The newly implemented Instant Payments Regulation (IPR) aims to foster a more level playing field in the European payments landscape by mandating direct access to payment systems for Non-Banking Payment Service Providers (NB PSPs).
This regulatory shift significantly reshapes the ecosystem, prompting NB PSPs—many of which currently rely on sponsoring banks—to assess whether direct participation aligns with their strategic goals and operational capabilities.
As a leading actor in the banking sector, BNP Paribas outlines the key considerations NB PSPs should evaluate when making this important strategic decision.
Assessing strategic advantages and operational realities
Direct participation undeniably offers tangible benefits. It provides institutions with, enabling full control of financial flows. Direct connectivity can also lead to cost efficiencies at scale, improved operational performance, and stronger positioning within the payment ecosystem.
However, these advantages must be carefully weighed against the substantial investments required in infrastructure, compliance, and internal expertise. The process of becoming a direct participant is inherently complex. NB PSPs must navigate intricate regulatory frameworks, obtain approvals from central banks and payment system authorities, and coordinate with multiple stakeholders. This demands robust in-house capabilities and dedicated resources across payment operations, settlement management, and regulatory compliance.
In practice, direct access entails specific operational commitments, including a sound liquidity management process and maintaining additional technical connections with the central bank. According to the new regulation, the PSPs must safeguard their clients’ funds with a commercial bank. Institutions must also build and train expert teams to manage regulatory changes, investigate transactions, and conduct routine checks in line with the clearing system rulebooks’ requirements.
The essential role of sponsoring banks: a value-added partnership
Given these complexities, indirect participants must carefully consider the intrinsic value offered by sponsoring banks. Institutions such as BNP Paribas provide far more than transactional processing—they deliver comprehensive solutions across investment, credit, and risk management.
Sponsoring banks alleviate operational burdens through their deep expertise in regulatory compliance, technical connectivity, continuous testing, and alignment with evolving payment standards. In addition, they play a pivotal role in fraud prevention by leveraging advanced AI-based monitoring tools—an area where many NB PSPs face challenges in replicating equivalent in-house capabilities.
Beyond security, indirect access through a sponsor bank simplifies integration via APIs and ensures consistent liquidity provision. This significantly reduces both operational complexity and risk exposure.
With the indirect model, there is no need to request a Swift-connected BIC or build dedicated interbank communication layers. BNP Paribas acts as a single point of integration for both safeguarding and settlement accounts. This simplifies compliance obligations and streamlines infrastructure. Clients also benefit from tailored implementation support, particularly for connectivity and testing phases.
Once the client is live and project is finished, a dedicated servicing team is assigned.
Strategic reflection: key questions for decision making
To rigorously evaluate whether direct access suits your strategic goals, BNP Paribas recommends careful consideration of the following critical factors:
Core business alignment
Are payments (classic and instant) fundamental to your core business strategy? Direct participation requires deep-rooted internal payment capabilities and a commitment to maintaining dedicated payment infrastructure over time.Transaction volume and scale
Does your organisation process transaction volumes and settlement values that justify direct participation? Achieving economies of scale is essential to offset the considerable fixed operational costs involved.- Operational scalability and resilience
Can your current and planned operational infrastructures sustainably support ongoing Rulebooks compliance, continuous system accreditation, and rapid technology changes inherent to direct participation?
Investment commitment
Have you fully considered the required investments in people, processes, and technology? This includes building specialised payment operations teams and infrastructure for liquidity management and real-time settlement.Additional costs include initial registration with clearing systems, licensing and BIC connectivity. These requirements can place a significant burden on organisations without dedicated infrastructure.
- Long-term vision and commitment
Can your institution ensure continuous commitment and adaptability required by a dynamic regulatory and technological payments landscape over the long term?
Making an informed choice
Direct participation under the Instant Payments Regulation brings exciting opportunities for innovation, efficiency, and enhanced competitiveness. However, it also entails significant operational complexity and financial commitment. BNP Paribas, as a trusted partner and experienced banking partner, recommends a carefully considered and strategic approach tailored to each institution’s specific needs.
Indirect participants should thoroughly assess their commercial objectives, operational readiness, investment capacity, and long-term strategic alignment before pursuing direct access.
Alternatively, many may find that the full-service support and robust capabilities offered by sponsor banks continue to represent the most pragmatic and cost-effective path to sustainable growth and regulatory compliance.
BNP Paribas remains fully committed to supporting indirect participants—helping them navigate regulatory evolution, optimise payment operations, and seize new opportunities in the evolving instant payments landscape.
If you have any questions, please do not hesitate to send an email to psp.cashmanagement@bnpparibas.com.
