Instant payment

What it means

An instant payment is a bank transfer in which the money reaches the payee’s account within seconds, whatever the day or time, including weekends and holidays. In the euro area it runs on the SEPA instant credit transfer scheme between participating banks.

The EU Instant Payments Regulation requires euro-area banks to receive and send such payments and to charge no more for them than for a standard transfer. The rules also include payee verification: before sending, the bank compares the payee’s name with the holder of the IBAN and warns of any mismatch.

An instant payment is irrevocable. Once sent it cannot be stopped or cancelled, and the money is immediately available to the payee. For companies this means faster collection but also higher demands on checks before sending.

How it works in practice

For sales of goods at higher amounts that would otherwise be paid in cash, we recommend instant payment instead. It complies with the cash payment limit, and the seller sees the money in the account before handing over the goods.

On invoices and in online shops we use the PAY by square QR code, which carries all the details into the customer’s banking app. With a payment gateway, an instant transfer often replaces a card payment at lower fees.

For cash flow the benefit is that money does not wait over the weekend. In the payment approval rules, however, we set limits and dual approval for larger amounts, because the bank can no longer reverse a wrong payment without the payee’s consent.

What to watch out for

Irrevocability and speed make instant payments a favourite tool of fraudsters. With phishing or a fake invoice showing a new account number, the money is gone in seconds. We always verify a change of supplier account by phone on a known number.

A bank warning that the payee name does not match should not be ignored. If a company sends the payment despite the warning, the bank is generally not liable for any loss. A mismatch may be innocent, such as an abbreviated business name, but it may also signal fraud.