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Banking Circle helps smaller banks fast-track to comply with EU SEPA Instant mandate

With less than 8 months until 9th January 2025 deadline, Banking Circle delivers plug and play solution to help smaller financial institutions

London, 14th May 2024 – On 7th February 2024 the European Parliament mandated that instant payments (in less than 10 seconds) should be the de facto standard for consumers and businesses in the SEPA zone, with a deadline set of 9th January 2025 to deliver this service. For smaller banks with already stretched IT and development resources, less than 12 months to make significant infrastructure changes could be a step too far. Recent insight suggests that more than 40% of banks that currently do not offer instant payments believe the deadline is unrealistic.

Banks unable to meet the deadline could potentially face fines as well as lose competitive market edge. The new regulation also requires that credit transfers are affordable which means banks that have not yet implemented plans to meet the mandate will not want to incur significant development costs that could undermine their bottom-line profitability.

Helping smaller banks cost-effectively fast-track to meet the EU deadline, Banking Circle’s Agency Banking solution delivers ‘speed to market’ to EURO local clearing via SEPA Credit Transfer (SCT) and SEPA Instant Credit Transfer (SCT Inst). Accessible through Banking Circle’s SWIFT membership as a plug and play solution means the development and administrative costs and timelines usually linked to direct participation with the clearing houses (ACH) or cumbersome sponsor bank integration can be eliminated.

Banking Circle can sponsor a bank into the scheme; the communication channel to the bank from Banking Circle is via SWIFT, API or SFTP, even though payments are delivered over SEPA payment rails. To be eligible, banks will simply need to be regulated in the SEPA zone to become indirect participants. And by accessing Banking Circle’s Agency Banking solution, banks may become SEPA Instant reachable on their existing core banking systems and payment gateways adding to their customer propositions more widely.

“The key with our efficient and convenient Agency Banking solution is to give clients faster ‘go to market’ accessibility,” explained Jon Levine, Head of Institutional Banking at Banking Circle.

“Leveraging our SWIFT membership for local clearing payment messaging and settlement connections, we are providing our clients with indirect access to SEPA SCT and SEPA Instant. There’s no need to connect directly to a clearing house or hold a central bank settlement account. Banking Circle has done the ‘heavy lifting’ of connecting with the clearing houses and establishing central bank accounts, reducing costs and integration complexities. And majority-owned by EQT, one of the world’s largest private equity firms, we give smaller banks a secure financial platform from which to meet the SEPA instant deadline. Banking Circle is a Luxembourg Credit Institution with robust capital and liquidity metrics, and we have the ability to sweep customer funds our AAA credit rated institution in our capacity as fiduciary.”

Through Banking Circle’s Agency Banking solution, indirect participants can issue accounts, using their own Bank Identifier Codes (BICs) and International Bank Account Numbers (IBANs) to send and receive payments. The account/IBAN will be in the localised country format in which the bank is regulated, including their own branch code, which is obtained from their regulator.

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