Real-Time Transactions and Instant Payments for SMEs and Banks in the EU

The European payments sector is changing quickly. This change is mainly due to the rise of SEPA Instant Credit Transfers (SCT Inst). By 2025, over 60% of EU financial institutions will support instant SEPA payments. New rules will likely require all banks and payment service providers to adopt this standard.

SEPA instant payments allow you to send euro transfers in under ten seconds. You can do this at any time, even on weekends and holidays. The transaction limit is €100,000, and this service is available in 36 European countries. This speed and easy access are a big improvement over traditional SEPA credit transfers, which can take up to one business day to settle.

Why Instant Payments Matter for SMEs

For small and medium-sized enterprises, cash flow can mean the difference between growth and stagnation. With SEPA instant payments, SMEs gain quick access to incoming funds. This helps them manage working capital better and react swiftly to market changes.

Key benefits for SMEs:

• Improved liquidity from quick settlements boosts working capital management and reduces the need for credit lines.
• Stronger supplier relationships, as faster payments help build trust and may lead to better terms.
• Competitive advantage from fulfilling orders and responding to market changes faster than competitors.
• Enhanced customer experience, with instant refunds and payments increasing satisfaction and loyalty.

Immediate settlement also strengthens ties with suppliers. Businesses can pay invoices upon delivery or negotiate better terms. Customers benefit too, as instant refunds and quicker order processing are now expected.

How Banks Benefit from SEPA Instant Payments

Banks must meet customer demand for faster payments and comply with new EU rules. By the end of 2025, banks need to support sending and receiving SEPA instant payments. This shift is more than a tech upgrade, it’s a strategic move to stay competitive.

Advantages for banks:

• Customer retention, as instant payments are now a key differentiator in retail and business banking.
• Operational efficiency, with automated, real-time processing reducing manual work and costs.
• New revenue streams by offering value-added services, including API-based payment initiation and real-time treasury management.
• Regulatory compliance. The new EU Instant Payments Regulation (IPR) requires all banks and payment service providers to send and receive SEPA instant payments by the end of 2025.

By automating payment processing, banks can lower costs and offer new services, such as real-time treasury management. Mandatory IBAN name checks and daily sanctions screening enhance security and reduce fraud risk.

SEPA Instant Payments vs. Faster Payments in the UK

While SEPA instant payments are transforming the eurozone, the UK has its own real-time payment system – Faster Payments. Launched in 2008, Faster Payments allows near-instant transfers between UK bank accounts, typically within seconds, and is available 24/7. The maximum transaction limit for most users is £1 million, though individual banks may set lower limits.

Both systems share key features: round-the-clock availability, rapid settlement, and a focus on improving liquidity for businesses and individuals. However, SEPA instant payments are unique in their cross-border reach within the euro area. In contrast, Faster Payments is limited to domestic transactions in the UK. This distinction is important for SMEs and banks operating across multiple European markets, as SEPA instant payments simplify cross-border euro transfers and support the single market.

Key Regulatory Changes and Trends

The European Commission’s Instant Payments Regulation, effective from April 2024, requires all eurozone banks to offer instant payment services at no extra cost compared to standard SEPA transfers. By December 2025, all banks must support both sending and receiving instant payments and implement IBAN verification to reduce fraud. These changes are expected to drive further adoption and innovation in the payments sector.

Notable trends:

• Pricing parity, as instant payments must not cost more than standard SEPA credit transfers, making them accessible for all businesses.
• Mandatory IBAN verification, with name checks becoming standard before payment initiation to reduce fraud.
• Sanctions screening, allowing daily screening of client databases instead of per-transaction checks to reduce false positives and payment failures.
• Direct access for fintechs, as payment institutions and electronic money institutions will connect directly to SEPA systems, boosting competition and innovation.

Another notable trend is the move towards direct access for fintechs and electronic money institutions. This allows them to connect directly to SEPA systems and offer instant payment services without relying on sponsor banks. This change is likely to increase competition and lead to new, customer-focused solutions.

Challenges and Opportunities

Transitioning to instant payments comes with challenges. Banks and payment providers must upgrade their infrastructure to handle real-time processing and higher transaction volumes. Cybersecurity is a concern, as the speed of instant payments leaves little time for traditional fraud checks. Advanced analytics and machine learning are increasingly used to monitor transactions and detect suspicious activity in real time.

Key challenges:

• Infrastructure upgrades, as banks and payment providers must modernise their systems for 24/7/365 real-time processing and higher transaction volumes.
• Cybersecurity, with the speed of instant payments needing advanced analytics and AI-driven risk management.
• Interoperability, as ensuring seamless integration across different platforms and countries remains a technical hurdle.

Despite these challenges, the benefits for SMEs and banks are significant. Improved cash flow, enhanced customer experience, and the ability to innovate with new financial products all contribute to a more dynamic and resilient European economy.

The Future of Instant Payments in Europe

SEPA instant payments are set to become the new standard for business and consumer transactions across Europe. As adoption grows, transaction limits may increase, and integration with technologies like blockchain and digital identity is likely to accelerate.

For SMEs, embracing instant payments means better cash flow, improved supplier and customer relationships, and the agility to thrive in a fast-moving market. For banks, it is an opportunity to modernise, innovate, and remain central to the European payments ecosystem.