Complete Guide to IPR Compliance for European Banks

The Complete Guide to IPR Compliance and Real-Time Payment Modernization for European Banks

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Instant Payment Regulation (IPR) is the European Union’s directive mandating that all euro credit transfers must be executed within seconds, 24 hours a day, 7 days a week, 365 days a year. 

The IPR is not just a regulatory update; it is the catalyst driving the most profound transformation in the European payments landscape in a generation. By enforcing the universal adoption of Real Time Payments (RTP), the regulation aims to enhance competition, foster innovation, and increase the speed and security of fund transfers across the EU.  

For financial institutions, achieving IPR Compliance requires a strategic and architectural shift far beyond simple software patching, it demands a commitment to true RTP Implementation. 

The Regulatory Imperative: Mastering IPR Compliance

The Instant Payment Regulation (IPR), adopted in 2024, is the main driver forcing the accelerated adoption of instant euro credit transfers across the EU. This legislation aims to strengthen Europe’s financial infrastructure by ensuring ubiquity and affordability in instant payments. 

The path to full IPR Compliance is defined by four non-negotiable mandates: 

The 10-Second Mandate and 24/7 Availability 

All Payment Service Providers (PSPs) must ensure euro payments can be sent and received within 10 seconds, on any day of the year. This moves banking away from legacy batch processing to continuous, instant execution, demanding a fundamental architectural overhaul. 

Equality of Charges (Cost Parity) 

Charges levied for RTP payments (instant credit transfers) cannot be higher than the charges for corresponding standard credit transfers. This mandate puts immense pressure on banks to achieve operational efficiency, as they must absorb the costs of RTP Implementation without increasing customer fees. 

Verification of Payee (VoP) 

PSPs must offer a service that verifies the payee (matching the IBAN with the account name) before a credit transfer is authorized. This applies to all credit transfers, not just instant ones, and is a critical fraud mitigation tool. 

Sanctions Screening Challenge 

The 10-second processing window is too short for traditional, end-to-end sanctions screening. The IPR requires PSPs to verify their payment service users against sanctions lists periodically, and at least daily, but prohibits transactional screening within the 10-second window. This requires banks to implement dedicated, high-speed, 24/7 tools for real-time fraud monitoring and enhanced risk assessment. 

Further reading: The Instant Payment Solution and the IPR Imperative 

The Technological Core: Mastering RTP Implementation

Compliance requires building a system capable of making true Real Time Payments at a scale. This involves transitioning from outdated systems to agile, API-driven RTP Implementation. 

The Architectural Shift 

Many institutions still operate complex, legacy systems that cannot support the 24/7/365 requirements of instant payments. Successful modernization requires adopting an architecture that separates the stable, legacy core banking system functions from the agile, high-speed payment execution layer. This is often achieved through a modular or “two-speed” approach, leveraging APIs (Application Programming Interfaces) to connect the core ledger to the real-time payment hub. 

Payment Platforms and Payment Orchestration 

To handle the complexity of different schemes (SEPA Instant, domestic RTP) and ensure global reach, banks are adopting sophisticated solutions: 

  • Payment Platforms: These centralized systems manage the routing, processing, and clearing of all payment types through a unified infrastructure. 
  • Payment Orchestration: This software layer manages and optimizes the entire payment flow across multiple gateways and providers. An Orchestration Platform intelligently routes transactions based on cost, success rates, speed, and reliability. This ensures that if one channel fails, the system automatically reroutes the transaction to an alternative, maximizing transaction approval rates and minimizing costs. 

Integrating the Payments Gateway and Payment Solution 

A bank’s modern infrastructure needs to integrate effectively with external commerce platforms. A secure, high-performance payments gateway is the crucial link, encrypting and sending data to the payment processor. Choosing the right payment solution—whether a single vendor platform or a customizable payment orchestration layer—determines the bank’s ability to offer competitive services globally. 

The Strategic Opportunity: The Rise of Mobile Payments

While IPR focuses on compliance, the strategic goal for banks is winning the consumer interface, which is overwhelmingly shifting to mobile payments. The combination of RTP and mobile technology creates an immense competitive advantage. 

Frictionless Customer Experience 

Mobile Payments systems, utilizing methods like NFC and payment technologies (e.g., contactless Near Field Communication Payment) and QR codes, eliminate long checkout lines and speed up transactions. This boosted convenience encourages repeat business and fosters brand loyalty. 

  • Security: Mobile payments systems enhance security protocols through advanced encryption, tokenization, and biometric authentication (like fingerprint or facial recognition), significantly reducing fraud risk. 
  • Data and Insights: Integrating a mobile payment solution provides valuable real-time data on customer behavior, enabling personalized offers and strategic adjustments. 

Competition from Digital Wallets and Fintech 

The rise of digital wallets and potential Central Bank Digital Currencies (CBDCs) is challenging traditional banking models. Banks must leverage their modernized RTP core to offer superior, real-time products embedded within their own or partner mobile payments apps. Offering instant credit and integrated loyalty programs through a bank-owned mobile payments platform creates revenue and drives customer loyalty. 

Conclusion: Turning Compliance into Competitive Advantage 

For European banks, achieving IPR Compliance means more than just software updates; it requires a wholesale shift in technology, operations, and strategy to enable RTP Implementation 24 hours a day, 7 days a week, 365 days a year. 

The Instant Payment Regulation forces compliance, but the successful RTP Implementation unlocks the digital future. Banks that treat the IPR as an opportunity to implement a modular, API-first architecture, enabling high-volume mobile payments and leveraging payment orchestration, will transform their cost centers into strategic revenue generators. 

The challenge of updating legacy systems to support 24/7 RTP payments while managing new regulatory risk is significant. Samlink specializes in guiding financial institutions through this complex journey, providing the Advisory Services and Application Services required to secure your transition and master the demands of the modern payment solution ecosystem. *Embed link to service page* 

Ready to build a future-proof RTP Implementation strategy that ensures IPR Compliance and secures your position in the mobile payments market? Contact Samlink to begin your modernization roadmap today.