It is a common belief that, given their extreme speed, instant payments are less secure and more vulnerable to fraud than traditional bank transfers. The reality is exactly the opposite. While an ordinary bank transfer sits waiting in batch processing queues, instant transfers utilize real-time, AI-driven fraud detection systems mandated by recent European directives. They do not merely move money faster; they analyze transactional patterns with unprecedented speed, making them one of the most secure digital payment methods currently available for our accounts .

What are instant payments?

Instant payments are electronic transactions that transfer funds between two bank accounts in less than ten seconds, 24 hours a day, 365 days a year. Unlike traditional bank transfers, the funds are immediately available and spendable by the final beneficiary.

Created to modernize global financial infrastructure, these tools have revolutionized the concept of money transfers. In Europe, the primary standard is the SEPA Instant Credit Transfer (SCT Inst) , originally introduced in 2017 but having since become the regulatory cornerstone of the current decade. Until a few years ago, instant transfers were considered a “premium” service, often subject to high fees charged by financial institutions. Today, thanks to regulatory developments, they have become the norm for anyone with a current account.

How they work at a technical level

At a technical level, instant payments operate through real-time gross settlement networks, such as the ECB’s TIPS system. This ensures that each transaction is processed individually and instantaneously, without deferred netting, guaranteeing the immediate transfer of liquidity.

The process unfolds in a fraction of a second through highly automated steps:

• Initiation: The user initiates the payment via their bank’s app .

• Verification (VoP) : The system instantly queries the central database to verify that the IBAN actually corresponds to the entered beneficiary’s name (Verification of Payee).

• Reservation of funds: The payer’s bank places a hold on the amount in the account.

• Clearing and Settlement: The transaction passes through a clearing infrastructure (such as EBA Clearing’s RT1 or the European Central Bank’s TIPS). Funds are transferred in real time between the banks’ reserve accounts.

• Confirmation: Both banks receive a success notification, and the beneficiary sees the funds credited to their account.

All of this takes place within a guaranteed maximum time of 10 seconds. If, for any technical reason, the transaction cannot be completed within this timeframe, it is automatically cancelled, and the funds immediately become available to the sender again.

Advantages over traditional bank transfers

The main advantages of instant payments include the immediate availability of funds, continuous operation even on weekends and public holidays, and improved liquidity management for businesses. They represent a payment method that is clearly superior to standard bank transfers.

Overcoming the time constraints of the traditional banking system (the so-called afternoon “cut-off” and weekend closures) has a profound impact on the real economy. Businesses can secure urgent supplies by making real-time payments, while individuals can exchange money instantly to split expenses or handle emergencies.

Security and Fraud Prevention

The security of instant payments is guaranteed by Strong Customer Authentication (SCA) protocols and artificial intelligence-based transaction monitoring systems. Banks verify the match between the IBAN and the beneficiary’s name in real time, blocking fraud attempts.

According to official European Commission documentation, the mandatory introduction of the Beneficiary Verification service (IBAN-Name Check) has drastically reduced social engineering-based fraud (such as fake supplier scams or “distressed relative” scams). If the name entered by the user does not match the actual account holder of the IBAN, the system generates a blocking alert before the payment is even authorized.

Case Study: The Impact of the European Regulation

The mass adoption of instant payments in Europe has been accelerated by Regulation (EU) 2024/886 . This regulation has mandated that banks standardize costs and guarantee instant sending and receiving for all account holders, thereby transforming the market.

Prior to this regulatory intervention, adoption was patchy: many banks applied unjustified surcharges (up to €2 or €3 per transaction), discouraging use by consumers. The intervention by European lawmakers has restored market fairness.

Payment service providers offering standard euro credit transfers must also offer the service of sending and receiving instant euro credit transfers. The fees charged for instant credit transfers must not be higher than those charged for standard, non-instant credit transfers.

Council of the European Union, Adoption of the Instant Payments Regulation

This case study demonstrates how technology, if supported by consumer-oriented regulation, can rapidly become a universal standard, eliminating barriers to entry and improving systemic efficiency.

Conclusions

In summary, instant payments are no longer a premium option, but the new global standard for money transfers. They offer speed, advanced security, and a robust infrastructure, perfectly meeting the modern financial needs of individuals and businesses.

Technological advancements in interbank networks and regulatory measures have definitively reduced costs and waiting times. Choosing a current account that fully supports this functionality at no additional cost is now a fundamental requirement for managing one’s finances with maximum efficiency and security.

Frequently Asked Questions