On 19 March 2024, Regulation (EU) 2024/886 of the European Parliament and of the Council of 13 March 2024 amending Regulations (EU) (i) No 260/2012 establishing technical and business requirements for credit transfers and direct debits in euro, (ii) 2021/1230 on cross-border payments in the Union as regards instant credit transfers in euro and Directives (i) 98/26 on settlement finality in payment and securities settlement systems and (ii) 2015/2366 on payment services in the internal market (“PSD 2”) (the “Regulation”) as regards instant credit transfers in euro was published in the Official Journal of the European Union.
The Regulation will enter into force on the 20th day after that of such publication. It is binding in its entirety and directly applicable in all Member States. However, Members States will have until 9 April 2025 to implement the amendments to Directives 2015/2366 and 98/26.
The Regulation aims at setting up the framework, mechanism and characteristics of instant credit transfers, in order to update and modernise the Single Euro Payments Area (SEPA) and develop uniform euro instant credit transfers across the EU.
Payments service providers (“PSPs”) are required to extend the framework of credit transfer to instant credit transfer: a PSP that offers to its payments service users (“PSUs”) a payment service of sending and receiving credit transfers is required to also offer such service for instant credit transfers. It must ensure that (i) payers are able to place a payment order for an instant credit transfer through all of the same payment initiation channels as the ones through which those payers are able to place a payment order for other credit transfers and (ii) payment accounts that are reachable for credit transfers are also reachable for instant credit transfers 24 hours a day and on any calendar day.
Specific rules on instant credit transfer differ from those provided for under PSD 2, notably the time of execution of the instant transfer.
Mechanism
Thus, immediately after receiving a payment order for an instant credit transfer, the payer’s PSP verifies whether all of the necessary conditions for processing the payment transaction are met and whether the necessary funds are available. Then it reserves or debits the amount of the payment transaction from the account of the payer, and immediately sends the payment transaction to the payee’s PSP.
The payee’s PSP makes the amount of the payment transaction available on the payee’s payment account in the currency in which the payee’s account is denominated and confirms the completion of the payment transaction to the payer’s PSP, within 10 seconds after receiving the payment order for an instant credit transfer by the payer’s PSP. The payee’s PSP ensures that the credit value date for the payee’s payment account is the same as the date on which the payee’s payment account is credited by the payee’s PSP with the amount of the payment transaction.
Where the payer’s PSP has not received a message from the payee’s PSP confirming that the funds were made available on the payee’s payment account within 10 seconds of the time of receipt, the payer’s PSP immediately restores the payment account of the payer to the state in which it would have been if the transaction had not taken place.
Upon the request of the PSU, a PSP enables a PSU to set a maximum amount that can be sent by means of instant credit transfer. This limit may be modified at any time prior to the placing of a payment order for an instant credit transfer.
Charges for instant credit transfers are not higher than the ones for credit transfers.
Verifications
Regarding liabilities, a PSP is not liable for the execution of a credit transfer to an unintended payee on the basis of an incorrect unique identifier provided it has complied with the requirements applicable to it, with certain exceptions. In this case, without delay, the PSP refunds the payer with the amount transferred and, where applicable, restores the debited payment account to the state in which it would have been if the transaction had not taken place. Where the failure to comply occurs because the payee’s PSP, or the payment initiation service provider, failed to comply with its obligations, the payee’s PSP or, where relevant, the payment initiation service provider, compensates the payer’s PSP for the financial damage caused to the payer’s PSP by that failure. Any further financial loss caused to the payer may be compensated in accordance with the law applicable to the contract concluded between the payer and the relevant PSP.
PSPs offering instant credit transfers verify whether any of their PSUs are persons or entities subject to targeted financial restrictive measures. However, during the execution of an instant credit transfer, the payer’s PSP and the payee’s PSP involved in the execution of that instant credit transfer shall not verify whether the payer or the payee whose payment accounts are used for the execution of that instant credit transfer are persons or entities subject to targeted financial restrictive measures, in addition to the verifications carried out above.
Finally further amendments to PSD 2 pertain to payment institutions which provide payment services and electronic money institutions (the “Institutions”). The Institutions are required to safeguard all funds which have been received from the PSU or through another PSP for the execution of payment transactions. Such safeguarding is carried out in either of the following ways: (i) by depositing funds in a separate account in a credit institution or in a central bank or by means of an investment in secure, liquid, low-risk assets and they shall be insulated in accordance with national law in the interest of the PSUs against the claims of other creditors of the payment institution or electronic money institution or (ii) through an insurance policy or comparable guarantee from an insurance company or a credit institution.
