The EU instant payments regulation and payment packages – interpretation and best practices

Abstract

This article analyzes the specificity of the regulation regarding the provision of instant credit transfer packages under the Instant Payment Regulation (IPR). This service exhibits a number of differences compared to “ordinary” credit transfers and individual instant payments. While it is not possible to define specific hours for accepting instant payment orders (i.e., establish a cut-off time), it is potentially feasible to “extend” the execution time of instant payments for payment packages beyond ten seconds. This is particularly relevant for large payment packages that necessitate sequential conversion into individual instant payments. The ten-second time limit, in such cases, effectively applies post-unpacking, meaning after the payment package has been broken down into individual transactions. Implementing such a framework requires corresponding adjustments to contracts or regulations with clients. In line with the principle of technological neutrality, the IPR refrains from restricting the technical or functional methods employed for executing instant payment packages. Technological neutrality, in this context, means the IPR doesn’t favor any specific technology, allowing flexibility in implementation. Strong authentication of a transfer batch should occur after the Verification of Payee (VoP) service has been performed, using a code specific to the total amount of the batch and the designated payees. When offering payment packages to non-consumers, the provider must offer both opt-out and re-opt-in options for the VoP service. Concurrently, aligning with the European Banking Authority’s (EBA) stance, the VoP service can be offered either integrated with or separate from the payment service. In the latter scenario, VoP fees may be applicable, but regulations beyond the IPR, notably in personal data protection, may govern such fees. Given the notable distinctions between instant payments, especially payment packages, and the “general” provisions of PSD2 governing the execution of transfer orders, it is crucial to appropriately formulate the rights and obligations of involved parties in payment service providers’ contracts and regulations concerning instant payments. This article highlights specific areas that payment service providers should prioritize when implementing the IPR.