Real-time eurozone payments have long been positioned as vital for European consumers and businesses. But despite SEPA Instant launching in 2017, progress has been uneven. Adoption splintered by country and institution, with pricing models and readiness levels creating a payments patchwork rather than a unified system.

By 2023, instant payments accounted for only around 18% of euro credit transfers, with wide variation between markets and institutions.

That changed with the Instant Payments Regulation (IPR), by mandating:

• Universal availability of instant payments for euro‑denominated credit transfers
• Fee parity between standard SCT and SCT Inst
• Execution within ten seconds, 24/7/365
• Supporting fraud controls such as Verification of Payee

In doing so, the regulation removes two of the most significant historical barriers to adoption: friction and cost. Once instant payments are always available and no more expensive than traditional transfers, the question is no longer whether customers would use them, but why wouldn’t they?

This shift has profound implications:

• For banks, whose infrastructure and cost bases were designed for batch processing
• For EMIs and PIs, who must decide whether to deepen reliance on sponsor banks or seek greater control
• For businesses and customers, who will increasingly expect payments to move at the same speed as information

We examined these dynamics, from how firms are approaching compliance to the effect on payment methods, in our latest research, ‘SEPA Instant: Build it and they will come.’

In this article, I'll discuss some significant findings around market participants’ readiness and perception of the challenges. In subsequent articles, I’ll examine how the IPR could affect SEPA access models, payment volumes and the rails being used.

At a headline level, attitudes toward SEPA Instant are encouraging. Most institutions believe instant payments will have a positive impact, not just on the payments market overall, but on their own customers and businesses. There is a broad agreement that faster payments align with modern expectations and enable new use cases.

However, beneath that optimism lies a more nuanced reality: banks are better prepared for the 2027 SEPA mandates. 55% are already compliant with the July 2027 mandates, and the majority (95-97%) believe they will be ready in time. In contrast, one in five Electronic Money Institutions (EMIs) and Payment Institutions (PIs) already expect to miss the July 2027 compliance deadline by up to six months.

Transitioning to instant payments under the IPR timelines poses significant challenges for market participants.

Many banks face the challenge of upgrading legacy core banking systems to support 24/7/365 operations and 10-second processing windows. Batch processing models and downtime windows must be re-engineered, for example, by converting to stream processing.

Unlike large banks, many EMIs and PIs use cloud-native and API-based tech stacks, which can be an advantage. But they often rely on third-party core banking or ledger systems. If those systems (or vendors) do not yet support SEPA Instant, the EMIs must coordinate upgrades. 

In Celent’s survey, 78% of PSPs ranked legacy technology as one of the top three challenges, with 44% citing it as the number one challenge, by far the highest score. As a result, PSPs are revising service-level agreements with IT providers to ensure high uptime and investing in robust cloud or on-premises infrastructure for low-latency processing.

Supporting instant payments requires an operational evolution to complement the required technology upgrades. Banks need procedures and staffing for round-the-clock incident monitoring and customer support.

Our research revealed that half of all respondents identified these operational challenges as one of their top three concerns, with a third ranking it among the top two challenges. PSPs are also worried about the lack of available expertise and talent, with 56% raising it as one of their top three challenges. Some PSPs are forming dedicated real-time payments teams or outsourcing night-time and weekend operations to service bureaus.

From October 2025, PSPs must provide Verification of Payee (VoP), a service that checks the beneficiary’s name against the IBAN before execution and alerts payers of any potential mismatches.

IBAN / name checking is not a new concept in Europe, and there are multiple domestic offerings across SEPA member states, for example, in Belgium and the Netherlands. However, these offerings typically cover domestic transactions and operate with different standards and rulesets.

To overcome this, the European Payments Council (EPC) launched a pan-European Verification of Payee scheme and directory, closing this gap by enabling interoperability by providing a standard Pan-European specification. The EPC VoP Scheme Rulebook was published in October 2024, with the first phase requiring that, from 9 October 2025, PSPs registered in an EU Member State that use the euro domestically have VoP available. The second phase requires PSPs registered in a Member State of the EU that doesn’t use the euro domestically to be VoP reachable by 9 July 2027.

Our research revealed that the VoP mandate has caused the most concern among the banks. Respondents suggested that having a year from the final rulebook to implementation, including selecting a partner, integrating APIs across all digital banking channels and corporate payment systems, and redesigning workflows to incorporate these, was a significant challenge.

You can read more about VoP and how ClearBank has delivered it here.

For banks with significant legacy tech stacks, implementing instant payments comes with costs, such as technology upgrades, scheme fees, and delivering new services such as VoP.

Many banks historically charged for instant transfers (€0.50–€1 or more), but under IPR, they must price them at, or lower than, the price of a standard transfer. This will squeeze direct fee income and leave PSPs concerned that they might not be able to recoup investment.

Instead, our research suggests that banks are seeking indirect benefits, for example, utilising instant capabilities to win customers, to feed other revenue-generating services, or value-added APIs for corporate treasury. While lack of business cases was cited as one of the top three barriers by 34% of all respondents, that number rises to 43% for retail banks and 41% for payment institutions, but just 25% for EMIs.

Given these challenges, our research asked PSPs about approaches they follow to achieve compliance. Are they adapting or replacing technology systems, buying from existing or new vendors, or perhaps outsourcing it to another bank or a third-party service provider?

The answer is all of the above.

However, banks are much more likely to adapt and buy new modules for existing systems, while unsurprisingly, EMIs and PIs prefer outsourcing, either to their partner bank or other third parties, for aspects such as VoP.

As a result, there’s also a significant investment disparity between market participants.

Banks expect to spend more than EMIs and PIs to achieve compliance: 61% of Celent’s survey respondents plan to spend over €20 million (total capital and annualised operating expenses) and 23% between €50m and €100m. Naturally, the largest banks are the biggest spenders, with 57% spending between €50-100 million, although 24% estimate spending less than €10 million.

In contrast, many non-banks expect to spend less than €10m. This is likely because these EMIs and PIs tend to have more modern technology stacks and are more likely to outsource instant payments to a bank or a third-party service provider.

Real‑time payments underpin a broad set of developments already reshaping financial services: from just‑in‑time liquidity management and embedded finance to automated commerce and account‑to‑account alternatives to cards.

Our research reveals that the growth of SEPA Instant will be the catalyst and foundation for real-time intelligent banking, where money moves as quickly and predictably as data. Institutions that treat instant payments solely as a regulatory compliance obligation risk missing that wider opportunity.

In my next article, I’ll examine how these changes could affect SEPA Instant access models, and the implications for EMIs, PIs and their partner banks.