Instant payment is gradually becoming the new normal in Europe. In Luxembourg, a strategic financial center in the euro zone, financial institutions will soon be able to provide instant payment to their customers. But what are instant payments? What are the advantages? The ABBL answers your most frequently asked questions as consumers.
Instant payment at a glance
Instant payments are frictionless, transparent and secure electronic payment solutions that process payments in less than 10 seconds, 24 hours a day, 365 days a year, and where the funds are made available immediately to the recipient. Here are the key characteristics of instant payments in Luxembourg:
- European Reachability: Consumers and businesses can make an instant transfer in EUR from and to a reachable account in Luxembourg and abroad (in the Single Euro Payments Area). In 2021, an important number of consumers and business accounts in Luxembourg will be reachable for instant payments.
- 24 × 7 × 365, 10 SECONDS: Instant payments run 24 × 7 × 365, and the funds are available with the beneficiary within 10 seconds.
- Mobile and online banking: Instant payments are/will be made available via mobile and online banking channels.
- Frictionless and secure: Instant payments are/will be developed to ensure frictionless, transparent and secure payments.
Frequently Asked Questions
1. What is an instant payment?
An instant payment is a credit transfer in EUR that is processed immediately, 24 hours a day, 7 days a week. With the instant payment, the amount transferred is available on the beneficiary’s account in seconds.
2. Why should I make an instant payment?
Instant payments are useful in all situations where it is required by the payer and/or the payee that the funds be credited immediately to the payee’s account.
- Sending and receiving money from family and friends seamlessly, immediately and securely
- Paying a lost bill just in time to avoid late payment interest
- Paying a bill upon delivery instead of paying it in advance or afterwards which is the current practice. At the exact moment when the delivery takes place, the instant payment can be made. The invoice amount is credited to the supplier’s bank account immediately, including during evenings and weekends.
Possible use cases
- Peer-to-peer payments, for example to split a bill in a restaurant
- Payments for sales between private individuals (for instance used cars)
- Urgent pay-out of compensation (government welfare, insurance claims) to the customer
- Payment for delivery of service from freelancers, self-employed, day workers at end-of-day or at the moment of completing the project
- Immediate reimbursement by a merchant of a returned good bought by a consumer
The list of benefits and use cases above is non-exhaustive. Contact your bank to learn more about the instant payment benefits and use cases, and the services they offer.
3. Can I make an instant payment at any time?
Yes, an instant payment is processed at any time: 24/7, 365 days a year. It is therefore also processed at night, and during public holidays and weekends. Of course, the beneficiary account must be reachable for instant payments.
4. Are all payments instant payments?
Not every payment is instant. The traditional (non instant) credit transfer will also continue to exist.
5. Can I also make instant payments abroad?
Yes, instant payments can be made to any bank account in Luxembourg or in another country of the Single Euro Payments Area, provided the account accepts instant payments.
6. Do you have a choice in selecting an instant payment or a payment based on the current standard?
Each bank will determine if you have the possibility to choose between an instant payment or a traditional (not instant) transfer, or if your payment will be automatically processed as an instant payment whenever possible.
7. How long does it take for an instant payment to reach my beneficiary’s account?
If you instruct an instant payment, for example to pay an invoice, the money will be available on your beneficiary’s account within 10 seconds.
8. Can I pay any amount using an instant payment?
You can pay any amount in EUR using an instant payment as long as it does not exceed the maximum amount of 100,000 euros currently set by the European Payments Council.
However, your bank can set a limit itself, as it can, for example, also do for the daily limits in the mobile banking app. Your bank can also set a limit higher than 100,000 euros, but the beneficiary’s bank also has to accept the amount if it is higher than the maximum amount set by the EPC.
9. Can I also receive instant payments?
Yes, if your bank is participating in the “instant payment” system and the payer sends an instant payment, it will be credited to your account.
10. Are payments between accounts within the same bank also instant?
The rapidity of such in-house transactions is determined by the bank’s policy
11. Once initiated, can an instant payment still be recalled?
No, as with a traditional (not instant) credit transfer, the initiation of your payment transaction is irrevocable. Your bank will do everything possible to recall your money, but cannot guarantee that it will succeed.
12. Will the payer get an instant confirmation if the beneficiary has received the funds?
The payer will be informed immediately if a payment is successful or not. For an unsuccessful payment, there can be various reasons. For instance, the payer could have insufficient funds or the account of the beneficiary could be closed or not reachable for instant payments.
How the payer is notified might differ per bank. Banks inform their customers on this topic.
13. Are instant payments safe?
Yes, banks do everything to protect their customers against possible fraud. Instant payments are therefore as secure as traditional electronic payments. The customer must, of course, reinforce his security by never communicating his internet or mobile banking credentials by e-mail, SMS, telephone or on social networks, and by no other means of communication either.
Also, safety and reliability of payments meet all the high requirements by the supervisors of the Payment Service Providers.
14. What will be the costs of instant payments?
Each bank will determine whether, and if so, what fee(s) they intend to charge for instant payments.
Specific FAQ for Businesses
15. What are the advantages of instant payments for my organisation?
Instant payments provide many advantages. Your organisation can benefit from:
- Improved cash flow
- Optimisation of cash management
- Send and receive funds outside business hours
- Immediate delivery and receipt of time-critical payments
- Improved supply chain
- Opportunities for innovation
- Improved control and oversight of financial cash management
16. When will instant payments be credited?
For payments processed as instant payments, there will no longer be a difference between a working and a non-working day. The amount paid is credited directly and is instantly available for the beneficiary.
17. Is there any additional information available?
Business clients can contact their bank for further questions related to the use of instant payments in their business activity.
18. Does the introduction of instant payments have an impact on the reporting I receive from my bank?
The reporting of the banks might change. Banks will inform their clients accordingly.
19. Do I have to change my administration as a consequence of the introduction of instant payments?
Instant payments will be processed on working and non-working days. This might require some adjustments for your administration, systems or terms of delivery.
Instant payments offer new opportunities for online and real-time services. To benefit from these new possibilities, a redesign of your business processes might be necessary.
As a company, you should take into account that your customers know that their instant payment is instantly credited to your company. This might impact the way you arrange your customer service.