Swift research finds European SMEs expect to be more competitive and save money as a result of instant payments regulation

Brussels, 18 June 2024 - Swift today published the findings of research that shows Small and Medium Enterprises (SMEs) in the European Union feel positive about the EU's Instant Payments Regulation, with many expecting it to save them money, improve their cashflow, and increase their competitiveness.

Swift asked more than 2,000 decision makers at SMEs in France, Germany, Italy and Spain[i], who already transact cross-border within the EU, for their views on the regulation, which came into force in April. Almost nine in ten expect to be impacted by the change, while 44% of respondents say the regulation will save their business money, and 27% think it will help improve their cashflow. One in five expect to be more competitive.

83% of respondents say upfront beneficiary checks are important to them. The regulation mandates Verification of Payee (VoP) for cross-border payments within the Single European Payment Area (SEPA) by October 2025. Many countries use VoP at a domestic level, but interoperability between these schemes is critical to its success on an international scale.

Swift is working to make it as simple as possible for financial institutions to comply with the regulation, by facilitating interoperability of VoP schemes through its Payment Pre-validation solution. This will ensure the secure transmission of standardised financial data - which is critical to the success of VoP as a friction-removing tool - and pave the way for its widespread use in cross-border payments, while enabling financial institutions to comply with the regulation at pace using their existing Swift connectivity.

CBI and SurePay are two VoP providers that have already expanded their reach across Europe and beyond through collaboration with Swift.

Marianne Demarchi, Chief Executive, EMEA, at Swift, said: "The European regulation has the potential to be a landmark development for the cross-border payments industry, but financial institutions are under pressure to comply with the Verification of Payee element by the October 2025 deadline. Swift is ideally-placed at the heart of the industry to facilitate interoperability of VoP schemes, simplifying the compliance process for our community and giving users of cross-border payments peace of mind when sending money not just across borders within Europe, but also beyond."

One survey respondent said that the regulation would allow them to "gain time and be more efficient", because their suppliers often wait to receive funds before shipping goods. Another said the regulation was "a great incentive to work with suppliers from abroad" as "it will make it much easier to manage payments and reduce expenses", while a third respondent said that if invoices aren't dealt with immediately upon arrival, "it can quickly lead to late payments."

Currently, instant credit transfers across Europe account for less than 13% of the total.[ii] The regulation is the latest initiative focused on improving the European cross-border payments ecosystem, following on from the introduction in November of the European Payments Council's One-Leg-Out Instant Credit Transfer scheme (OCT Inst), for which Swift connects domestic instant payment systems within and outside of Europe, providing full transparency and end-to-end tracking.

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About Swift

Swift is a global member owned cooperative and the world's leading provider of secure financial messaging services. We provide our community with a platform for messaging and standards for communicating, and we offer products and services to facilitate access and integration, identification, analysis and regulatory compliance.

Our messaging platform, products and services connect more than 11,500 banking and securities organisations, market infrastructures and corporate customers in more than 200 countries and territories. While Swift does not hold funds or manage accounts on behalf of customers, we enable our global community of users to communicate securely, exchanging standardised financial messages in a reliable way, thereby supporting global and local financial flows, as well as trade and commerce all around the world.

As their trusted provider, we relentlessly pursue operational excellence; we support our community in addressing cyber threats; and we continually seek ways to lower costs, reduce risks and eliminate operational inefficiencies. Our products and services support our community's access and integration, business intelligence, reference data and financial crime compliance needs. Swift also brings the financial community together - at global, regional and local levels - to shape market practice, define standards and debate issues of mutual interest or concern.

Headquartered in Belgium, Swift's international governance and oversight reinforces the globally inclusive character of its cooperative structure. Swift's global office network ensures an active presence in all the major financial centres.

[i]Research methodology: A total of 2,012 senior decision makers at SMEs in France, Germany, Italy and Spain, currently carrying out cross-border transactions, were surveyed. Respondents were either business owners/proprietors, managing directors or managing partners, Board level directors or partners, directors not at Board level, or management. For the purpose of this research SMEs were defined as those businesses with between 1-250 employees. The sample counts a minimum of 500-people surveyed per market and includes a representative spread across industries, size, and age of business. Research was conducted from 18-29 April 2024.

[ii] Treasury Today, February 2024. Harnessing the benefits of instant payments in Europe. Available: https://treasurytoday.com/insight-and-analysis/harnessing-the-benefits-of-instant-payments-in-europe/ [7 June 2024]

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