EU Commission: Instant bank transfer to become mandatory

If the EU Commission has its way, all banks should offer their customers the option of an instant bank transfer in the future. However, this must not cost more than a standard transfer.

Instant bank transfer for all

The EU wants to introduce new rules for bank transfers in Europe. Banks are to be obliged to allow their customers to make instant transfers. A suitable legislative initiative has now been presented by the Commission under the leadership of Commission President Ursula von der Leyen. The aim of the initiative is to make the payment process easier for customers in the European Economic Area by significantly speeding it up. The so-called quick transfers or instant payments are based on a money transfer within seconds. Compared with standard transfers, which sometimes take a day or more, this is much more practical. Many banks already offer such a service.

However, they also charge for it. But that is to end now, if the Commission has its way. There should no longer be any higher additional costs for the incredibly fast transfers. Instead, the costs should be on a par with those of a standard transfer. There are many advantages of a real-time transfer over a standard transfer. For example, you no longer have to worry about reminder fees if you forget an invoice and do not settle it until the day the payment deadline ends. Furthermore, the Commission sees advantages for the credit institutions in the introduction. Namely, these could adapt to other payment services such as PayPal in terms of convenience, making them more competitive in the global market.

Also of interest: Competition law: EU Commission gets no fine from Qualcomm.

Instant transfer is rarely used

Of course, it is safe to assume that the lame standard bank transfer will slowly but surely fade into obscurity once a general real-time transfer option is introduced. However, a look at the current figures paints a deceptive picture in this regard. At present, just 11% of all private and corporate customers use fast real-time transfers. Particularly in direct comparison with the rest of the world, this is a serious competitive disadvantage, complains the EU Commission. To solve this problem, it would be necessary to prohibit additional costs for a real-time transfer and to adjust the price to standard transfers.

Incidentally, the Commission’s idea is not new. Two years ago, the body already launched a legislative initiative. However, not much has happened in this regard. This is now set to change. And changes are not just to be made to real-time transfers. As part of the financial strategy package, the EU Commission has also clearly set its sights on money laundering in the EU. From now on, cash payments are to be limited to a maximum rate. More than 10,000 euros should not be possible for cash transactions. This is another step towards strengthening digital payment options.

Also of interest: Data Act: EU Commission faces mammoth task

Strengthening economy through instant bank transfer

It’s not just customers and banks that are expected to benefit from real-time money transfers. The European economy should also get a good boost in the best case scenario, if the EU Commission has its way. After all, more instant transfers will also bring cash flow to a constant level. An example makes it clear why. If you want to pay an invoice using a standard transfer and you do it on a Friday, many banks make you wait until Monday for the money to reach the recipient. With an instant payment, on the other hand, the money reaches the payee a few seconds later. As a result, there is likely to be a real low point in cash flow, especially at the weekend, due to the pause in standard transfers.

In the Commission’s view, this also dampens companies’ appetite for investment, at least temporarily. Instant transfers would solve this problem. In order to make it more difficult for fraudsters to use false identities or IBANs in the future, the Commission would also like to hold banks more accountable in this area. For example, the IBAN and the name of the payee are to be matched in the future. The current war in Ukraine is also reflected in the legislative initiative. In the future, banks are to compare their customers with current sanctions lists at least once a day.

Introduction to come step by step

A look at the draft law reveals a number of changes. Credit institutions in particular will certainly have to make drastic changes to their own structures. The Commission is also aware of this. For this reason, it would like to accommodate the banks by not introducing the new regulations abruptly. Instead, they want to introduce them step by step. This will give service providers sufficient time to implement the new rules effectively. However, real-time transfers are to be introduced quickly. These are to be mandatory just six months after the new law comes into force.