SEPA payment changes - Instant Payments Regulation

The next stage of the European Instant Payments Regulation (IPR) comes into force for Eurozone PSPs on the 9th Oct. Modulr is introducing updates to the way SEPA payments are made as a PSP operating in the Eurozone, the changes will be consistent across the platform for customers & partners contracted with our EU or UK entity.

The IPR changes are intended to drive the adoption of SEPA Instant Credit Transfers across Europe, by requiring all PSPs to be able to send/receive SEPA Instant at the same cost as SEPA Credit Transfers (SCT) - starting with Eurozone. The IPR also introduces an account name-checking service Verification of Payee (VoP) to ensure payers receive reassurance they are paying the intended beneficiary.

Modulr has supported the intent of the IPR by offering SEPA Instant as the preferred payment scheme since inception, and does not differentiate in charging between schemes, however the IPR also allows Modulr to enable certain improvements to its flows

Harmonisation of SEPA Credit Transfer & SEPA Instant Transfer item limits

A key SEPA Instant scheme change is the removal of the central €100,000 per item limit. From 9th October, Modulr will introduce a limit of €10m per SEPA payment (via SEPA Credit Transfer or SEPA Instant). This will mean that more payments that previously were forced to go as SCT will now be automatically sent by the preferred SEPA Instant mechanism 24/7.

No change is necessary to enable this; as the Modulr Payment API will automatically determine the best route as it does today - any payment that cannot be sent as a SEPA Instant payment (e.g. to a SEPA PSP outside the Eurozone that cannot yet accept Instant) will still be sent as a SEPA Credit Transfer.

SEPA Instant failure updates

In a case where a payment made to a SEPA Instant reachable PSP fails, this will now be reported immediately with a final status of ER_EXTSYS instead of previously being converted to a SEPA Credit Transfer. This means you receive a near immediate status on every payment that is SEPA Instant reachable.

SEPA Instant failures can be transitory (e.g. the receiving PSP has a system outage or maintenance period) and you have the option to retry by resubmitting the payment request.

This gives you control, and removes possibility of undesirable outcomes from conversion to SCT, such as a the SCT the payment being unable to be submitted the next working day if after SCT cut-offs.

Specifying when payments should be sent as SEPA Credit Transfer

There may be cases (such as after a SEPA Instant failure) where you do not want to resubmit as the same type of payment and want to force a SEPA Credit Transfer to a SEPA Instant reachable participant.

The single and multiple Payment entry API endpoints will be extended with an additional field permittedScheme that accepts a SEPA_CREDIT identifier only (currently). When this is provided, Modulr will execute the payment as a SEPA Credit Transfer explicitly - even if the beneficiary PSP could have accepted a Instant Payment. In the unlikely case the beneficiary PSP is not reachable by SEPA Credit Transfer, the payment will be rejected at validation.

An example payment request explicitly requiring execution as SEPA Credit Transfer

{
    "destination": {
    "type": "IBAN",
    "name": "A.N Beneficiary",
    "id": "NL57RABO9712139840"
  },
  "reference": "Example reference",
  "permittedScheme": "SEPA_CREDIT",
}