When you transfer money today, you expect it to move instantly. But it wasn’t always that way. In fact, Europe’s journey to instant payments has taken nearly two decades, shaped by regulation, technology, and customer demand. The Instant Payments Directive, now coming into force, is the latest chapter in that story. To understand why it matters, you need to know how we got here.
Back in 2007, the EU introduced the first Payment Services Directive (PSD1). At the time, payments across Europe were fragmented. A transfer from Germany to Italy didn’t look or feel the same as one from France to Spain. Different rules, different timelines, and plenty of friction. PSD1 was the EU’s way of saying: let’s harmonize payments so Europe can act like one market.
This set the stage for the Single Euro Payments Area (SEPA). By 2012, SEPA credit transfers became the norm. Now a transfer from Lisbon to Warsaw could, in theory, be processed just like one within Paris. It was a big step forward—but payments were still slow. It could take up to three days for money to arrive.
By 2017, expectations had shifted. People were used to instant messaging, streaming, and real-time everything. Payments were falling behind. That year, the European Payments Council launched SEPA Instant Credit Transfers (SCT Inst). For the first time, money could move across borders in less than 10 seconds.
But there was a catch. SCT Inst was optional. Some banks adopted it, others didn’t. By 2020, only about half of European banks supported instant payments. In some countries, it was widely available; in others, almost non-existent. The EU had laid the rails, but trains weren’t running everywhere.
As technology advanced, so did fraud. A new wave of scams emerged, known as authorized push payment (APP) fraud. Victims were tricked into sending money to fraudsters, believing they were paying a legitimate supplier or colleague. Once the money was sent, it was gone—there was no “undo” button.
Consumers and businesses began to worry. Instant payments were fast, but were they safe? Regulators realized that without proper safeguards, trust in the system could collapse before it even took off.
Around the same time, PSD2 (2018) was introduced. It pushed banks to open up through APIs and made strong customer authentication mandatory. The goal was clear: make payments more secure and more competitive. But even with PSD2, adoption of instant payments lagged.
The European Commission saw the problem: Europe couldn’t afford a two-speed payments market. If some banks offered instant payments and others didn’t, customers would be left behind and fraud risks would grow.
By 2022, the Commission had had enough. It proposed the Instant Payments Regulation (IPR) to make instant payments mandatory across the euro area. No more optional participation. Every bank and PSP holding euro accounts would need to be able to send and receive instant transfers—24/7, year-round.
But speed wasn’t enough. The regulation also included a requirement for Verification of Payee (VoP). This meant banks must check whether the beneficiary’s name matches the IBAN before processing a transfer. If there’s a mismatch, the sender gets a warning. It’s a simple step, but it helps stop fraud and catch errors before money leaves the account.
By late 2025, all EU banks and PSPs must comply. Instant payments will no longer be a premium service—they’ll be the standard.
For companies, this evolution changes the game. Payments won’t just be faster; they’ll demand tighter controls. Payroll, supplier payments, tax settlements—everything will move in real time. That means treasury teams must have accurate data, strong processes, and integrated fraud-prevention measures.
Here’s the risk: many corporates rely on ERP master data that isn’t always correct. Old supplier records, outdated employee bank details, and manual entry errors can all creep in. In the world of instant, irreversible payments, these mistakes are costly. That’s why VoP is so important—it acts as a safety net, catching errors and potential fraud before the money is gone.
The journey from PSD1 to today shows a consistent pattern: the EU is building a payments ecosystem that is faster, safer, and more integrated. Each step—SEPA, SCT Inst, PSD2—was laying the groundwork. Now, with the Instant Payments Directive, the EU is pulling all those threads together.
For businesses, the message is clear: instant payments are coming, and VoP is the trust layer that makes them sustainable. This isn’t just compliance. It’s about ensuring your financial operations keep pace with a real-time world without exposing you to unnecessary risk.
The story of instant payments in Europe is one of steady evolution. From fragmented national systems to SEPA, from slow transfers to real-time settlement, from open banking to fraud prevention—each chapter built toward this moment.
The Instant Payments Directive is not the beginning of the story, but it may be the most important chapter yet. It makes instant payments universal, and with Verification of Payee, it makes them safe. For corporates, this means preparing systems and processes now to thrive in a world where money moves in seconds—and mistakes or frauds cannot be undone.
At Cobase, we believe VoP should not be treated as a burden but as an enabler of trust and efficiency. That’s why we’ve built solutions that embed VoP across all key points of the payment lifecycle:
Master data checks – Validate supplier and employee records from your ERP and other systems via Cobase, reducing errors before payments are created.
Bulk payments – Run VoP checks across batches, payroll and supplier files, ensuring thousands of lines are validated before execution in the Cobase portal.
Single payments – Apply real-time checks to all SEPA payments directly in the Cobase platform.
Address book validation – Keep you address book clean, flagging outdated or incorrect entries before they cause failures.
By covering all these areas, Cobase ensures corporates stay compliant, protected, and efficient—without relying on shortcuts or hoping for regulatory grace periods.
1. What is the Instant Payments Directive?
The Instant Payments Directive (also called the Instant Payments Regulation) is new EU legislation that makes instant payments mandatory across the euro area. By late 2025, all banks and payment service providers holding euro accounts must be able to send and receive instant transfers 24/7.
2. Why were instant payments not widely available before?
Although SEPA Instant Credit Transfers (SCT Inst) were introduced in 2017, participation was optional. Some banks adopted the scheme quickly, but many did not. As a result, instant payments were common in some countries but almost unavailable in others.
3. How does Verification of Payee (VoP) work?
Verification of Payee checks whether the name of the beneficiary matches the IBAN before a transfer is processed. If there’s a mismatch, the sender is warned. This helps reduce fraud and prevents costly errors before the payment leaves the account.
4. What risks do corporates face with instant payments?
Instant transfers are irreversible. Errors in supplier details, outdated employee data, or fraud attempts can cause money to be lost in seconds. Without accurate master data and fraud-prevention controls, corporates are more exposed to risk than with traditional, slower payments.
5. How should businesses prepare for instant payments?
Corporates need to ensure their payment processes, ERP data, and fraud controls are ready for a real-time environment. This means cleaning up master data, implementing strong verification measures, and adopting technology that supports instant and secure payment flows.