Sepa Instant explainer – how it works, pros and cons

This explainer takes you through how the SEPA Instant Credit Transfer scheme works, and it's main benefits and downsides for PSPs, fintechs and merchants.

SEPA Instant: how it works, advantages, and disadvantages

Digital payments are here to stay. Consumers, merchants, and financial institutions all expect to be able to make payments, settle bills, and transfer money at the drop of a hat.

And with the SEPA Instant Credit Transfer (also known as SCT Inst) scheme, sending and receiving money within the European payments areas is as fast as reaching into your pocket for cash. But what exactly is SEPA Instant?

In this explainer, we take a look at how a SEPA Instant Credit Transfer works, what advantages this instant payment format offers, and what the drawbacks are.

What is the SEPA Instant Credit Transfer and how does it work?

And, simply put, the SEPA Instant Credit Transfer (SCT Inst) is a pan-European scheme that offers instant cross-border bank transfers in Euro in the SEPA (Single Euro Payments Area) region.

This means that you can send and receive Euro transfers between banks that have signed up for the scheme within a few seconds. Moreover, the money can be sent at any time, including weekends and holidays! These instant payments have a limit of 100,000 EUR per transaction, and the fees are as low as in regular SEPA transfers, which means that the incoming transactions are free.

How are these instant payments made possible?

This ultra-fast interbank settlement is possible because SEPA Instant uses direct routing from the sender’s banking institution to the recipient’s. It doesn’t involve any intermediaries or correspondent banks. As a result, the transaction speed is independent of the account provider’s underlying payment clearing and settlement arrangements.

In effect, this instant payments scheme is similar to data messaging systems that enable instant financial communications to be sent between debtors, creditors and financial institutions in a common language. The result is payments in seconds between accounts.

How does SEPA Instant compare to standard SEPA payments?

The speed - transfers are processed in 10 seconds or less - is a major improvement on the timeline offered by standard SEPA Credit Transfers. So, why is it so much faster to use SEPA Instant Credit Transfers? It is because standard SEPA payments are processed in batches within 24 hours. But SCT Inst handles transactions differently - at a granular, transactional level. This enables nearly instant clearing and settlement.

As a result, this instant payments scheme is becoming increasingly popular. As of the first quarter of 2021, SEPA Instant Credit Transfers accounted for almost 9% of all SEPA transactions.

Estimated share of SCT INST volumes in total CT* volumes

The popularity of SCT Inst has grown rapidly, and this payment type now accounts for 8.6% of all SEPA payments.

(Source: European Payments Council)

Where is SEPA Instant available?

SEPA Instant payments have been available since November 2017, and the number of countries where it is offered by at least one PSP has steadily increased. The payment scheme aims to progressively reach the 36 countries and territories in the Single Euro Payments Area. Here's a breakdown of the state of play present, according to data from the European Payments Council.

  • At present, more than 2,300 payment service providers (PSPs) have joined the SEPA Instant scheme.
  • This amounts to 69% PSPs in the Euro area.
  • There is at least 1 PSP offering European payments using SEPA Instant in 23 countries.
  • A majority of payment accounts can make SEPA Instant Credit Transfers in 12 European countries. These include the 3 largest economies in the EU, Germany, France and Italy.

What are the advantages of SEPA Instant?

The rise in popularity of SEPA Instant payments can be put down to 3 key advantages that if offers to businesses and consumers:

  • Rapid transaction speed,
  • Increased liquidity for businesses,
  • Features that make it a suitable alternative to cash



The most obvious advantage of the SEPA Instant scheme is the payment speed. With 99% of transactions completed in less than five seconds, cross-border European payments have never been faster or more efficient.

24/7 availability provides further convenience as payments can be made outside regular business hours on all year calendar days.

Increased liquidity for business

With SEPA Instant, businesses benefit from increased liquidity. The 24/7 availability of funds can help businesses improve their cash-flow management and reduce their need for external financing.

The immediacy of instant payments allows companies to pay suppliers on the date of delivery. At the same time, they can offer flexibility to their clients through payments on delivery or online.

In this way, businesses can reduce delays in payments and better identify outstanding debt. With a 100,000 EUR limit per transaction, SCT Inst provides businesses with a lower-cost method of moving large volumes quickly.

Increased liquidity for business

The possibility to execute a transaction instantly offers great value to all parties in the value chain.

Consumers benefit from the increased speed of moving money, especially in instances when payment speed is important. In fact, the SEPA Instant transfer mechanism is the closest alternative to cash payments, as the process is almost immediate and doesn’t depend on the banking holidays, weekends, or other non-operational timeframes.
This makes it great for sharing joint bills, or for emergency cross-border transfers for immediate use.

Advantages of SEPA Instant Credit Transfer for Banks and PSPs

For banks, fintechs and PSPs, the transition to SEPA Instant Credit Transfer payments offers an opportunity to attract more customers.

Now they can offer the transaction speed consumers expect and need. For example, SumUp, a global provider of card acceptance solutions, realised that the merchants who used its services wanted faster ways to receive payments. As Dimitri Gugunava, VP Banking and Acquiring at SumUp, explains:


Essentially, we depend on intermediary banking services providers to be able to move the money from the issuers through acquirers to our accounts, and finally to the merchants’ accounts. This process used to take several days, especially if the card payment was made before a weekend or a holiday.

Dimitri Gugunava, VP Banking and Acquiring at SumUp

Gaining access to SEPA, and being able to offer SEPA Instant Credit Transfers, enabled SumUp to solve this problem for its customers, improving loyalty and market share.

There is also the opportunity to design new products tailored to the fast moving markets of today. As instant payments using SEPA Instant Credit Transfers become more widespread, the opportunities for innovation will only grow.

Finally, SCT Inst can also give you a way to stand out from your competition. As Sarah Dees, CEO of fintech MyEUPay explains, including SEPA Instant Credit Transfers in your offering can help you create more impactful marketing messages and catch a wider range of customers.


Having SEPA Instant has been very useful from a marketing perspective. That speed in being able to receive transactions has been very well received by our clients.

Sarah Dees, CEO of My EU Pay

What are the drawbacks of SEPA Instant Credit Transfers?

There are 3 potential downsides to this scheme: coverage, cost (in terms of architecture and deployment for banks and PSPs) and added complexity in terms of KYC/AML.


While the SEPA Instant Credit Transfer scheme is becoming increasingly popular, not all European banks support it yet. SCT Inst coverage is quite inconsistent across Europe - some countries, such as Germany and Spain, have a high percentage of PSPs participating in the scheme. On the other hand, significant economies like Czechia and Greece do not have a single bank or PSP signed up to the scheme at present.

This can be explained by the fact that SCT Inst is an optional scheme - European PSPs operating within SEPA are not obliged to adhere to it. As SCT Inst is not mandatory, providers need to prioritise it. This can be tough when there are many mandatory regulatory changes that need to be considered.

The number of scheme participants has increased dramatically since its inception, but progress has slowed in recent months. Nevertheless, demand for instant payments is only going to increase. So it's more a question of when, rather than if, coverage will increase.

Cost of deployment

Another factor to consider is the cost of implementation. According to Level Research’s 2019 Real-Time Payments Report, deployment cost is the biggest drawback for banks and PSPs. It's the number one reason why they are hesitant to adopt real-time instant payments schemes such as SCT Inst.

That's because developing the infrastructure to handle instant payments is, in general, expensive. A lot of payment platforms have evolved over many years in a batch payment environment - this means SEPA Instant implementation adds substantial cost and deployment effort to banks.

Accessing SEPA Instant Credit Transfers via an API is one solution that can keep costs down, and significantly cut the amount of time needed for development.

Complexity in AML and KYC

A further question accompanying instant payments is fraud prevention. Clearly, as SEPA Instant payments are offered by over 2,300 PSPs in Europe, this method of payment is secure and compliant.

Nevertheless, it's worth bearing in mind the fact that, as the speed of execution decreases, so does the time dedicated to anti-money-laundering (AML) analysis. Because instant payments are transmitted and settled within seconds, there is no bringing that payment back once it has been sent.

The instant nature of SCT Inst certainly heightens the need to invest in a better fraud prevention process. In order to ensure a secure payment environment for both customers and financial institutions, many PSPs have started to engage in collective fraud combatting initiatives, both at national and pan-European levels. They are also strengthening their real-time fraud prevention and detection capabilities (especially using AI).

There are an increasing number of third-party providers offering real-time payment fraud detection software that enables the necessary AML checks and sanctions screening processes to be carried out within seconds.

SEPA Instant Credit Transfer: the takeaways

Joining this credit transfer scheme is an investment. Banks and PSPs need to ensure they have the infrastructure and AML procedures in place. And the fact that this instant payment scheme is not (yet) offered in every European country might make some institutions think twice.

But ultimately, the world is moving steadily and consistently towards instant payment being the standard, rather than a nice add-on. More than 50% of the banks and PSPs in Europe have already moved to the SEPA Instant Credit Transfer scheme. This means that implementation is easier than ever - access is available via APIs with no need to build your own architecture. And there is now a wealth of AML providers available to assist with compliance.

And the benefits to merchants and end users are clear to see - faster payments ensure better liquidity and improved customer experience. As a fintech, bank or PSP, being able to offer SEPA Instant Credit Transfers to your clients can give you a significant edge. For a real example of how, take a look at this case study of how SumUp added SEPA Instant to its product offering.

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