Navigating the Instant Payments Regulation: EBA's Guidance for Seamless Currency Conversions

The European Banking Association (EBA) has released a comprehensive set of recommendations to help Payment Service Providers (PSPs) address the requirements of the Instant Payments Regulation for Euro-denominated instant payments involving currency conversion. This guidance aims to provide practical solutions for managing real-time transactions that operate 24/7/365, ensuring compliance with the new regulatory obligations.

Unlocking the Potential of Instant Payments Across Currencies

Addressing the Currency Conversion Challenge

The Instant Payments Regulation presents unique challenges for PSPs that handle accounts in currencies other than the euro. According to officials from the EBA Practitioners Group on Instant Payments, PSPs must now carry out currency conversions within seconds, even outside standard market hours. This requires them to provide exchange rates at any time, including when the foreign exchange markets are closed.The EBA's recommendations aim to offer guidance on managing the operational implications of these new requirements, which will apply to Eurozone PSPs starting 9 January 2025. The recommendations, developed by 18 account-servicing payment service providers (AS-PSPs) from 11 European countries, focus on how foreign exchange specialists and payment practitioners can interpret and implement the regulatory obligations affecting real-time transactions.

Fostering a Pan-European Approach to Instant Payments

The EBA's Practitioners Group on Instant Payments was created following the enactment of the Instant Payments Regulation in the second quarter of 2024. The group's primary objective is to assess the regulation's operational impact and develop recommendations based on a collaborative, pan-European approach.This latest report, titled "FX Conversion for Instant Payments in Euro: Practitioners' Understanding and Recommendations," is the first output of the EBA's Practitioners Group. The document provides practical advice for PSPs on managing currency conversion challenges and ensuring compliance with the new regulatory framework.

Empowering the Payments Industry through Collaboration

The Euro Banking Association is an organization that facilitates dialogue and exchange among payments industry professionals, with a focus on a pan-European approach to payments. By working closely with its members, the EBA aims to help the industry understand regulatory changes and support the development of market practices.With more than 160 members from across the European Union and other regions, the EBA is well-positioned to drive the evolution of the payments landscape. The organization's latest guidance on the Instant Payments Regulation is a testament to its commitment to fostering collaboration and innovation within the industry.

Navigating the Regulatory Landscape: Practical Insights for PSPs

The EBA's recommendations provide a comprehensive framework for PSPs to navigate the complexities of the Instant Payments Regulation, particularly in the context of currency conversions. By offering practical advice and a collaborative approach, the EBA is empowering the payments industry to adapt to the new regulatory requirements and deliver seamless, real-time transactions to customers across Europe.As the Instant Payments Regulation takes effect in 2025, PSPs will need to carefully consider the EBA's guidance to ensure compliance and maintain a competitive edge in the rapidly evolving payments landscape. By embracing the EBA's recommendations, PSPs can unlock the full potential of instant payments and provide their customers with a truly frictionless, cross-border payment experience.