What are our financial and technological news?

Banking services
April 8, 2022

Instant Payment and interchange fees

Instant Payment is a European payment method offered to individuals and companies. It allows bank transfers to be made in the SEPA zone 24 hours a day and instantly (in less than 10 seconds).
This new payment method contributes to the improvement of payment systems, costs and user experience. One of its objectives is to compensate for these interbank commissions immediately, by sending a confirmation request to the payer. We will first present the history of the instant transfer and then make a reconciliation with the interbank commissions.

History and application of the Instant Payment

The Instant Payment project was born in 2015 in Europe from the collaboration between several major European financial institutions (European Retail Payment Board, European Payments Council, European Banking Authority...).

This new European payment method complements the classic SEPA credit transfer, which allows money to be transferred within approximately 24 hours. Even if this delay is not excessive, it is important to be able to address professionals and individuals who wish to benefit from a faster transfer, and therefore from an instantaneous writing; with Instant Payment, the debit and credit are seen immediately.

A new type of European banking transaction has therefore been created: : the SCT Inst (SEPA Instant Credit Transfer). As mentioned above, this type of transfer allows for real-time processing of bank transactions (less than 10 seconds): the interbank clearing between the creditor and the payer will therefore be immediate.

Originally, the maximum amount of a SEPA instant transfer was 15,000 euros per transfer. This limit favors money transactions for relatively small amounts and therefore represent a more limited risk for the banks.

Example of use of the instant transfer :

  • Payments between individuals, the latter being reassured by the immediacy of the payment. They receive the funds in 10 seconds.
  • Physical or online merchants recovering the funds from banking transactions made with their consumers or customers through Instant Payment in their store or on their merchant website, always in less than 10 seconds.
  • The damaged customers are reimbursed in record time by their insurance companies, allowing them to react quickly to their misfortune.

These examples are not exhaustive because the use of Instant Payment can be extended to any type of payment as long as it does not exceed 15 000 euros.

Then, in order to meet the needs of professionals and merchants mainly, the maximum amount of an instant transfer has increased to €100,000. Today, very few banks, neobanks and payment institutions allow this amount for their transactions via instant payments. Most of them have remained at the initial maximum (€15,000).

At Olkypay, we have chosen to offer our customers this maximum authorized limit of €100,000 because our credo is to provide our customers with the best possible support!

End of interbank commissions?

Interbank payment fees or interchange fees are invisible elements that have an impact on each money transfer from an acquiring bank to an issuing bank. These interchange fees are amounts that banks charge each other to cover the costs of their banking services (ATM management, direct debit, etc.).

Interbank payment fees for credit or debit card payments, VISA or Mastercard for example, are around 0.20% for each transaction as we mentioned in a previous article. These bank commissions are often penalizing for small merchants for example, who are forced to refuse payment by credit card from a consumer below a minimum amount. The Instant Payment now makes it possible to eliminate interbank commissions because the costs will be borne by the issuer of the transfer..

The instant transfer is not free... Indeed, the costs of implementation are real for the financial organizations wishing to integrate it into their operation. We can nevertheless estimate these costs as being lower than the interbank commissions mentioned in this article. In concrete terms, the cost of this service corresponds to 1% of the amount entered during the transaction.

The advantages of Instant Payment are numerous. The transfer is processed automatically in less than 10 seconds.

As a professional, Instant Payment will ensure you :

  • A much more predictable and reactive cash management
  • A receipt of funds in real time

Instant Payment meets the market's evolutions in terms of payment and immediacy.. Available in Europe in nearly 38 countries, Olkypay has integrated it into its offer to meet these needs for immediacy. Our customers will benefit from all the advantages of instant payment with a limit of 100 000€.

There is no doubt that instant transfers will soon be the majority of money transfers between 2 entities.