Europe Adopts Instant Payments: Ripple Insights

Accelerating the transition to instant payments across Europe

Instant payments are becoming the transaction method of choice for consumers and businesses across the European Union and the United Kingdom. Institutions like the European Commission (EC) are driving these developments, working to build more resilient financial infrastructure and make instant payments universally available.

Payment Services Directive 3 (PSD3) and Payment Services Regulation (PSR)

In June 2023, the EC published proposals for the Payment Services Directive 3 (PSD3) and the Payment Services Regulation (PSR) to keep pace with the rapid development of the electronic payments market. The Financial Data Access and Payments Package aims to maintain an efficient market for retail financial services and ensure uniform rules across the EU, clear information on payments, instant payments, consumer protection and a wide choice of payment services.

Challenges of Instant Payments

Despite these advances, challenges persist. One in three EU payment service providers does not offer instant euro payments, and up to 70 million payment accounts in the euro area do not allow holders to send and receive instant payments. In most cases, instant payments cost much more than traditional money transfers, sometimes up to €30 per payment.

UK fast payment system

In the UK, the Faster Payments System enables fast and secure transactions between UK bank accounts 24 hours a day. The amount of payments processed through this system in the second quarter of 2023 increased by 14% compared to the same period last year.

Difficulties caused by new payment system

Pan-European payments cooperation often faces challenges, as seen in the European Payments Initiative and the more recent P27 initiative. Conflicts and disagreements between coalitions and the lack of critical public participation are problematic.

Instant payment support trends

Several key trends are accelerating the adoption of instant payment methods across Europe. The European Central Bank is exploring a digital euro that would provide pan-European payment solutions under European governance. Financial institutions must rapidly onboard and implement institutional-grade digital asset software infrastructure to meet demand and deliver digital euro services to their customers.

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