A Major Shift in Payment Processing

The way businesses process payments in Europe is about to change. Since its launch in 2017, the SEPA Instant Payment Scheme (SCT Inst) has improved transaction speeds, ensuring funds reach beneficiaries within 10 seconds, 24/7, across 36 countries. However, adoption remains incomplete: only 20% of SEPA transactions are processed instantly, mainly because participation is optional, costs can be higher than standard SEPA transfers, and transactions are capped at €100,000.

To address these challenges, the European Commission introduced the Instant Payment Regulation (IPR). This regulation eliminates pricing barriers, makes instant payments mandatory for all banks, and reinforces fraud prevention mechanisms. It aims to increase efficiency, enhance security, and establish common European standards to ensure interoperability and accessibility.

With these measures, IPR will transform the payment landscape, offering businesses and consumers a faster, safer, and more reliable payment experience.

Key Changes with the Instant Payment Regulation

Faster Instant Payments

Transfers will still be processed within 10 seconds, but the countdown now starts earlier, as soon as the Payment Service Provider (PSP) validates the payment. For bulk payments, the process remains largely unchanged, with timing starting at debulking.

Mandatory Support for Instant Payments

Since January 2025, all banks in the eurozone offering standard SEPA credit transfers must be fully reachable for SEPA instant. And by October 2025, they must fully support outgoing instant payments at no additional costs for the customers. This eliminates reachability barriers, making instant payments the standard across financial institutions, ensuring widespread access.

Aligned Pricing

Previously, some banks charged higher fees for instant payments, discouraging businesses from using them regularly. The new regulation ensures that instant payments cannot cost more than standard SEPA transfers, removing pricing as a barrier.

Improved Sanction Screening

Sanction screening ON EU Lists will now be performed daily on customer data, rather than for each transaction. This reduces false positives and improves processing efficiency.

Transaction and user Limits

The previous interbank €100,000 cap will be removed as from October, allowing possible high-value transactions via instant payments, depending on the PSP and clients' conditions

Enhanced Fraud Prevention with Verification of Payee (VoP)

Soon, Banks will have to match the beneficiary’s name with the IBAN before authorizing a payment, preventing authorized push payment (APP) fraud and misdirected transactions. VoP operates separately from the 10-second payment timeframe, within a maximum of 5 seconds, meaning verification occurs before the payment is processed, ensuring added security without delays.

Phased Implementation

IPR will be introduced progressively, with different deadlines depending on the region:

For EUR countries:

• January, 2025 – PSPs must support incoming SEPA Instant Credit Transfers (SCT Inst), align pricing with standard SEPA transfers, and comply with sanction screening measures.
• October, 2025 – Outgoing instant payments, VoP, user-defined transaction limits, and enhanced confirmation messages will be introduced. The new SCT Inst rulebook requires both positive and negative confirmation messages.

EMI/PI must also provide incoming/outgoing SCT inst as per April 2027

For non-EUR countries:

• January, 2027 – Pricing alignment and the obligation to receive instant payments come into effect.
• July 2027 – Full rollout of VoP, outgoing instant payments, and user limits. 

How VoP Enhances Payment Security

Fraud remains a significant concern, particularly fake supplier fraud, where fraudsters impersonate vendors to redirect payments. VoP strengthens security by ensuring that the beneficiary’s name matches the IBAN before a payment is processed.

When a transaction is initiated, the payer’s bank performs a real-time check and provides one of four responses:

• Match – The provided details are correct.
• Close Match – A minor discrepancy (e.g., a typo) is detected, and the correct name is displayed.
• No Match – The details do not align with bank records, signaling a potential risk
• Verification Not Possible – The check cannot be completed due to missing or incorrect data, or due to a technical issue.

No matter the results, VoP does not block payments. Instead, it provides real-time feedback, leaving the final decision to the payer. Businesses must adapt their internal processes to manage mismatches and ensure secure transactions.

Impact on Corporates: Preparing for the Transition

For single payments, VoP will be mandatory. Payments made via online banking will automatically undergo payee verification before authorization. Finance teams must be prepared to interpret VoP results and make informed decisions in case of mismatches.

For bulk payments, corporates can choose whether to activate VoP checks  Opting Out ensure a frictionless execution while Opting In provides added security but requires process adjustments, as flagged transactions must be reviewed before execution when initiated within a web banking channel or corrected before resubmission when initiated within a H2H channel. VoP results can be received via e-banking interface, Payment Status Reports (Pain.002), or API integration for automated processing.

A key point: For unsigned payment files, verification must be completed before execution. For signed files a partial processing will be possible. ERP and treasury systems may need updates to support real-time VoP feedback.

Handling VoP Results: Managing Mismatches

With VoP integrated into payment validation, businesses must define response strategies:

• Full match – The transaction proceeds as usual.
• Close match – Finance teams may need to correct minor errors before approving the payment.
• No match – This could indicate an error (e.g., outdated supplier details) or fraud risk, requiring further verification.

• Verification not possible – this may be due to technical issues or incorrect formatting (for example, an IBAN that does not comply with SEPA standards). It can also mean that the payee’s PSP is temporarily unreachable. In such cases, businesses can still process the payment, but with added risk.

Preparing for the Transition: Next Steps for Corporates

With mandatory compliance deadlines approaching, businesses must take proactive steps to ensure a smooth transition. The first priority is to review internal workflows and define how VoP results will be handled in payment approval processes. Finance and treasury teams should also be trained to interpret VoP responses, especially in cases of mismatches.

System updates may be required to integrate new transaction statuses and VoP verification codes. Businesses using ERP or treasury management systems should verify whether modifications are needed to support these changes.

For bulk payments, corporates must decide whether to opt in or out of VoP checks. BNP Paribas recommends keeping bulk payments opt-out by default, with beneficiary verification done before submitting payment files. However, businesses seeking added protection can selectively activate VoP for specific payment orders.

Turning Regulation into Opportunity

Beyond compliance, these changes bring significant benefits for businesses:

• Faster cash flow as instant payments become the norm.
• Lower costs due to pricing alignment with standard SEPA transfers.
• Improved fraud prevention through VoP and enhanced security measures.

By acting early and adapting to these new requirements, corporates can optimize their payment operations and gain a competitive edge in the evolving European payments landscape.

BNP Paribas is committed to supporting its clients through this transition. For more details, contact your account manager or refer to our FAQ document below, which addresses frequently asked questions.