Introduction 

The European Union is entering a new era in payments, thanks to the adoption of the Instant Payments Regulation (IPR) in March 2024. This regulation aims to drive the widespread use of instant payments across the EU, focusing specifically on euro-denominated SEPA credit transfers. While it opens the door to faster, more efficient transactions, it also brings a host of new requirements for financial institutions, particularly around compliance, technology, and operations.

Key Deadlines for IPR Adoption 

The IPR rollout follows a phased approach to ensure consistency across EU member states:

  • January 9, 2025: All EU banks must be ready to receive SEPA Instant Payments.
  • October 9, 2025: Banks and PSPs must also support sending instant payments and verifying the payee in real time.
  • 2027–2028: Non-Eurozone banks will need to comply with the regulation.

Implementation Hurdles 

Even with the initial January 2025 milestone, banks face considerable challenges in getting fully compliant:

  • Tight Deadlines: The short timeline has put pressure on banks to upgrade systems and processes quickly, particularly affecting smaller PSPs with fewer resources.
  • Infrastructure Demands: Real-time payments require robust, scalable systems that can handle high volumes and work seamlessly with existing tech stacks.
  • Real-Time Screening: With transactions needing to be processed in under 10 seconds, traditional batch-based fraud and sanctions checks no longer cut it. Banks must now screen transactions in real time—a significant shift.
  • Cost Pressures: IPR mandates that instant payments can’t cost more than standard ones, leaving banks to absorb the expense of 24/7 operations and tech upgrades.
  • Verification of Payee (VoP): From October 9, 2025, banks must confirm that the payee’s name matches the IBAN. This adds another layer of complexity to implementation efforts.

The Complexity of Real-Time Sanctions Screening 

Sanctions screening—matching payment details against regulatory watchlists—becomes significantly more complicated in a real-time setting. Instant payments don’t allow for delays, so screening must happen within 10 seconds. 

Key challenges include:

  • Proactive Screening: Institutions must screen customers before a transaction, not just during it, to avoid bottlenecks.
  • Strict Regulations: The EU’s KYC and sanctions compliance standards are among the world’s toughest, complicating international transactions.
  • Equivalence Requirements: Payments from non-EU countries, especially those on FATF grey lists, are subject to stricter scrutiny.
  • Daily Screening & Immediacy:
    • Delta Screening requires daily updates to watchlist checks.
    • Immediacy expectations mean immediate action on updates—though the exact timing is vague.
  • System Performance: Screening systems need to process large volumes within milliseconds.
  • Data Quality: Errors like misspelled names or missing data often trigger false positives.
  • Matching Complexity: Algorithms must handle varied naming conventions, phonetics, and transliterations.
  • Legal Risks: Banks face penalties if they miss alerts—but also legal exposure if they wrongly freeze or reject payments.

Emerging VoP Challenges in the Real-Time Payment Ecosystem

As banks advance toward compliance with IPR, another critical component—Verification of Payee (VoP) required by October 9, 2025, has emerged as a key implementation hurdle. VoP uses the IBAN (International Bank Account Number) to look up the beneficiary's account details and verify the name associated with that specific IBAN to provide the payer with a confirmation (or warning) before they finalize the payment - helping prevent fraud and misdirected payments in real-time environments.
While it boosts security, VoP introduces new hurdles:

  • Racing Against Time: Banks have limited time to implement VoP. Many will rely on Routing and Verification Mechanism (RVM) providers certified by the European Payments Council.
  • Multi-Channel Compatibility: VoP must work across all platforms—apps, online portals, and even branches—some of which may lack the routing data needed for verification.
  • User Expectations: Consumers expect immediate confirmation. Any delay risks undermining user experience.
  • Customer Education: Nicknames or aliases can lead to mismatches, causing confusion. Banks must educate customers on what "match," "close match," or "no match" means.

To handle VoP effectively, banks must consider more than just tech integration—they need a strategy that balances compliance, customer trust, and operational efficiency.

Looking Ahead: Real-Time Compliance

Staying competitive in the EU's evolving payments space means adapting to a real-time compliance model. Financial institutions should focus on:

  • Building real-time compliance systems.
  • Strengthening risk management.
  • Seamlessly integrating advanced screening tools.

With instant payments, institutions need tools that can detect and respond to threats in real time—not after the fact.

How RS Software can help with IPR Readiness

With decades of experience in payments innovation, RS Software supports banks and PSPs in managing the transition to IPR compliance—especially with challenges like real-time sanctions screening and VoP implementation.

RS IntelliEdge™: Intelligent Fraud, Risk, and Compliance Engine

RS IntelliEdge™ is a state-of-the-art, real-time fraud and risk management platform engineered for today’s compliance-intensive payment environment. At its core, the platform is built for speed and precision—capable of sub-100ms latency and designed for in-stream data processing, enabling real-time transaction screening without compromising user experience. By leveraging adaptive machine learning and intelligent rules engines, RS IntelliEdge™ significantly reduces false positives and enhances alert prioritization.

One of its most critical features is instantaneous hotlist updates, which fortify fraud detection by ensuring that watchlists reflect the most current risk intelligence. The system supports real-time integration of global regulatory databases including OFAC, PEP, and EU-specific sanctions lists. These capabilities allow banks to detect fraud patterns such as Authorised Push Payment (APP) fraud in real time, protecting both institutions and customers. RS IntelliEdge™ also incorporates federated learning to enable secure, privacy-preserving collaboration across institutions—turning compliance from a siloed obligation into a shared defence mechanism.

RS DigitalEdge™: Composable Payments Modernization Platform

RS DigitalEdge™ is a cloud-ready, API-first platform designed to help banks and PSPs modernize their core payments architecture with speed and agility. Unlike traditional core systems, RS DigitalEdge™ enables composable architecture, making it easy to deploy services like CoP/VoP through modular APIs, enabling real-time payee verification embedded directly into the transaction journey. These services are embedded seamlessly and allow real-time name matching before transactions are executed—critical for IPR compliance.

The platform is natively aligned with ISO 20022 standards, managing complex, data-rich messages seamlessly. It provides secure, PSD2-compliant open banking connectivity, ensuring banks can collaborate with third-party providers while maintaining transaction integrity and trust. Its active-active infrastructure design delivers zero-downtime availability—essential for 24/7 operations—and integrates advanced security controls to manage fraud, cyber risks, and operational resilience. Enhanced with observability dashboards and low-code orchestration tools, RS DigitalEdge™ empowers banks to meet regulatory timelines while keeping innovation agile.

A Legacy of Global Payments Leadership

RS Software brings decades of experience in designing and operating national-level payments infrastructure. A notable example is its foundational role in India’s Unified Payments Interface (UPI), where Confirmation of Payee (CoP) is not an add-on but built into the protocol by design. This deep-rooted understanding of real-time, customer-centric, and fraud-resistant payments makes RS Software a partner of choice for European banks navigating the VoP mandate.

Our VoP solutions are informed by global best practices and real-world deployments, ensuring scalability, accuracy, and SEPA-wide interoperability.

Supporting the Shift 

The transition to real-time compliance is not just technical—it requires a significant mindset change among banks. 

RS Software helps financial institutions by:

  • Reducing the need for in-house builds for faster rollout.
  • Making integration easier with modular APIs.
  • Providing real-time visibility into compliance performance.
  • Offering tools like developer portals and test environments to speed up deployment.

Conclusion

As deadlines for the Instant Payments Regulation approach and customer expectations continue to evolve, banks and financial institutions across the EU must move quickly to ensure real-time compliance and operational readiness. Success in this landscape requires technology partners with deep domain expertise, proven platforms, and the ability to deliver at scale.

RS Software offers advanced solutions like RS IntelliEdge™ and RS DigitalEdge™ to help financial institutions meet IPR timelines, enhance sanctions screening, and implement Verification of Payee with speed and accuracy. With a strong track record in building mission-critical payment systems globally, RS Software is well-positioned to support EU banks and PSPs in navigating this transformation.

By leveraging RS Software’s platforms, financial institutions can modernize with confidence—strengthening trust, security, and performance in a real-time payments environment.