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April 10, 2019

JP Morgan Launches “SEPA” Instant Payments in Europe

Bank first to offer instant payments in USD, GBP and EUR

By CBR Staff Writer

Investment bank J.P. Morgan has become the latest financial services institution to join Europe’s SEPA (Single Europe Payments Area) instant payments scheme; a completely new payments rail on a pan-European level first launched in 2017.

The move makes J.P. Morgan the first bank to offer instant payment capabilities in USD, GBP and EUR. Users can transfer up to €15,000, which will arrive in a beneficiary’s account within a maximum of 10 seconds; typically much faster.

(A March 2019 update from the European Payments Council, an industry group, shows that just seven British payment providers are part of the SEPA Instant scheme, versus 1299 in Germany, the biggest adopter of the approach.)

See also: New Payments Architecture: “The Mother of All Contracts”

Describing the move as “another step towards offering real-time payments around the globe”, Sungmahn Seo, the bank’s head of EMEA Payments & FX, said: “SEPA Instant will allow our clients the ability to make/receive a payment within seconds, for credit transfers in EUR up to 15,000, with 24/7 availability and a Pan-European reach.”

He added: “Furthermore, we offer a single global API for our clients to connect with us for multiple real-time payment systems.”

Some 2057 payment service providers have now joined SEPA Instant.

SEPA instant payments

A European Payments Council illustration of how SEPA instant payments work

SEPA Instant Payments: Involves End to Batch-Oriented Processing

A six-month progress update the EPC promoted with DZ BANK captures some of the challenges faced in implementing it.

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“[DZ Bank has]had to cast aside and then completely redefine many of the basic principles of mass payments. For example, instant payments processing means bidding farewell to batch-oriented processing. In the old system, orders were collected as bulk payment transactions and cyclically processed”, the bank’s Martin Holtmann, head of product management, payment and accounts noted.

“The 24/7/365 availability also presents banks with major technological challenges because not only must the core instant payments application be available around the clock, but other systems involved in the overall process, such as the bank system, must also meet the new requirements.”

“One example in this context is the order handling process that has to comply with the throughput, availability and stability requirements for instant payments processing. Another is the fully automatic embargo/sanction processing system, including fraud detection, that also has to take place in a fraction of a second to meet the time requirements for overall processing.”

J.P. Morgan Sees “Exponential” Growth 

“Since we launched Real-time Payments in the US about a year ago, we are approaching one million transactions per month,” Art Brieske, Head of Faster Payments for J.P. Morgan Treasury Services said, adding: “As we create new opportunities and efficiencies for our clients via SEPA Instant and other real-time payment schemes we expect the take-up for real- time payments will grow exponentially.”

Critically for those on the IT side,  SEPA Instant provides a single set of rules, practices
and standards, but does not set requirements for the technology platforms and networks that support them, as its rule book [pdf] notes: “Infrastructure is an area where market forces operate based on the decisions of Participants.”

Read this: Goldman Sachs Leads Funding in GCHQ Veteran’s Cybersecurity Startup


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