The regulatory obligation in Europe making the reception and sending of SEPA Instant Credit Transfer (SCT Instant) mandatory is soon to become a reality for banks and fintechs. At Mambu Payments, we have extensive experience in connecting our customers to the interbank instant payment network with millions of payments taking place in production.

This blog is inspired by our experience in working around the sometimes complex existing internal CBS architecture, the challenges we observe, and how we support in complying with regulatory requirements.

We will explore how banks and fintechs can implement SCT Instant without having to overhaul their CBS architecture and systems.

SCT Instant, in a nutshell

Instant payments are electronic transactions processed in real-time, 24/7, 365 days a year. Funds are made available immediately (within 10 seconds) and irrevocably to the recipient.

SCT Instant is the first pan-European instant payment method, launched by the European Payments Council (EPC) in 2017. This initiative aims to make instant money transfers efficient and ubiquitous across the Eurozone. Failure to comply with SCT Instant will result in sanctions.

Key deadlines and requirements

The transition to mandatory SCT Instant payments will occur in several phases for EU countries, categorized by type of financial institution and whether they are in the Eurozone or not.

There are three main groups of requirements concerning instant payments: supporting SCT Instant payments, screening of entities and individuals, and Verification of Payee (VoP).

These requirements gradually become mandatory starting on 9 January 2025. While the specific sanctions for non-compliance are not yet clear, they will likely result in penalties for institutions that fail to meet these requirements.

For detailed information about SCT Instant regulatory framework, refer to our guide: The Guide to SEPA Instant Credit Transfer and Numeral’s blog on PSD3 and IBAN verification.

Is your CBS architecture real-time 24/7 365?

The shift to SCT Instant payments presents challenges, particularly for banks, PIs and EMIs with legacy core banking systems (CBS). Traditional CBS architectures were not designed for real-time 24/7 processing, and typically have some mandatory downtime for maintenance and end-of-day processing.

Key challenges for complying with SCT Instant regulations

• Real-time payment processing

Payments must be processed and funds made available to the beneficiary within 10 seconds end-to-end, from the initiating financial institution to the receipt of the approval or rejection by the payer.

• Real-time Notifications

The initiating entity needs to notify the originating party that the funds have been successfully delivered to the beneficiary within the 10-second processing window.

• Verification of Payee (VoP)

VoP will be required on all SCT payments, including SCT Instant, even if the payer is sending a payment to a pre-registered, whitelisted payee. This requires the ability to query payee information from the scheme or a third-party vendor solution to perform the verification before the customer initiates the transfer.

• Screening of entities and individuals

Although sanctions screening is not required in real-time for incoming and outgoing SCT Instant, entities will be required to screen their customers on a daily basis.

This ensures that the originating party of an SCT Instant will have been screened within the past 24 hours, limiting the likelihood of SCT Instant payments being sent by individuals on sanction lists. Sanctions screening is typically done using a fraud and compliance solution.

A daily, 365-day-a-year process will be needed to ensure that the originating party reference information is updated as soon as the sanction screening has been performed, blocking the possibility of initiating an SCT Instant payment in case of a screening match.

Mambu Payments: SCT Instant without overhauling your CBS architecture

With Mambu Payments’ modular product offering and flexible integration, it is not too late to comply with upcoming SCT Instant regulatory requirements. Mambu Payments can help banks and fintechs implement SCT Instant in a matter of weeks, not months or years, without completely overhauling their legacy CBS architecture.

We have designed an SCT Instant offering to satisfy the key requirements of complying with SCT Instant regulations for core banking CBS architectures that do not support real-time or zero downtime processing.

Mambu Payments: SCT Instant payment gateway and scheme compliance

Mambu Payments can facilitate deploying SCT Instant payments by providing a SCT Instant scheme-compliant payment gateway that can be easily implemented within your existing architecture. By routing SCT Instant through Mambu Payments, it can fully manage the complexity of real-time interactions with the scheme, allowing the existing CBS to operate efficiently without any modifications:

• Mambu Payments can orchestrate the real-time processing by interacting with the channels for incoming and outgoing SCT Instant, customer notifications, and virtual/real-time customer balance credit/debits.

• It also provides a real-time orchestration with a fraud and compliance solution for mandatory and optional fraud and compliance checks.

• Mambu Payments can queue virtual real-time customer credit/debit to send to the CBS core ledger when the system is online and available.

Comply on time

The transition to mandatory SCT Instant payments is a significant milestone for European payments and will result in sanctions for non-compliance. Mambu Payments offers an easy-to-deploy, quick time-to-market, bank-grade solution to comply with key SCT Instant deadlines and milestones without needing to overhaul your existing CBS architecture.