The concept of “banking hours” is rapidly becoming obsolete. From late nights to public holidays, payments in Europe are poised to become truly non-stop.
Banks confront the cost of SEPA Instant
By October 2025, the EU’s SEPA Instant Payments Regulation will make real-time euro transactions mandatory, bringing transformative benefits to commerce and consumers — but also exposing banks to sharp financial and operational risks.
According to new research from RedCompass Labs, 47% of European banks anticipate millions in lost interest as they prepare for the round-the-clock liquidity requirements that SEPA Instant entails.
Based on a survey of 300 senior payment executives, “Inside Europe’s race to Instant Payments“ paints a picture of a sector undergoing deep reconfiguration, not only to comply with regulation, but to remain competitive in an always-on financial landscape.
Liquidity Strains and the Limits of Infrastructure
A central challenge lies in managing liquidity outside traditional business hours.
While SEPA Instant requires payment processing 24/7/365, the European Central Bank’s TARGET2 system — the backbone of liquidity management — only operates on weekdays between 07:00 and 18:00 CET.
To bridge this gap, banks must pre-fund their accounts in the TARGET Instant Payment Settlement (TIPS) system, tying up capital that could otherwise be deployed for investment or lending.
The situation is expected to worsen with the planned removal of the €100,000 transaction cap.
Without an upper limit, payment volumes and values become far harder to predict.
“How much is enough?” asks Pratiksha Pathak, Head of Payment Services at RedCompass Labs.
“Imagine multiple high-value payments hitting your system on a Saturday night. If your TIPS account is underfunded, you can’t respond until Monday. That’s more than a compliance failure — it’s reputational damage.”
A Multi-Layered Bank Response
To prepare, banks are deploying a variety of strategies.
Nearly half (47%) are boosting their liquidity buffers. Another 46% are investing in advanced fraud and sanctions screening tools, designed to operate within SEPA’s strict 10-second processing window.
AI is increasingly seen as essential, with two-thirds of banks aiming to harness machine learning to cut false positives and improve real-time monitoring.
Risk frameworks are also being re-evaluated (44% of respondents), while 43% of institutions are negotiating bilateral agreements to share liquidity burdens across networks.
Sanctions compliance is a growing pressure point. Over 54% of banks reported a surge in payment rejections due to sanctions mismatches, driven by the speed and volume of instant transactions.
Benefits Gaining Ground Despite Growing Pains
Despite the complexities, sentiment around SEPA Instant is turning positive.
Support among banks has climbed significantly, with 82% now believing the benefits outweigh the costs, compared to just 71% a year ago.
Demand for instant payments is increasing sharply: 56% of banks report rising interest from corporates, while 27% see more uptake from retail customers.
Beyond the EU, momentum is building as well.
With the SEPA Instant mandate extending to non-EU countries by 2027, over half of European banks (51%) say they are very likely to prioritise early compliance.
SEPA Instant is not merely a regulatory hurdle — it is the foundation of a real-time financial system.
As Pathak notes, the move to 24/7 banking demands “strategic clarity, liquidity precision, and a mindset shift.”
Banks that fail to adapt risk more than penalties: they face the erosion of customer trust in a world where financial speed is no longer a luxury, but an expectation.
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