The European Central Bank (ECB) is at the heart of an ambitious transformation in the payments sector, aiming to speed up, simplify and reduce the costs of monetary transfers within the European Union. This innovation is based on two main pillars: on the one hand, the implementation of Instant Payment regulations in the euro area, which guarantee real-time transactions, ensuring the immediate availability of funds 24 hours a day, 7 days a day. 7; on the other, the future introduction of the Digital Euro, conceived as a supplement to physical currency, in order to offer a safe, stable and direct payment method, issued directly by the ECB.
The first step, promoted by the European Central Bank, aims to spread instant bank transfers among the European public, with the aim of gradually replacing traditional bank transfers. Nonetheless, doubts emerge about the fluidity of the adoption of Instant Payments within the European Union and, more specifically, in the Italian context. This article intends to explore the reasons why, in Italy, the instant bank transfer may not be able to replace the ordinary bank transfer, highlighting how its current limited diffusion does not necessarily imply future growth. Let us proceed, therefore, in order.

WHAT ARE INSTANT PAYMENTS (OR INSTANT BANK TRANSFERS), AND WHAT ARE THE REGULATORY NEWS
Instant Payment, launched in Europe on 21 November 2017, represents a transfer method that allows the transfer of funds up to a maximum of €100,000 in less than 10 seconds between account holders in the SEPA area, ensuring 24-hour availability , 7 days a week, 365 days a year. This payment method brings with it numerous advantages, such as efficiency, speed and flexibility, benefiting both private individuals and companies. In February 2024, the European Parliament approved an update to the SEPA legislation, introducing new rules that all Payment Service Providers (PSPs) will have to comply with:

• obligation to offer instant transfers, in addition to ordinary ones;
• obligation to apply the same commissions as for ordinary bank transfers;
• obligation to verify IBANs to prevent errors and fraud, by checking data correspondence;
• implementation of massive, daily customer checks against EU sanctions lists.

This new regulation will come into force 20 days after its publication in the Official Journal of the European Union. The publication date has yet to be announced, but it is expected to be by June 2024. The intent is to increase the adoption of this payment method, which has so far been characterized by limited diffusion. The objective is to make the adoption of Instant Payment pervasive and its use economically indifferent for customers compared to ordinary bank transfers, while at the same time increasing its security.

A METHOD OF PAYMENT LITTLE USED IN ITALY
Despite the numerous advantages previously highlighted and the adoption of this payment method by most financial institutions, the use of instant bank transfers in Italy remains significantly limited. In 2022, in fact, only 5% of SEPA transfers carried out in Italy were instant, a percentage significantly lower than the European average of 14%. A further survey, conducted on a sample of European citizens in 2022 by the European Central Bank and entitled “Study on the payment attitudes of consumers in the euro area (SPACE) – 2022”, revealed that instant payments were available for 57 % of Italian respondents, a percentage higher than the 51% recorded in the entire euro area, thus suggesting greater accessibility to this tool in Italy compared to other European countries. However, a considerable barrier to large-scale adoption of this technology has been identified, primarily attributable to the cost of the service. In particular, the ECB survey showed that a significant 38% of Italian respondents say they face higher fees for instant transfers compared to traditional ones, a percentage that compares with the 20% recorded in the euro area. This consideration, which does not only concern our country, has meant that the instant bank transfer is used when strictly necessary, leaving the ordinary bank transfer the protagonist role.

THE FUTURE OF INSTANT BANK TRANSFERS IN LIGHT OF THE CHANGE IN REGULATIONS
With the entry into force of the new regulation, an increase in the use of instant transfers is expected, which emerge as potential substitutes for ordinary transfers. This trend towards cannibalization is encouraged by the leveling of costs between the two types of transfers and by the introduction of new security measures, such as name checks, which significantly increase user trust, making instant transfers perceived as a secure means. These improvements directly address concerns about fraud and transfer errors, which are critical when choosing a payment instrument.
Despite the advantages listed above, instant transfer does not appear to be on its way to becoming the go-to payment method for peer-to-peer (P2P) transactions. The main limitation to this rise lies in the presence of alternative solutions that allow transactions without any costs, thus continuing to attract a large number of users. In addition, the user experience, made less immediate by the obligation to enter the IBAN and the recipient’s name, unlike other applications where a click on an alias is sufficient, is often perceived as less fluid and intuitive than other digital payment options. This represents a further obstacle to the adoption of instant transfers for daily or small transactions between private individuals.
However, this scenario could experience a significant turning point with the advent of the Digital Euro. The introduction of a European digital currency could offer a solution that combines the security and efficiency of instant bank transfers with a simplified user experience free of additional costs, thus meeting the main needs of users.