A proposed rule from the European Commission would require banks to provide rapid payments in euros at no additional cost.
In contrast to conventional card payments or credit transfers, which may take up to three days, the proposed system would enable anyone to transfer money at any time of the day, any day of the week, in only 10 seconds.
Simply put, banks would begin to take the steps that PayPal and other companies have been taking for years.
The head of financial services for the European Union, Mairead McGuinness, described the change as "seismic and comparable to the move from mail to e-mail."
In a time when the continent is experiencing skyrocketing energy costs and a cost-of-living crisis that means "every cent counts," she said it was especially crucial.
The decision might in fact result in savings for small and medium-sized firms, notably shops, and dramatically boost cash flow for both families and corporations.
The Commission estimates that on any given day, up to €200 billion are trapped in the banking system's "payment float," which might now be released and reinjected more swiftly into the economy.
In other words, you could be able to start spending your paycheque as soon as your company transfers the funds, eliminating the need to wait days for it to arrive in your bank account.
The change would enable customers to pay in-store using an instant credit transfer method, such as using a QR code in place of a credit or debit card, or for peer-to-peer payments, such as splitting the cost of a meal or making a second-hand purchase.
The plan was applauded by the European Consumer Organization BEUC, which praised it for making rapid payments "safer, more affordable, and convenient."
In actuality, the adjustments would entail:
1. All banks must offer instant payments to all their customers;
2. Instant payments will be offered at no extra cost than normal credit transfers;
3. Banks will have to check that the account number matches the name of the payment beneficiary and warn the payer about any risk of fraud.
Currently, some banks charge significantly more for a rapid money transfer than they do for conventional transactions - up to €30 in some situations.
According to the Commission, only around 11% of all euro credit transfers throughout the EU were immediate at the start of 2022.
It said that accelerating their implementation would guarantee the bloc's economy's viability in the digital era.
Cross-border card payments are now dominated by US businesses Visa and Mastercard. Brussels expects that quick payments will increase competition along with changes like "open banking," which allows fintech companies to use a customer's financial information to provide a variety of services.
The action is part of broader EU financial changes, which also include the eagerly awaited introduction of a digital euro.
The proposed regulation would give banks in the eurozone six months to be able to accept instant payments in euros and a year to be to send them. It must be approved by EU member states and the European Parliament to become law.
Banks in other EU countries will have 24 months to adapt to the new regulations.
By fLEXI tEAM