Consumers expect ever easier and faster services. The Inst scheme delivers these by enabling pan-European credit transfers with the funds made available on the account in less than ten seconds.
With the spread of smartphones and electronic commerce, the digitalisation of the economy entails a general acceleration of payments. Customers make internet purchases anywhere and at any time, including during evening hours, weekends and holidays – periods when most traditional electronic payments are not operational. Suppliers, on the other hand, want the certainty of being paid as soon as they sell their goods and services. The scheme fulfils these expectations.
Several European countries planned their own solutions to the challenge of rapid payment. The problem: these national schemes would have stopped at national borders, creating a fragmented European landscape. They would have slowed the further harmonisation of payments in Europe – one of the building blocks of the single market – at a time when harmonisation of direct debits and credit transfers had finally been achieved in .
In November 2016, just two years after the (Euro Retail Payments Board: a high level body chaired by the European Central Bank to address strategic retail payment issues) identified the need for a pan-European euro instant payment solution, the published the Inst scheme. It will launch in November 2017, a world first for a region as large as .
- An initial maximum duration of ten seconds
When the payer’s payment service provider () is certain that all mandatory attributes for processing the transaction are valid, it marks this starting point with a timestamp. Within ten seconds, the beneficiary’s PSP has to report to the payer’s PSP either that the money has been made available to the beneficiary or that the transaction has been rejected. If the maximum execution time of ten seconds cannot be met due to exceptional processing circumstances, the Inst rulebook foresees a hard time-out deadline of 20 seconds. The payer’s PSP cannot unilaterally reject the transaction until the moment it receives a negative confirmation message reporting its failure.
- An initial maximum amount of 15,000 euros
Any transaction higher than this maximum amount is rejected by the interbank parties involved in the process chain (unless otherwise previously agreed between the participants).
Though the transaction must be made in euros, the payment accounts held at operating in do not have to be denominated in euros.
- Availability 24/7/365
The services based on the Inst scheme are available 24 hours a day and on all calendar days of the year.
- Similarities with the Credit Transfer (SCT) scheme
As many elements of the existing SCT scheme as possible have been incorporated into the new scheme to facilitate the implementation for the , their customers and other market players.
- An optional scheme
PSPs operating within SEPA are not obliged to adhere to the scheme. If a PSP wishes to adhere, it must at least be reachable in the role of beneficiary bank.
- Flexibility is in the DNA of SCT Inst
SCT Inst scheme participants are free to agree on either a bilateral or multilateral basis on a shorter execution time and a higher maximum amount. The maximum amount will be reviewed by the EPC annually (as of 2018).
Inst transactions can officially be made as of 21 November 2017. All are encouraged to adhere rapidly to the scheme, at least as receivers of transactions, in order to give it momentum as soon as possible.
Instant payments, also known as ‘immediate’ or ‘real-time’ payments, offer many benefits to all payment stakeholders, be they end-users or service providers.
- Instant payments are the closest substitute to cash: the transfer of money is immediate and available 24/7/365.
In particular, they have the potential to develop in the person-to-person and person-to-business segments in situations where cash and cheques are currently widely used. They may reduce the cost of managing cash and cheques, which are the most expensive means of payment at the level of the entire economy. They further facilitate electronic and mobile commerce payments.
This EPC Report to the ERPB on instant payments (June 2015) lists many examples of use cases for instant payments, such as the purchase of high-value goods (second-hand cars, antiques, etc.) between two individuals, the payment of a share of a bill (restaurant, joint gift, etc.), and services requiring on-the-spot payment.
- The 24/7 availability of funds can help business customers improve their cash-flow management and reduce their need for external financing.
- Instant payments can act as a springboard for to develop other 24/7/365 financial services and products to better serve their customers and attract new clients.
Instant payments are a useful tool to spread the use of digital interaction channels between PSPs and their clients.