Instant payment was also introduced in Switzerland, with which transfers are available on the recipient's account within 10 seconds. Hungary has had an instant payment system since 2020, with transfers settled within 5 seconds.
In Switzerland, around 60 financial institutions participating in the system have already made the new service available, covering more than 95% of Swiss retail and retail payments. By the end of the year, all financial institutions must offer the instant payment system.
The technical framework was launched in November 2023, allowing transactions between accounts to be received and processed instantly. The introduction of instant payments was an important milestone that laid the foundation for further innovation in the payments sector.
Why is the introduction of instant transfers an important step forward?
It provides flexibility and convenience from the consumer and public perspective. With the introduction of instant transfers, we can send money quickly and easily to individuals or merchants. Moreover, it is more secure due to the modernity of instant payment systems.
From a commercial perspective, it has a greater role. Thanks to the instant settlement of transfers, the value of transactions becomes immediately available to companies, so their cash flow will be more predictable. By the way, it can also be used to improve the quality of their services, for example by providing refunds to customers quickly.
This also applies to foundations and NGOs, which can manage the amounts received from donations more quickly and predictably.
Hungary: Four years of immediate payment
Hungary has been using the instant payment system since 2020. AFR allows electronic transfers of less than HUF 20 million to be completed in just 5 seconds. With the introduction of the system, customers of local banks can make and receive transfers around the clock, even on weekends and public holidays.
Instant payments are set to expand with the introduction of AFR 2.0 on September 1, 2024, with the introduction of QR code, contactless (NFC) and so-called deep link AFR-based payments.
It was already introduced in the US last year, and is expected to be launched in the EU this year.
In 2019, the US central bank, the Federal Reserve, announced the introduction of FedNow, the US instant payment system. Finally, 4 years later, in July 2023, the system was activated, which can be used to transfer funds worth up to $500,000 in seconds.
The Council of the European Union recently adopted a regulation making it mandatory. Instant payments for transactions in euros In the EU and EEA countries. According to the new regulations, money transfers must be completed in ten seconds, every day of the week, from 0 to 24 hours, and even between different EU member states.
The introduction of the system will be gradual. It will become available sooner in the euro area, while in non-euro area countries after a longer transition period.
(source: Finestra, Council of the European Union, Manb)
(Cover image: Depositphotos)
