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As of January 9, 2024, the instant payments regulation (IPR) has officially come into effect in the EU. This regulation aims to make instant euro payments the standard, ensuring that transactions are processed within ten seconds, 24/7, across all participating banks.

For merchants, this means faster settlements, improved cash flow, and a more seamless customer experience. But what are the key implications, and how can businesses adapt to this change? Let's break it down.

1. Faster payments, faster cash flow

Traditionally, bank transfers in the EU (via SEPA) could take one to two business days to clear, causing cash flow delays. With IPR, merchants can now receive funds instantly, reducing reliance on credit lines and improving liquidity management.

2. Reduced payment uncertainty

For businesses that rely on bank transfers, long settlement times often mean uncertainty in order fulfillment and service delivery. With IPR it now eliminates this issue, ensuring that transactions are confirmed and settled immediately, reducing failed payments and disputes.

3. Lower payment processing costs

Unlike traditional card payments, which involve intermediary fees from acquirers, issuers, and card networks, instant payments bypass card schemes. This can lead to significantly lower transaction costs, especially for high-value transactions where card fees can be substantial.

4. Stronger competitive advantage

By offering instant payment options such as DPMax Open Banking, merchants can enhance the checkout experience, improving customer satisfaction and conversion rates. Businesses that adopt “Pay by Bank” solutions will be able to provide seamless, real-time transactions without additional fees and no chargebacks.

5. Enhanced payment security

With strong customer authentication (SCA) built into the instant payment framework, transactions are more secure, reducing fraud risks associated with card payments and unauthorized transactions.

Challenges to consider

While the benefits are clear, there are some challenges merchants should be aware of:

• Bank and PSP readiness: Not all banks are equally prepared for IPR implementation. Merchants should verify their payment providers' compliance and capabilities.
• Consumer adoption: Merchants need to educate customers on the advantages of using Open Banking. 

How merchants can leverage instant payments

✅ Enable instant bank transfers

Merchants should partner with PSPs that support SEPA instant credit transfers (SCT Inst) to provide real-time payment options at checkout.

✅ Offer Open Banking 

Solutions like DPMax Open Banking leverage IPR to allow customers to pay directly from their bank accounts instantly, reducing processing fees and increasing payment success rates.

✅ Educate customers on instant payments

Promote the benefits of faster transactions, increased security, and zero hidden fees to encourage adoption among consumers.

✅ Streamline Your Checkout

Simplify the checkout experience and make the payment options highly visible to encourage smooth, seamless adoption.

The future of payments is instant

With IPR now in effect, the European payment landscape is undergoing a massive transformation. Merchants who embrace instant payments early will benefit from improved cash flow, reduced costs, and a more seamless customer experience.

Are you ready to integrate instant payments into your business?

Get in touch with us to learn more: sales@alternativepayments.com