What is Instant Payment?

Since 2018, individuals and businesses have had access to Instant Payment, enabling them to make their euro bank transfer instantly. Ideal for settling large-value purchases or immediately paying a bill that is due, this payment method is winning over more and more Europeans.

Instant Payment, or IP, is experiencing strong growth (instant payment transactions in Europe are set to increase from 13.2B in 2022 to 34.2B by 2027), and its development represents a strategic priority for national and European authorities. SCT instant transfers represented 14.2% of all SEPA credit transfer transactions in February 2023. 

Here’s a closer look at this innovation, perfectly adapted to the needs of an increasingly digital society.

Instant payment: definition

Today, Instant Payment enables euro funds to be transferred to a beneficiary in less than 10 seconds, 24/7, 365 days a year. By Q1 2023, it will account for over 14% of SCT transfers in Europe. And the European Commission’s legislative proposal of October 26, 2022 aims to accelerate its deployment by guaranteeing its universal availability and affordable rates.

Fast and simple, the SCT Inst (instantaneous credit transfer) meets the needs of consumers and businesses in today’s hyper-connected world. It is ideal for both domestic and cross-border transactions: 

• C2C (consumer to consumer), to carry out a transaction on platforms such as Leboncoin, or to participate in a fund-raising project;
• B2C (business to consumer), for the purchase of goods and services by individuals, on e-commerce sites for example;
• B2B (business to business), for companies wishing to speed up payment to their suppliers.

Instant Payment features

Instant Payment meets the needs of a digital economy. Seeing money move from one account to another, in real time, meets the demands of consumers who are increasingly accustomed to immediate results.

The main features of instant transfers make them a serious alternative to cards, checks and cash.

• Payment in euros in the 36 countries of the SEPA zone;
• Maximum runtime of 10 seconds;
• Instant credit to the beneficiary’s account;
• Irrevocability;
• Transaction amount limited to €100,000 (the financial institution may set a lower limit);
• Uninterrupted 365-day service availability;
• Transaction is occasional and immediate, unlike standard SCT which can be permanent and deferred.

Risks associated with instant transfers

Instant Payment cannot be cancelled once the bank has received the transfer order. This is a problem in the event of error or theft of access codes. 

However, it can be contested within 13 months of the debit: 

• if it has been incorrectly executed (wrong amount or beneficiary);
• if it has not been authorized.

Payment fraud is a fact of life, including for Instant Payment, in the form of attempted identity theft, for example. This means of payment represents a technical challenge for financial institutions, since transactions need to be monitored in real time. 

Nevertheless, this new means of payment is less risky than a bank card.

Advantages of Instant Payment

Instant Payment enhances the user experience and opens up new opportunities for companies to optimize their cash flow. 

For private customers

The instant transfer is a secure, flexible and useful payment solution for everyday use, particularly for: 

• paying back a friend or colleague;
• transferring funds to a family member for urgent use;
• participating in an online auction;
• buying goods from a private individual;
• paying for your shopping cart on an e-commerce site;
• paying for a craftsman to come to your home;
• paying taxes and fines;
• donating to charity, etc.

Instant Payment allows you to be reactive and pay your debts even on Sundays, without risking late payment penalties from tax authorities or energy suppliers.

What’s more, with a theoretical ceiling of €100,000, instant transfer technology allows for the payment of high amounts, unlike bankcards, whose daily or monthly ceilings can sometimes be an obstacle to certain transactions. 

Last but not least, private customers have access to their account balance in real time, making it easier for them to manage their budget. They have greater control over their spending and reduce overdraft fees. 

For companies

Businesses are constantly going digital, to boost productivity and meet new legal obligations (dematerialization of tax returns, electronic invoicing, etc.) They therefore need a means of payment adapted to the digital transition in order to: 

• pay suppliers or subcontractors instantly and meet invoice due dates;
• carry out inter-company fund transfers to avoid cash flow defaults;
• refund a customer without delay to preserve the customer relationship;
• pay an urgent tax or social security debt;
• carry out cross-border transactions;
• pay salaries or reimburse expenses quickly, etc.

Instant Payment is a way of optimizing the production chain. Order processing can be triggered as soon as funds arrive in the company’s bank account. 

SMEs and VSEs are also better able to control their cash flow and avoid the risk of default. They no longer suffer from the time lag between the sale of goods and services and the collection of receivables.

Companies that integrate instant transfer also offer a better customer payment and refund experience, with a direct impact on brand image. What’s more, they have an impact on their conversion rate, as higher caps help to reduce payment failures and cart abandonment.

Thanks to its perfect match with digital developments, Instant Payment has great potential in the world of cashless payments. All the more so as the European authorities intend to legislate in order to democratize Instant Payment and strengthen consumer and business confidence in this means of payment.

Treezor offers instant credit transfers as part of its SEPA offering. Its technology is both easy to use and compliant with regulatory controls and LCB-FT procedures. Our experts are here to help you make your payment project a reality.