The European Instant Payments Regulation (IPR), formally known as Regulation (EU) 2024/886, represents an important step ahead for the EU’s payments ecosystem. By requiring Payment Service Providers (PSPs) to offer instant credit transfers in euros under clear and fair conditions, the IPR accelerates Europe’s shift toward real-time payments.
For startups in the financial ecosystem, the IPR represents a dual-edged sword—introducing transformative opportunities alongside operational and compliance challenges. As Europe aligns with global leaders like Brazil’s Pix and India’s UPI, the regulation paves the way for a competitive, inclusive, and interconnected payments environment, redefining the future of financial services within the EU.
Key Aspects of the IPR
The regulation was adopted on 13 March 2024, published in the Official Journal of the European Union on 19 March 2024, and entered into force on 8 April 2024.
Main Requirements:
- Mandatory Offering: PSPs offering standard credit transfers must also offer instant credit transfers.
- No Excess Charges: Charges for instant credit transfers must not exceed those of standard credit transfers.
- Free Verification Services: PSPs must provide a free payee verification service to minimise transfer errors.
- Daily Sanctions Screening: PSPs must screen payment service users daily against targeted financial restrictive measures.
Scope:
The IPR applies to credit transfers denominated in euro across the European Union and introduces amendments to key financial regulations:
- SEPA Regulation
- Regulation on Cross-Border Payments
- Settlement Finality Directive (SFD)
- Payment Services Directive (PSD2)
Implementation Timeline
The regulation introduces a phased implementation schedule for PSPs:
- For PSPs in the Eurozone:
- Receiving instant credit transfers: January 9, 2025
- Sending instant credit transfers: October 9, 2025
- For PSPs outside the Eurozone:
- Receiving instant credit transfers: January 9, 2027
- Sending instant credit transfers: July 9, 2027
Additionally, Member States whose currency is not the euro may apply equivalent rules for domestic instant credit transfers in their local currencies.
Europe in a Global Context
The IPR aligns Europe with the growing global trend of instant payments, where other regions are already reaping significant benefits.
- Brazil: Brazil’s Pix system, launched by the central bank in 2020, has revolutionised payments with real-time transfers available 24/7. Pix adoption has surged, with about 154 million users (or approx. 70% of Brazil’s total population)—a testament to its success in enhancing financial inclusion and reducing cash dependency.
- India: India’s Unified Payments Interface (UPI) has become a global benchmark for instant payments. UPI processed over 100 billion transactions in 2023, driven by its zero-cost structure and seamless integration across apps, merchants, and banks.
Both systems demonstrate the transformative impact instant payments can have on economies, financial inclusion, and innovation—insights the EU is now applying through the IPR.
Recent developments in the UK and US also highlight the global momentum:
- UK: The Faster Payments Service (FPS) has been operational since 2008 and is evolving to improve 24/7 reliability and fraud prevention mechanisms, particularly for account verification.
- US: The Federal Reserve launched FedNow in July 2023, a real-time payments system designed to enable instant transfers between banks, mirroring the success of systems like UPI and Pix.
By introducing the IPR, Europe takes a step forward in closing the real-time payments gap with these markets, fostering innovation and competition across the EU.
Opportunities for Startups
The IPR removes cost barriers and expands access to instant euro transfers, creating opportunities for fintech startups and embedded finance providers:
- Fintech Startups:
Fintech companies—such as neobanks and payment platforms—can now standardise instant payments in their offerings without additional costs.- Examples: Peer-to-peer payments, real-time loan disbursements, instant gig worker payouts, and fast e-commerce refunds.
- Embedded Finance Providers:
Startups embedding financial services into platforms (e.g., e-commerce, ride-hailing, and B2B supply chains) can leverage instant credit transfers to improve cash flow and user experience.- Examples: Immediate supplier payments, instant driver payouts, and real-time refunds for cancellations.
- Access to Payment Systems:
By amending the Settlement Finality Directive, the IPR allows non-bank PSPs (payment institutions and electronic money institutions) to access payment systems after a transitional period. This inclusion empowers startups to compete more effectively with traditional financial institutions.
Compliance Challenges
While the regulation opens doors for innovation, it also requires technical and operational adjustments, such as, for example:
- System Upgrades: PSPs must upgrade infrastructure to process high volumes of instant transactions reliably.
- Daily Screening: PSPs must implement tools for daily screening of all customers against sanctions lists, with some jurisdictions requiring multiple checks per day.
- Fraud Prevention: Real-time payments increase exposure to financial crimes, demanding advanced fraud detection and prevention technologies.
- User Controls: PSPs must provide functionalities for users to set payment limits on instant credit transfers.
Non-compliance with the IPR requirements could result in pecuniary measures or penalties for PSPs.
Worth to be mentioned, that Artificial Intelligence (AI) can be a valuable ally in overcoming these challenges, particularly in areas like fraud detection, where machine learning models can identify suspicious patterns in real-time, and sanctions screening, where automated systems can streamline daily compliance checks. By integrating AI-powered solutions, PSPs can enhance operational efficiency, reduce risks, and stay ahead of evolving regulatory demands.
What This Means for Startups
The IPR levels the playing field for startups while enhancing user trust in instant payments. Startups able to adapt quickly stand to benefit from:
- Competitive differentiation: Seamless, 24/7 instant payments as a standard feature.
- Cross-border opportunities: Scalability across SEPA markets where instant euro transfers are now mandated.
- Collaborations: Partnerships with incumbent financial institutions seeking faster paths to IPR compliance.
For startups offering compliance-as-a-service solutions, the regulation also creates a market for supporting PSPs in fraud detection, sanctions screening, and technical upgrades.
Conclusion
The European Instant Payments Regulation represents a turning point for Europe’s payment ecosystem. By mandating instant euro transfers with fair and accessible conditions, the IPR fosters innovation, enhances financial inclusion, and creates a competitive landscape for startups and established players alike. By aligning with successful models like Pix in Brazil and UPI in India, the IPR signals a global shift toward real-time payments as a standard.
For European startups, the regulation is more than a compliance requirement—it is an opportunity to redefine user experiences with seamless, 24/7 payment solutions, unlock cross-border growth within the SEPA region, and differentiate through speed, reliability, and compliance. Fintech startups that embrace this transformation have a significant opportunity now as they can position themselves as key players in the financial ecosystem of tomorrow.
For further details, refer to the full regulation text on EUR-Lex and implementation guidance on the European Commission’s Finance page.
Read the orginal article: https://www.eu-startups.com/2025/01/the-european-instant-payments-regulation-ipr-a-game-changer-for-fintech-startups/
