The European Union wants to change bank transfers: always instant and cheap

l’European Union wants to change transfers. The distinction between ordinary and instantaneous is anachronistic, things – says the European legislator – have to change. The Commission also wants to make transfers a more secure tool by making administrative errors in the transcription of the IBAN become nearly impossible.

The proposal is extremely ambitious and could finally modernize an instrument marked by unsustainable expectations in the era of direct payments. Tools like PayPal have revolutionized the payments world, but it seems the banking system didn’t notice. Today, not all banks offer instant transfers, and those that do ask the customer to accept an additional expense of just under $2.

Then there is the problem of the holidays. Today, Sepa transfers take an average of 24 hours, but if they are issued on a Friday, the times are further extended. In some cases you have to wait until Tuesday. It makes no sense anymore. In addition, the Commission notes, this means that every day about 200 billion euros floating: suspended pending the transfer and the money deposited in the beneficiary’s current account. The costs to the economy are unsustainable.

Hence the decision to intervene in the bank transfer regulations of SEPA system approved in 2012. Transactions must always be instantaneous, without incurring extra costs for the customer. It is precisely the high costs of instant transfers that discourage their use: only 11% of transactions are carried out in this way.

At the moment there is a proposal, but before we see a change in the SEPA system, we will probably have to wait a few more years. These are the four points that the Commission is promoting:

1. Instant Payments in euros must be universally available, all service providers that already offer regular euro transfers must offer their instant version within a time frame to be determined
2. The charges for direct bank transfers in euros will no longer be higher than those for regular bank transfers
3. The supplier undertakes to check whether the details of the beneficiary of the transfer (surname and first name, bank of destination) correspond to those of the entered IBAN holder. In case of deviations, for example due to a typing error, the transfer cannot start.

Remove barriers to direct payment processing, while preserving the effectiveness of anti-money laundering and EU-sanctioned screening practices. In short, easier and faster transfers, yes, but not all for free for criminals and blacklisted individuals.