Instant payments have been technically possible in the European Union since the EU SEPA Instant Payments (SCT Inst) standard was introduced in 2017. So far, however, they have not been a resounding success: At the start of 2022, just 11% of transfers in the EU were processed in real time. In countries such as India or Brazil, this figure is around 90%. It is estimated that only around 50% of banks in the EU currently offer real-time payments at all. The EU Commission wants to make instant payments the norm by 2024 and has put forward a corresponding draft proposal requiring banks to offer real-time payments, among other things.
Instant payments have not proven very popular among businesses thus far, as real-time payments only deliver tangible added value when the subsequent processes, such as the treasury and the dispatch of goods, can react just as quickly. In some cases, however, this requires a complex adaptation of the systems and processes – which many businesses are still shying away from.
Poland, Romania and Hungary leading the way
For German companies with strong eastern European business in particular, it would be worthwhile considering how to integrate instant payments into the treasury processes. While progress in the eurozone is rather slow, there is progress to be seen, particularly in areas of eastern Europe that use currencies other than the euro. In Poland, for example, two Polish banks have been offering instant payment services with Złoty via Express Elixir and Bluecash since as early as 2012. This puts Poland in a leading position on the international stage when it comes to real-time payments. In Romania, the operator of the country's instant payment network, Transfond, was launched in 2019. Today, ten Romanian banks offer real-time transfers. Hungary likewise launched an instant payment system in March 2020. As in Poland and Romania, the central bank also acts as a trustee and supervisory body in Hungary. When the system was implemented, it became mandatory for banks in Hungary to offer instant payment services. If payments meet the necessary requirements, they are automatically processed in real time. At the same time, the Hungarian central bank is also promoting other payment services such as Request to Pay. Banks in Hungary will be obligated to offer this payment method from 2024 onwards. Particularly for companies that issue a lot of invoices, such as energy suppliers or telecommunication providers, Request to Pay in conjunction with instant payments simplifies processes, meaning that other payment instruments such as direct debit could be replaced in the medium-term.
To date, these services have been limited to the local currency area and are not linked to the EU SCT Inst scheme; but whether in the short-term or the long-term, companies in the region are also likely to start expecting real-time payments from their German business partners. As a result, the treasuries of German companies should start looking beyond the eurozone. This is challenging, because the required forms and documentation are often only written in the national language of the country in question. However, the greater the acceptance of instant payments and Request to Pay in the respective markets, the more important it will be to be able to serve local payment systems – with a partner bank in the country, for example.
Authors: Marten Bleijenberg is the regional head of Transaction Services Products CEE at ING Germany and Zoltán Hegedűs is the regional product manager for Transaction Services Sales at ING in Hungary.