 

the 

273 “There is strong empirical evidence that network externalities exist in payment instruments like ACH 
transfers, debit- and credit card payments and ATMs.” Payment Systems and Network Effects Adoption, 
Harmonization  and  Succession  of  Network  Technologies  in  a  Multi-country  World,  Johan  Gottfried 
Leibbrandt,  2004.  Gautam  Gowrisankaran  and  Joanna  Stavins  also  find  significant  evidence  that  the 
network externalities for payment  systems are moderately large. Network Externalities and Technology 
Adoption: Lessons from Electronic Payments, Gautam Gowrisankaran, Joanna Stavins, The RAND Journal 
of  Economics,  Vol.  35,  No.  2,  p260-276,  2004.  Network  Externalities  and  Technology  Adoption:  Lessons 
from Electronic Payments (nyu.edu) 
274 Payment service users need an intermediary (a payment service provider) to be able to use the service 
(indirect  link  to  other  users).  Therefore,  it  is  first  the  service  providers  who  need  to  join  the  platform 
(adoption or membership externality), while already considering the size of their own potential customer 
demand  (and  the  customer  base  of  other  service  providers  that  they  expect  to  join)  in  their  decision. 
Consequently,  the  service  providers  need  to  offer  the  new  payment  service  to  their  customers  (end 
users), and encourage its use. 
275 Social marginal benefits continue to exceed private marginal benefits. 
276 Even adoption externalities that are small at the individual level can lead to large social welfare losses. 
Systems Competition and Network Effects, Journal of Economic Perspectives—Volume 8, No. 2, p93-115, 
Michael L. Katz, Carl Shapiro, 1994, Systems Competition and Network Effects (aeaweb.org) 
277 Or implemented slowly. 
278 Product Introduction with Network Externalities, The Journal of Industrial Economics, Vol.  40, No. 1, 
p55-83, Michael L. Katz, Carl Shapiro, 1992, Product Introduction with Network Externalities (jstor.org) 
ECB  Occasional  Paper  Series  Are  instant  payments  becoming  the  new  normal?  A  comparative  study 
(europa.eu), Monika Hartmann, Lola Hernandez-van Gijsel, Mirjam Plooij, Quentin Vandeweyer, 2019 
279 Examples are men and women for nightclubs, firms and workers for employment agencies, customers 
and suppliers for supermarkets, etc. 
280 Also called as cross-side network effects by some.  The Challenge of Two-Sided Markets in Merchant 
Payments (cgap.org), 2019 

110 

 
 
                                                           
retailers  benefit  from  accepting  them,  and  the  more  retailers  accept  payment  cards,  the 
more consumers benefit from  them. The relative  size of positive externalities and price 
sensitivities  on  the  two  sides  might  justify  rebalancing  mechanisms  between  the  two 
sides in order to achieve a socially optimal network size281.  

The payment industry  exhibits  significant  economies of scale, for two  reasons282. First, 
due  to  the  network  externalities  described  above,  i.e.  the  value  for  an  individual 
participant  increases  with  the  number  of  others  using  the  system.  Network  effects  may 
imply  multiple  demand  levels  for  a  given  price,  depending  on  users’  expectations 
regarding  network  size283.  Convergence  to  the  high  equilibrium  depends  on  passing  a 
given  threshold.  Once  that  threshold  is  crossed,  demand  will  continue  increasing  in  a 
self-reinforcing process that ends in the large-network equilibrium. This threshold level 
is  usually  referred  to  as  the  critical  mass  of  buyers  that  leads  to  the  build-up  of  the 
network284. 

The second reason for the existence of considerable scale economies in payments is the 
relatively high level of fixed costs compared to variable costs. Building up new payment 
systems requires significant investment costs285. In such a situation with scale economies, 
the  turnover  of  electronic  payment  methods  must  reach  a  critical  level,  where  the  unit 
costs are low enough to  provide an opportunity to  recover the sunk costs  286. There are 
three  components  to  this  initial  investment:  (i)  a  common  scheme,  (ii)  a  common 
infrastructure287, and finally (iii) investments at the level of individual PSPs.  One way to 
help overcoming the scale entry barriers is to separate the provision of services from the 
provision of physical infrastructures, which are often provided centrally288.  

In the specific case of IPs, as regards the investment component (i) the EPC has already 
designed  the  SEPA  Inst  Scheme,  while  with  respect  to  component  (ii)  the  ECB  has 

281 For instance when only men pay entrance fee to nightclubs, or the interchange fee in payment card 
transactions  which  would  act  as  a  rebalancing  mechanism  between  the  issuing  side  and  the  acquiring 
side. 
282 The payment system, Payments, securities and derivatives, and the role of the Eurosystem, editor Tom 
Kokkola, ECB, 2010, THE PAYMENT SYSTEM  - PAYMENTS, SECURITIES AND DERIVATIVES, AND THE ROLE 
OF THE EUROSYSTEM. EDITOR TOM KOKKOLA, SEPTEMBER 2010 (europa.eu) 
283 Introduction to Industrial Organization, Luis M. B. Cabral, The MIT Press, 2002 
284  Payment  Systems  and  Network  Effects  Adoption,  Harmonization  and  Succession  of  Network 
Technologies in a Multi-country World, Johan Gottfried Leibbrandt, 2004 
285 Macroeconomic effects of the increase of electronic retail payments – A general equilibrium approach 
using Hungarian data. Financial and Economic Review, Vol. 15 Issue 2., p 129–152, Ilyés T. – Varga L., 2016 
286  The  existence  of  fixed  costs  imply  that  the  average  cost  of  a  payment  declines  with  the  number  of 
payments  processed,  in  other  words,  as  volumes  increase,  the  marginal  cost  of  transactions  falls.  Fast 
payments - Enhancing the speed and availability of retail payments (bis.org), 2016 
287 “As argued by Milne, a  shared payment  infrastructure is  a  public good from the point of view of an 
individual bank, which may without public intervention lead to under-provisioning.” 
ECB  Occasional  Paper  Series  Are  instant  payments  becoming  the  new  normal?  A  comparative  study 
(europa.eu),  Monika  Hartmann,  Lola  Hernandez-van  Gijsel,  Mirjam  Plooij,  Quentin  Vandeweyer,  2019 
referring to0020What is in it for us? Network effects and bank payment innovation, Journal of Banking & 
Finance, 30, p1613-1630, Alistair Milne, 2006 
288 The payment system, Payments, securities and derivatives, and the role of the Eurosystem, editor Tom 
Kokkola, ECB, 2010, THE PAYMENT SYSTEM - PAYMENTS, SECURITIES AND DERIVATIVES, AND THE ROLE 
OF THE EUROSYSTEM. EDITOR TOM KOKKOLA, SEPTEMBER 2010 (europa.eu) 

111 

 
 
                                                           
already  created  a  pan-European  clearing  and  settlement  infrastructure  TIPS289,  plus 
ensured  the  interconnection  of  national  (and  cross-border)  clearing  and  settlement 
infrastructures (see Annex 6). Therefore, the necessary fixed investment cost for offering 
IPs is now limited to the PSPs’ individual investments (component (iii)).  

In order to  overcome the market  failure  (due to  the network  characteristics, aggravated 
by the economies of scale in  payments)  to  achieve a socially optimal network size, the 
literature recognises the importance of coordinated efforts, either on the basis of industry 
collaboration and/or by some sort of government intervention (e.g. the importance of the 
role of central banks as initiators, coordinators and catalysts).290  

The  most  important  benefit  of  such  coordination  is  reducing  the  uncertainty  about 
whether  and  when  other  PSPs  will  make  the  necessary  investments.291  There  are 
examples  of  both  market-led  and  publicly  organized  coordination  in  the  area  of 
payments.  In  several  countries292,  the  banking  sector  decided  to  actively  coordinate  the 
implementation  of  IPs  (such  as  in  the  markets  of  Spain,  Belgium  and  Sweden  –  see 
Section 2.3.1).  

As  regards  public  intervention,  the  completion  of  the  SEPA  area  (for  regular  credit 
transfers  and  direct  debits)  required  EU  regulatory  intervention  to  phase-in  EU  SEPA 
standards  and  phase-out  national  legacy  corresponding  standards,  as  self-regulation 
forces  alone  had  not  managed  to  reach  this  objective  within  a  reasonable  end-date.  In 
Hungary,  the  central  bank  MNB  decided  to  regulate  the  implementation  of  domestic 
currency  IPs  by  making  adherence  mandatory  “in  order  to  move  the  whole  domestic 
payments market into a more optimal point from a social point of view”293. Involvement 
of central banks in promoting the roll-out of IPs in national markets was observed also in 
other Members States (e.g., the Netherlands, Lithuania). 

289 On top of various – mostly national - Automated Clearing Houses. 
290 Fast payments - Enhancing the speed and availability of retail payments (bis.org), 2016 
Instant payments in Hungary – Central Bank’s role in the development, László Kajdi, Kristóf Takács, Lóránt 
Varga, 2019 
https://www.ecb.europa.eu/pub/conferences/shared/pdf/20191126_payments_conference/academic_p
aper_kajdi.pdf 
ECB  Occasional  Paper  Series  Are  instant  payments  becoming  the  new  normal?  A  comparative  study 
(europa.eu),  Monika  Hartmann,  Lola  Hernandez-van  Gijsel,  Mirjam  Plooij,  Quentin  Vandeweyer,  2019 
Network  Externalities  and  Technology  Adoption:  Lessons 
from  Electronic  Payments,  Gautam 
Gowrisankaran, Joanna Stavins, The RAND Journal of Economics, Vol. 35, No. 2, p260-276, 2004, Network 
Externalities and Technology Adoption: Lessons from Electronic Payments (nyu.edu) 

291    In  other  words,  it  changes  the  users’  expectations  regarding  the  network  side.  Fast  payments  - 
Enhancing the speed and availability of retail payments (bis.org), 2016 
292 Differences in local coordination efforts, but also some other market features, such as payment habits, 
business  culture,  industry  structure,  etc  may  all  influence  the  adoption  levels,  and  can  explain  the 
apparent differences in the adoption levels across Member States.  
293  Instant  payments  in  Hungary  –  Central  Bank’s  role  in  the  development,  László  Kajdi,  Kristóf  Takács, 
Lóránt Varga, 2019  
https://www.ecb.europa.eu/pub/conferences/shared/pdf/20191126_payments_conference/academic_p
aper_kajdi.pdf 

112 

 
 
                                                           
 
Finally,  it  is  important  to  note  that  as  the  large  majority  of  retail  credit  transfers  (and 
other retail payments) in the EU is domestic, PSPs are mostly focusing on the domestic 
situation  when  evaluating  their  future  investments.  Hence,  the  SEPA  objective  of 
creating a true European payments area that strengthens the internal market by covering 
not only domestic, but also cross-border payments, would require that the market failures 
are addressed in all Member States in parallel, i.e. by efforts at the European level. 

113