The trialogue seems to be over, and the EU Parliament was able to agree on a uniform approach with the EU member states. This step has been eagerly awaited by all affected market participants in recent months.

But what happens next in this regard, when will instant payments become mandatory, and when exactly will the law come into force?

An agreement has been reached – but what happens next?

First, it should be said that the agreement is a major step towards the entry into force of the law, but that this will still take some time. Firstly, the political agreement must be approved by both the Committee on Economic and Monetary Affairs and the plenary. The EU Council must then approve the agreement before the final law can be adopted and published. An enquiry with the EU Parliament has revealed that this process is estimated to take another 2 – 3 months.

However, this means that the law is firmly expected to come into force in the first quarter of 2024. But how much time will banks and financial service providers ultimately have to implement instant payments?

New implementation deadlines

The last published version of the draft law from May 2023 included implementation deadlines for financial institutions in the eurozone of 12 months for the passive accessibility of instant payments (IP Passive) and 24 months for the sending of instant payments (IP Active). According to the current association letter from the VÖB, dated November 13th, 2023, there were further adjustments to the implementation deadlines. Contrary to market expectations and hopes, these have now been shortened by several months. According to the provisional agreement in the trialogue, the passive accessibility of instant payments must now be implemented within 9 months, while the active sending of instant payments and the IBAN name check must be implemented within 18 months. However, it is still unclear how the technical implementation of the name check will be organized.

To provide a better overview, we have placed the implementation deadlines for the affected institutions on a timeline. Our assumption in the illustration is that the deadlines for Euro system banks, non-euro banks and PSPs will begin on 1st April 2024.

European banks must act as quickly as possible

It is clear that implementation is subject to an ambitious timetable, particularly for banks in the eurozone. This means that banks must have established passive IP capability by the end of next year. This is currently just under 13 months until the functionality must be live.

By the end of September 2025, the sending of instant payments and the IBAN name check must also be finally introduced.

It is therefore high time for all affected banks to start the functional and technical analyses. The 24/7/365 availability poses particular challenges for the IT infrastructure and the affected systems.

Experience from IP projects that have already been realized has shown us that it can easily take 1.5 years from the time of the project application, through implementation, to the final go-live of Passive and Active.

Massive adjustments meet resource bottlenecks

However, the given timeframe for implementation also offers little room for blockers and delays. The potentially massive adjustments to your own systems, IT infrastructure and the new business processes to be defined with resource bottlenecks in your own specialist and IT resources are often underestimated in the overall view of an instant payments implementation project.

It is therefore essential that this topic is given high priority and management attention at all banks. Capacity bottlenecks also threaten payment transaction providers and external payment transaction consultants, as all institutions without instant payments now have to start an implementation project at the same time.

Even banks that have already successfully introduced instant payments must review their processes again based on the new law and also implement the IBAN name check.

Our appeal from Gravning to all banks is therefore clear:

Act now and start implementing Instant Payments if you haven’t done so yet! There is not much time left for implementation!

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