What is the Instant Payment Regulation (IPR): Impact on Open Banking

Feeling the pressure to keep up with the latest payment regulations? With the 9 January deadline approaching fast, all eurozone banks must be ready to receive instant payments, in line with Instant Payment Regulation (IPR). For merchants, this regulation is good news for how you manage cash flow, serve customers, and stay competitive.

If you’ve been struggling with delayed payments or high transaction fees, the IPR could be the solution you’ve been waiting for. In this article, we’ll break down the instant payments rules and regulation, including how this law will reshape the EU payments landscape in 2025 and why now is the perfect time to prepare your business.

What is the Instant Payment Regulation (IPR)?

The Instant Payment Regulation in Europe is a new law designed to make instant payments more accessible across the block. It requires all banks and payment service providers (PSPs) to offer instant payments.

How Does IPR Work?

This means allowing euro payments to be sent and received within 10 seconds, 24/7, year-round – not just within the same country but also across other EU member states and other SEPA markets. The 10-second settlement is a reduction from the previous 25-second window, putting increased pressure on banks and PSPs to optimise their systems.

Payers will be able to verify the payee's information before completing a transfer and can claim a refund. They will also be notified within 10 seconds when a payment is successfully made.

While IPR doesn't specify a particular settlement system, it's likely that existing systems will be adapted to meet the new requirements.

In the EU, instant payments are handled through two major systems: the ECB’s Target Instant Payment Settlement (TIPS) and EBA Clearing’s RT1. Switzerland uses the latest version of its Swiss Interbank Clearing system for instant transfers. Meanwhile, in the UK, the Faster Payments Service, introduced back in 2008, allows banks to transfer funds instantly.

Instant Payment Regulation: Timeline

19 March 2024: The IPR was published in the EU Official Journal.

8 April 2024: The IPR officially came into force.

9 January 2025: All bank-PSPs in the eurozone must be able to receive instant payments from customers.

Mid-2025: Member States must update national laws to ensure payment institutions and e-money institutions can access payment systems directly.

9 October 2025: All eurozone bank-PSPs must offer instant payment services for sending money, including payee verification.

9 January 2027: Deadline for non-eurozone bank-PSPs to enable receiving instant payments.

9 July 2027: Deadline for non-eurozone bank-PSPs to enable sending instant payments.

9 April 2027: EMIs and PIs must comply with instant payment requirements for both sending and receiving.

What Does It Mean for Merchants?

There are key impacts of the Instant Payment Regulation on merchants.

One major advantage is improved cash flow, as instant payments ensure immediate access to funds, which simplifies working capital management. Faster payments also improve the customer experience as merchants can process orders and ship goods more quickly.

Cost savings are another key benefit, as the regulation mandates that instant payments cannot cost more than standard credit transfers, which could potentially reduce transaction fees for merchants.

Additionally, the regulation improves competitiveness. A SWIFT survey revealed that 20% of small and medium-sized businesses believe it will make them more competitive, leveling the playing field for smaller players.

Finally, the regulation opens up new cross-border opportunities. Merchants can process cross-border transactions quicker, making it easier to enter new markets and expand customer base.

IPR and Open  Banking

The EU’s Instant Payment Regulation is undoubtedly a game-changer for Europe, but when combined with open banking, it becomes a true powerhouse. Experts confirm that the IPR regulation will greatly benefit the overall open banking ecosystem, leading to more efficiency and higher adoption.

“The Instant Payment Regulation will in combination with PSD2 provide a real boost to Open Banking, and might become a challenger for card payments,” said François de Witte from Treasury XL.

Why Should Merchants Switch to Open Banking?

Open banking and instant payments are a powerful combination that could pose a serious threat to card payments. Here’s why merchants should consider switching to open banking to further leverage instant payments:

• Speed and convenience

Open banking lets third-party providers (TPPs) initiate payments directly from a user’s bank account, bypassing card networks. Pair that with instant payments, and transactions are completed in seconds, any time of day, all year round. Customers no longer settle for slow settlements.

• Cost savings

The IPR ensures instant payments cost no more than standard credit transfers. Add the lower fees of open banking, and merchants get a cost-efficient payment solution bypassing expensive card networks.

• Better UX

Integrating instant payments along with open banking APIs makes real-time, smooth payments easy to use for customers.

Open banking allows customers to pay directly from their bank accounts, meaning they don’t have to insert lengthy card details. Instead, they are transferred to their trusted bank’s interface. It makes the payment process frictionless, boosting customer loyalty and eliminating shopping cart abandonment.

Transform Your Business with Noda’s Open Banking

Leverage faster payments with Noda’s open banking payment gateway, which makes transactions fast and seamless. Customers can skip lengthy payment details and pay-by-bank in just a few clicks, improving the user experience.

Get started easily with our plugins for leading e-commerce platforms or integrate effortlessly using Open Banking APIs. With connections to over 2,000 banks across 28 countries and support for multiple currencies, we help you reach global clients.

Beyond payments, Noda’s Know Your Whales (KYW) uses open banking data to deliver actionable insights. Predict customer lifetime value (LTV) and fine-tune your marketing strategies to drive better revenue results.

We also offer a secure card payment gateway, no-code payment options, authorisation tools, and more. Whatever stage your business is at, Noda provides the tools to grow and succeed.