As the EU’s SEPA Instant Payments Regulation nears enforcement in October 2025, European banks are preparing for a seismic shift that will see euro payments processed in seconds, 24/7, year-round.
According to IBS Intelligence, however, this move towards real-time settlement could come at a steep price, with nearly half of banks anticipating significant losses in interest due to the need to maintain constant liquidity.
According to new research from RedCompass Labs, 47% of banks across Europe expect to lose millions in interest as they prepare for round-the-clock payment obligations. The firm’s latest report, ‘Inside Europe’s Race to Instant Payments’, surveyed 300 senior payment professionals and found that while the shift promises modernisation, it is forcing banks to completely rework their liquidity strategies and operational resilience.
The core issue lies in the mismatch between the always-on requirement of SEPA Instant and the limited hours of the European Central Bank’s TARGET2 system, which currently operates only on weekdays from 07:00 to 18:00 CET. As a result, banks must hold capital in the TARGET Instant Payment Settlement (TIPS) system during off-hours — capital that would otherwise be deployed for lending or investment. A striking 93% of banks expressed concern about this requirement, with 48% being “very concerned”.
The removal of the €100,000 transaction cap has further complicated liquidity planning. RedCompass Labs head of payment services Pratiksha Pathak said, “How much is enough? €300 million? €600 million? €1 billion? Imagine it’s a Saturday evening and multiple high-value instant payments hit your system. What then?”
To cope with these pressures, banks are implementing a range of measures. Nearly half (47%) are increasing liquidity buffers, while 46% are enhancing fraud and sanctions screening systems. Additionally, 44% are updating risk frameworks, and 43% are entering into bilateral agreements to share liquidity responsibilities.
The study also revealed that 54% of banks have experienced more rejected payments due to sanctions as they rush to meet the 10-second clearing requirement. To combat compliance and fraud risks, 66% of banks plan to use AI to improve accuracy and cut false positives, and 65% are investing in better transaction monitoring tools.
Despite the challenges, confidence is growing. Today, 82% of banks believe the benefits of SEPA Instant outweigh the costs, compared to just 71% last year. Demand is also on the rise, with 56% of banks noting increased interest from corporate clients and 27% from retail customers.
However, concerns remain. A majority — 77% — expect SEPA Instant to increase fraud, and while 93% agree that Verification of Payee (VoP) helps, few believe it will be sufficient by itself.
Beyond the EU, momentum is also building. With SEPA Instant rules for non-EU countries expected by 2027, 51% of banks say they’re “very likely” to prepare early. Meanwhile, 43% of institutions are still working on ISO 20022 migration, while 39% have completed the process.
Encouragingly, belief in the achievability of the October 2025 deadline has soared from 42% to 85% in just a year. Yet, as Pathak noted, “A failed payment is more than a compliance cost. It’s a blow to trust and reputation… This shift calls for more than just technical readiness — it demands strategic clarity, liquidity precision, and a mindset built for 24/7 banking.”
New research from Datamaran has revealed how European companies are tackling the EU’s Corporate Sustainability Reporting Directive (CSRD), with many still in the early stages of embedding data-led, strategic ESG reporting.
The report, titled CSRD Reports Uncovered: Insights from a Detailed Analysis of 11,000+ IROs from 300+ Companies, offers one of the first in-depth examinations of how firms are implementing the regulation and engaging with the core concepts of impacts, risks and opportunities (IROs).
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