Challenges to consider
1. For retail banks
Channel availability: Banks must analyze gaps between their current practices and the new EU requirements. Even those currently offering IP through their online and/or mobile channels will need to expand their IP offering to be available for all their payment channels and customer segments.
Value date: The proposal removes the distinction between business and non-business days. This affects interest calculations for all banks regardless of their IP capabilities.
10-second window: The proposal stipulating a maximum of 10 seconds to conduct IBAN checks and process IPs conflicts with the SEPA Credit Transfers instant rulebook, which allows for a 20-second window under certain circumstances. This compressed processing time may be especially challenging for batch and bulk payments.
2. For private banks and wealth managers
Digital banking consideration: Private banking, traditionally more offline, should review whether to offer online interfaces or dedicated smartphone apps to offer the most appropriate user experience to their customers.
Client transactions: The €100,000 capped transfer amount may interfere with wealthier clients customarily making larger transactions. To accommodate this, banks will need to maintain two separate operational processes.
Uninterested customer base: Private banking clients, typically older and less tech-savvy, might initially be less open to the concept of instant payments.
3. For corporate banks
While IPs can significantly benefit treasury management for corporates, such as by improving cash flow management, the €100,000 capped amount will pose a constraint for corporate clients usually processing larger transactions to pay major customers and suppliers.
4. For existing PSPs
New product development: To support IPs in euros, PSPs need to develop a new product offering, impacting organizational operations and customer relations.
Fee restructuring: As PSPs cannot charge more for IPs than for regular credit transfers, they will need to review their pricing strategies and evaluate the financial implications of offering IPs.
Mismatch notifications: PSPs need to implement systems for alerting customers about discrepancies between payee names and IBANs, necessitating the development of new tools and robust processes with a focus on cross-border transactions.
Enhanced sanctions screening: To conduct transactions within seconds while adhering to AML and fraud prevention standards, PSPs will need to make adaptations in transaction monitoring and daily sanctions screening practices.
