Significant shifts at Sparkasse, Volksbank, and affiliated institutions
Breaking News: EU Regulation Revolutionizes Instant Money Transfers Across Europe
Starting October 9, 2025, money transfers within the European Union (EU), Norway, Iceland, and Liechtenstein will become instant, taking just 10 seconds, available 24/7. This groundbreaking development is part of the EU's broader initiative to modernize payments, improve transparency, and reduce risks of fraud or error in instant payments across Europe.
The EU regulation, (EU) 2024/886, has been in effect since April 2025 and aims to make banks more competitive with payment services like PayPal or Klarna. The regulation requires banks and payment service providers (PSPs) to enable real-time money transfers as part of the Instant Payments framework supported by the Eurosystem’s TARGET Instant Payment Settlement (TIPS) system enhancements.
One of the key features of the new regulation is the Verification of Payee (VoP) service, which will be mandatory for PSPs from October 9, 2025. This service allows payers to verify the identity of the beneficiary before authorising a payment, reducing the risk of errors.
In the event of mistakes, the regulation reinforces that PSPs and banks are liable to refund or rectify the transaction promptly, in compliance with the Payment Services Directive (PSD2) framework and corresponding national laws implementing these EU requirements.
Banks dealing with other currencies will have an extended transition period until July 2027 to technically adapt to the new regulation. However, the new regulation does not mention any changes in the cost of transfers for banks dealing with currencies other than euro during this period.
The new system is expected to provide faster and more efficient money transfers across the EU, reducing waiting times, increasing control, and providing more security for customers. Sparkasse, Volksbank & Co. customers will need to adapt to the new system for instant transfers.
It's important to note that the instant transfers should not cost more than the standard, often free transfers, according to "wa.de". The new regulation includes clear rules for customer protection.
However, the regulation does not specify who will be liable for errors in the instant transfer system beyond the mandates around VoP and PSD2 liability principles. For more granular liability rules, national implementations of PSD2 or specific contract terms may apply.
The EU's goal is to make banks competitive with payment services like PayPal or Klarna, as PayPal has a market share of over 28% in German e-commerce. Customers will soon be able to transfer money at any time of the day in seconds.
This news marks a significant step towards a more connected and efficient European financial system, providing a more seamless experience for customers and businesses alike.
[1] Source: Eurosystem TARGET Instant Payment Settlement (TIPS) [5] Source: Payment Services Directive (PSD2) and corresponding national laws implementing these EU requirements.
Technology plays a crucial role in the new European money transfer system, as it leverages the Eurosystem's TARGET Instant Payment Settlement (TIPS) system enhancements to facilitate real-time transactions.
The EU's financial business landscape is evolving, aiming to challenge traditional banks by adopting technology and payment mechanisms similar to those offered by digital players like PayPal or Klarna.
