The Instant Payments Regulation in euro (IPR)

HIGHLIGHTS

• The IPR introduces additional provisions in the SEPA Regulation regarding instant payments in euro, and obliges certain categories of payment service providers to offer users the service of making and receiving such instant credit transfers in euro. To this end, a definition of an instant credit transfer and rules for their execution are introduced, among other things.
• The fees imposed by payment service providers in connection with the execution and receipt of instant payments may not be higher than the fees imposed in connection with the execution and receipt of other analogous types of credit transfers.
• The IPR introduces an obligation to provide a matching verification service to verify that the IBAN and name of the payee provided by the payer match the data provided by the payee’s provider.
• The IPR obliges payment service providers offering instant credit transfers to check at least once a day whether any of their users is a person or entity included in the list of entities to which targeted financial restrictive measures apply.
• The IPR sets out rules for designating a catalog of sanctions for non-compliance with the requirements established by the act.
• The IPR allows payment institutions and electronic money institutions to apply for participation in the schemes specified in Directive 98/26/EC.

TIME ORDER

October 26, 2022 – announcement of the draft IPR
November 7, 2023 – publication of information on reaching an agreement between the European Parliament and the Council
February 7, 2024 – adoption of the IPR by the European Parliament
February 26, 2024 – adoption of the IPR by the Council
March 19, 2024 – publication of the IPR in the Official Journal of the European Union
April 8, 2024 – entry into force of the provisions of the IPR
January 9, 2025 – June 9, 2028 – Timetable for application of individual obligations (cut-off dates)

AMENDMENTS TO EU ACTS BY IPR

The IPR amends four pieces of Community legislation. The most numerous concern the SEPA regulation. The amendments to the other acts are aimed at making all the provisions introduced relating to instant credit transfers more consistent and allowing payment institutions and electronic money institutions to apply for participation in the schemes designated under Directive 98/26/EC.

Definition of instant credit transfer

The IPR for the introduction of instant credit transfer in euro in member countries adds to the SEPA Regulation a definition of an instant credit transfer, according to which it is a credit transfer which is executed immediately, 24 hours a day and on any calendar day.

Instant credit transfer transactions

The IPR introduces a new regulation into the SEPA regulation that requires payment service providers (“PSPs”) that offer their users a payment service of making and receiving credit transfers to also offer all such users a service of making and receiving instant credit transfers.

The aforementioned providers, are to ensure that all payment accounts that have receiving capacity for credit transfers also have receiving capacity for instant credit transfers 24 hours a day and on any calendar day.

In addition, the IPR imposes additional requirements related to instant credit transfers on PSPs, such as:

• ensuring that payers can submit a payment order for an instant credit transfer through all payment initiation channels through which such payers can submit payment orders for other credit transfers,
• immediately verifying upon receipt of a payment order for an instant credit transfer from a payer that all conditions necessary for processing the payment transaction are met and that the necessary funds are available, and reserving the amount of the payment transaction in the payer’s account or debiting that amount from that account and immediately sending the payment transaction to the payee’s PSP,
• provision by the payee’s PSP, within 10 seconds of receipt of a payment order for an instant credit transfer by the payee’s PSP, of the amount of the payment transaction on the payee’s payment account in the currency in which the payee’s account is denominated, and confirmation by the payee’s PSP of the execution of the payment transaction,
• ensuring by the payee’s PSP that the value date for the credit to the payee’s payment account is the same as the date on which the payee’s PSP credits the payee’s payment account with the amount of the payment transaction.

Fees related to instant credit transfers in euro

The IPR regulations establish the requirement that any fees imposed by the PSP on payers and payees in connection with the execution and receipt of instant credit transfers must not be higher than the fees imposed in connection with the execution and receipt of other analogous types of credit transfers.

The service of providing verification of the payee to whom the payer intends to execute the credit transfer is to be provided to all users free of charge.

Payee verification for credit transfers

The aforementioned payee verification service consists of confirming the payee’s data immediately after the payer provides it (name, IBAN) and before offering the payer the opportunity to authorize the credit transfer in question. This service is to be offered by the PSP regardless of the payment initiation channel used by the payer to submit a payment order for a credit transfer.

The provision of this service is to be carried out in accordance with the rules adopted in the IPR. The regulation provides (among other things):

• Verification by the payee’s PSP, at the request of the payer’s PSP, that the payee’s name and its IBAN number indicated by the payer are consistent with the data held by the payee’s PSP. In the event that the data provided by the payer does not match the payee’s data held by the payee’s PSP, the payer’s PSP will notify the payer of the inconsistency of the indicated data and signal that authorization of the credit transfer may result in the transfer of funds to another payee’s payment account. In cases where the data provided by the payer almost match, the payer’s PSP will indicate the name of the payee associated with the provided payment account identifier.
• In situations where the payee is a legal entity and the payer’s PSP offers a payment initiation channel that allows the payer to submit a payment order by providing the payee’s IBAN number together with data elements other than the payee’s name that uniquely identify the payee (e.g., TIN), and where the same data elements are available in the payee’s PSP’s internal system, that PSP shall, at the request of the payer’s PSP, verify that the data provided by the payer are compatible. If they would be inconsistent, the payer’s PSP notifies the payer.

PSP control of users

The IPR requires PSPs offering instant credit transfers to verify at least once a day whether any of their users are persons or entities subject to targeted financial restrictive measures. In addition, PSPs will be required to conduct such verifications immediately upon the entry into force of any new targeted financial restrictive measures and immediately upon the entry into force of any changes to the relevant list.

When participating in the execution of an instant credit transfer, the payer and payee PSPs will not be required to verify service users in real time.

Administrative sanctions

The EU legislator, following the model of Article 11(1) of the SEPA Regulation, has decided that administrative sanctions for non-compliance with the newly-introduced provisions on instant credit transfers are to be established by Member States. These sanctions are to be effective, proportionate and dissuasive.

It stipulated, however, that sanctions relating to the PSP’s obligation to inspect users must include :

• in the case of a legal entity – administrative penalties of a maximum of at least 10% of the total annual net turnover of the legal entity in the previous fiscal year,
• in the case of an individual – administrative penalties in the maximum amount of at least EUR 5,000,000 or the equivalent amount in national currency at the exchange rate as of April 8, 2024.

Applying for participation in the indicated payment systems

The IPR provisions provide for payment institutions (PIs) and electronic money institutions (EMIs) to apply for participation in designated payment systems regulated by Directive 98/26/EC, provided they have, among other things:

• a description of measures taken to protect payment service users’ funds,
• a description of management rules and a description of internal control mechanisms for payment services or electronic money services,
• a liquidation plan in the event of bankruptcy.

The IPR contains detailed conditions to which the documentation should conform.

SCHEDULE OF APPLICATION OF INDIVIDUAL OBLIGATIONS

According to the IPR, the various requirements take effect on different dates.

January 9, 2025:

– the latest date to start offering a payment service for receiving instant credit transfers in euro by IPR defined payment service providers located in a Member State whose currency is the euro,
– the latest date for the introduction of fees for instant credit transfers less than or equal to those imposed in connection with other analogous types of credit transfers by payment service providers located in a Member State whose currency is the euro, as specified in the IPR,
– the latest date for the introduction of payee verification services by payment service providers, as defined in the IPR, located in a Member State whose currency is the euro,
– the latest date for the IPR-specified payment service providers to start implementing the obligation to check users in order to verify that the user is not a person or entity subject to targeted financial restrictive measures,

April 9, 2025:

– the deadline for member states to implement the changes being made to PSD2 and Directive 98/26/EC in order for payment institutions and e-money institutions to be able to apply to participate in the designated payment systems,
– the deadline for member states to establish national legislation on criminal sanctions for failure of payment service providers identified in the IPR to comply with the requirements imposed by the IPR,

October 9, 2025:

– the latest date for payment service providers specified in the IPR located in a Member State whose currency is the euro to start offering a payment service of instant credit transfers in euro,
– the latest date for the introduction of a payee verification service by the payment service providers specified in the IPR located in a Member State whose currency is the euro,

January 9, 2027:

– the latest date to start offering a payment service for receiving instant credit transfers in euro by IPR-specified payment service providers located in a Member State whose currency is not the euro,
– the latest date for introducing fees for instant credit transfers that are less than or equal to those imposed in connection with other analogous types of credit transfers by IPR-specified payment service providers located in a Member State whose currency is not the euro,
– the latest date for the introduction of a payee verification service related to instant credit transfers in euro by IPR-specified payment service providers located in a Member State whose currency is not the euro,

April 9, 2027:

– the latest date for payment institutions and e-money institutions located in a Member State whose currency is the euro to start offering and executing a payment service for receiving instant credit transfers in euro,
– the latest date to start offering a payment service of receiving instant credit transfers in euro by payment institutions and electronic money institutions located in a Member State whose currency is not the euro,

June 9, 2027:

– the date by which payment service providers located in a Member State whose currency is not the euro, as defined in the IPR, are not required to offer the payment service of executing instant credit transfers in euro from payment accounts denominated in the national currency of that Member State, at a time when those payment service providers are not executing or receiving traditional euro credit transfer transactions in respect of such accounts,

July 9, 2027:

– the latest date for payment service providers located in a Member State whose currency is not the euro to begin offering the payment service of instant credit transfers in euro, as defined in the IPR,
– the latest date for payment institutions and electronic money institutions located in a Member State whose currency is not the euro to begin offering the payment service of instant credit transfers in euro,
– the latest date for the introduction of a payee verification service related to instant credit transfers in euro by payment service providers located in a Member State whose currency is not the euro, as specified in the IPR,

June 9, 2028:

– the latest date to start offering a payment service involving the execution of instant credit transfers in euro by IPR-specified payment service providers located in a Member State whose currency is not the euro from payment accounts denominated in the national currency of that Member State, at a time when those payment service providers do not execute or receive traditional euro credit transfer transactions in respect of such accounts.

IPR – FAQ

Is a Polish bank required to make instant payments and when?

As of January 9, 2027, Polish banks will be required to offer the service of receiving instant credit transfers in euro, while as of July 9, 2027, it will be mandatory to offer the service of executing such credit transfers. For PLN accounts that do not offer the service of making and receiving traditional credit transfers in euro, the obligation to offer instant credit transfers in euro will be suspended until June 9, 2028.

 

Does Polish KIP/KIPE have an obligation to provide instant payments?

Yes, national payment institutions and national electronic money institutions (KIPs/KIPEs) based in a member state whose currency is not the euro will be required to offer a service for receiving instant credit transfers in euro from April 9, 2027 at the latest, and a service for executing instant credit transfers in euro from July 9, 2027 at the latest.

IPR – WHAT DO WE DELIVER?

• Legal workshops to prepare for the implementation of IPR regulations in the operations of payment service providers.
• Legal audits of current procedures, policies and other internal documentation of PSPs for compliance with IPR with recommendations to achieve compliance.
• Development of new procedures, policies and other internal documentation for PSPs in compliance with IPR requirements.
• Legal audits of currently used contract templates (terms and conditions, T&Cs, etc.), communications, policies and other external documentation for IPR compliance with recommendations to achieve compliance.
• Development of new contract templates (regulations, T&Cs, etc.), communications, policies and other external documentation in compliance with IPR requirements.

DLK INFORMATION