The new reality of instant payments

Lars Frösslund, Head of Strategy & Transformation at SkySparc, reflects on how the Instant Payments Regulation (IPR) is reshaping European banking operations nearly a year after its full implementation.

The new reality of instant payments

The Instant Payments Regulation (IPR), which came into effect on April 8 2024, has now been fully implemented across the Eurozone since January 2025. It requires European banks and payment service providers to offer instant euro transfers at the same cost as standard transfers, clearing payments within 10 seconds, 24/7.

The regulation continues to shape banks’ technical processes, liquidity management, and compliance frameworks, as institutions adapt to the operational realities of continuous instant clearing.

Non-compliance remains subject to penalties of up to 1 percent of annual turnover, prompting ongoing investments to strengthen resilience and prevent operational disruptions.

Eighteen months into the new regime, three main areas have proven particularly challenging for banks: manual intervention, foreign-exchange (FX) exposure, and verification of payee – discussed in more detail below.

Lessons from manual-intervention challenges

The IPR has exposed significant operational inefficiencies in many European banks. Crucially, the regulation’s mandate for 10-second, 24/7 clearing makes manual intervention untenable. Maintaining separate payment rails for different channels (credit cards, SWIFT, domestic transfers, etc.) remains costly and risk-prone.

Two examples highlight this issue.

First, when communicating with central banks, some institutions still use SWIFT Alliance Lite without full integration into their treasury platforms – requiring manual entry of several transactions daily and increasing the risk of error and double work.

Second, for mortgage financing and settlements involving central-bank money, manual procedures persist. While once sufficient, these processes are no longer viable under IPR’s real-time requirements.

To maintain compliance and efficiency, banks have accelerated their transition toward full end-to-end automation of payment flows. Implementing a more centralized, consolidated payment-processing system has become a priority across the sector.

FX exposure: adjusting to 24/7 market realities

The need for instantaneous processing under IPR has required continuous communication with FX providers, even outside traditional market hours. Many banks have since implemented API-driven 24/7 FX capabilities to manage this shift.

Institutions continue to refine liquidity forecasting and exposure controls in an always-on environment, balancing operational efficiency against the cost of maintaining liquidity buffers.

For banks with an international presence – such as Nordic institutions operating across several currencies – these FX considerations add an additional layer of complexity to IPR compliance.

Verification of Payee (VoP) implementation gaps

A key component of the IPR, Verification of Payee (VoP), remains one of the most challenging aspects of implementation across Europe.

Banks must now perform payee verification instantly and securely, retrieving account-holder data, matching it, and confirming results within seconds – while adhering to strict GDPR privacy-by-design principles.

Many institutions have adopted interim API-based solutions while awaiting standardized EU-wide frameworks to mature. The focus has shifted to ensuring rapid, reliable verification without excessive data replication or privacy risk – an area where further cross-industry collaboration is still needed.

Automation and competitive advantage under IPR

The Instant Payments Regulation has proven to be more than a compliance exercise – it has become a catalyst for modernization across the European banking landscape.

Banks that viewed IPR as a strategic opportunity rather than a regulatory burden are now seeing tangible benefits: faster settlement, improved liquidity management, and enhanced client trust.

For institutions still refining their post-implementation processes, the focus has moved from meeting deadlines to optimizing efficiency, interoperability, and customer experience.

As the European Commission begins assessing early outcomes, the IPR is expected to serve as a blueprint for instant-payment schemes in other currencies and regions – further extending its influence beyond the Eurozone.

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