First movers won the right to brag last November as they rolled out with Instant SEPA Credit Transfers (also known as SCT INST), a payment type that has the potential to change the way businesses interact with their customers and suppliers in Europe.
Under the previous SEPA scheme, cross-border European payments are processed in batches, and payments reach their destination by the next day. With SEPA Instant Credit Transfers, transactions can affordably be processed 365 days per year, and reach their destination in less than 10 seconds. But they are not ubiquitous. According to PYMNTS.com, the transfers are currently available at banks and through PSPs in Austria, Estonia, Germany, Italy, Latvia, Lithuania, the Netherlands and Spain.
How fast will the trend grow? Seven countries are expected to join over the next year, with the rest yet to name their date. However, it is expected to grow quickly. More than 150 million Faster Payments were processed through the UK’s domestic instant payment scheme in December, according to the Faster Payments organisation, an increase of 20 percent over December 2016. And that number could easily be eclipsed by SEPA Instant because of a larger potential market and its cross-border functionality. The ability to instantly send payments from any country to any bank account in the 34 SEPA countries will be a game changer.
Providing instant payment capability across Europe will affect more than just the speed at which payments are delivered. There will be knock-on effects. Subsequent expectations around instant delivery of value are going to change the way companies compete. Vincent Brennan, head of group operations & payments at Bank of Ireland, and deputy chairman of the Euro Banking Association explains the necessary mindset in the paper Speeding Up The Payments Landscape: “The business case isn’t in the act of speeding up the movement of money, nor even in basic propositions such as P2P payments. The business case is a broader strategic one, around enabling contextual propositions for customers.”
Tom Kelleher, commercial director, of Icon, says: “SCT Inst is, above all, an opportunity for early adopters to launch game-changing products with value-added services to grow new business and revenues.” It can also lead to competitive disruption within the industry.
“Today, people are digital natives and expect every financial service they use to be digital,” notes Michael Kent, CEO and founder of Azimo. “Consumers demand payments to keep up with the speed of service in other areas.”
Noyan Nihat, CEO of Transactive, one of the early adopters of SEPA Instant Credit Transfers, believes there is significant opportunity to create competitive advantage through better customer experience and the logical innovations that will follow. “Businesses and institutions that make the conceptual leap from realtime payments across borders to new ways to provide instant value globally are in a prime position to capitalise on the instant payments revolution. Never before has there been such opportunity for meaningful innovation in multinational business platforms.”