Double click here to edit new New Header component
Investment Bank
How can we help?
X
  • Contact Us
  • Client Login
    • Search
    Parsys 1
    Double click here to edit Hero Media component
    INTERNATIONAL CORPORATE BANKING | INNOVATION EDGE

    Accelerating payments into and out of Europe

    authorImage authorImage 
    Elmira Jubanyshkaliyeva, Gulru Atak Gundem
    06 Feb 2025

    Existing schemes for euro payments into and out of Europe can result in delayed payments outside European business hours. New schemes, such as OCT Inst, offer 24/7 availability and should ensure a seamless customer experience. While adoption will take time, it could be a big change for European payments.

    Series Image
    Parsys 2
    Double click here to edit Go To Section component

    GO TO SECTION

    Parsys 3

    The European Payment Council (EPC) offers a suite of payment schemes for the Single Euro Payments Area (SEPA) zone—an initiative by European countries to harmonise payments across the Eurozone—including SEPA Credit Transfer, SEPA Instant Credit Transfer, and the Direct Debit Schemes. 

    Currently, banks process payments where one leg is outside the SEPA zone using euro systems like TARGET2 and EURO1. These systems are not instant, but they are highly efficient: payments are typically processed within 30 minutes end to end.

    Unfortunately, these systems have limited operating hours. Payments submitted outside these hours are held until the next business day, causing delays, especially for clients in Asia, the Middle East, or the Americas. This delay means payers don’t get confirmation of payment until after their business day ends.

    Instant payments in the European market 

    As part of the move towards instant payments and in line with its ambition to improve cross-border payments, the EPC introduced One Leg Out Credit Transfer Instant (OCT Inst) scheme, which promises to provide a better customer experience for the euro clearing market. 

    Payments are processed 24/7, and if the beneficiary is in the SEPA zone and its bank is reachable via OCT Inst, the payment will be processed within seconds and SWIFT Global Payments Innovation (gpi) tracker will update to show the payment as completed. This means the payer receives confirmation during their local business day—a major efficiency improvement to the payment process.

    Although OCT Inst currently has a maximum amount limit (100,000 EUR), which is lower than other systems, this will increase in the coming years.

    Cutting processing time from minutes to seconds, 24/7 

    OCT Inst transaction consists of two legs: one within the SEPA zone and the other outside the SEPA zone. For transactions within the SEPA zone, OCT Inst uses SEPA Instant market infrastructure in the euro currency. Outside the SEPA zone the transaction can be initiated or received in any currency. 

    For example, if a FinTech in Singapore, wants to send an instant payment in euros (or in any currency) into Europe, it will need to have a bilateral agreement with an entry payment service provider (PSP) in the SEPA zone for OCT Inst.

    The entry PSP will handle the currency conversion, format the payment correctly, apply the euro timestamp, and send it via the OCT Inst rails. The funds must be available in the payee's account within 10 seconds after the timestamp.

    What is the operational impact on the market?

    Unlike SEPA Credit Transfer and SEPA Instant Credit Transfer, OCT Inst is optional; each bank in Europe can decide whether to participate. 

    To take part, banks must act as the beneficiary institution and make themselves reachable. They can also serve as the originator bank to initiate OCT Inst payments to non-SEPA countries or as an entry/exit PSP that acts as gatekeepers between European and overseas PSPs.

    It’s worthwhile to remember that participation in both SEPA Credit Transfer and SEPA Instant Credit Transfer was originally optional for banks in Europe but has subsequently become mandatory1; it is possible that OCT Inst could follow a similar path. Given the similarities in process, resources and compliance, it could be smart to undertake OCT Inst technical developments alongside SEPA Instant Credit Transfer compliancy project. 

    1 From 2025 for SEPA Instant Credit Transfer

    It's still early days

    OCT Inst scheme was introduced in November 2023 but is slow to gain momentum. That’s because while it uses existing rails for the European leg, major market infrastructures have yet to fully support it.

    Spain’s payment infrastructure provider Iberpay is the front runner in supporting the scheme2, over thirty Financial Institutions in Spain have already subscribed to OCT Inst service of Iberpay.

    EBA Clearing, a provider of the major payment infrastructure introduced OCT Inst in November 2024, using its RT1 pan-European solution for instant payments in euro.3

    Also TARGET Instant Payment Settlement (TIPS) market infrastructure of the European Central Bank, has announced recently its plans for the implementation of a cross-currency settlement service for the TIPS platform, based on the OCT Inst scheme. This would allow for the exchange of cross-border payments between TIPS and other fast payment systems globally.4 

    Once other market infrastructures follow Iberpay’s, EBA Clearing’s and TIPS’s example to provide OCT Inst services to its members, all banks in Europe will theoretically be able to participate, making OCT Inst a more tangible prospect. The expansion of OCT Inst's reach in Europe could prompt a surge in adoption.

    2 FinTech Futures, May 2024

    3 EBA Clearing, March 2024

    4 ECB, October 2024 

    Optimising payments today

    OCT Inst will take time to expand but could ultimately be transformational for euro payments – a low value scheme involving one leg out transactions has long been the missing link in the euro clearing proposition.

    In the interim, corporates can look for ways to optimise their euro cross-border transactions using existing schemes. For instance, to avoid deductions from the payment principal, banks offer services that ensure delivery of the full payment amount.

    More generally, corporates and financial institutions should opt for a provider that has extensive reach and can deliver when it comes to speed.

    Important content disclosures

    Parsys 4
    Double click here to edit Experts Panel Card component

    About the experts

    Elmira Jubanyshkaliyeva

    Head of EU FI Cash Sales, Global Transaction Banking

    Elmira Jubanyshkaliyeva has over 15 years of experience in the Financial Services industry. Following her career start as a management consultant at KPMG, Elmira fulfilled senior product management positions for global banks and service providers. Most of her roles had a global scope of responsibilities, with clients, colleagues, and stakeholders overseas. She joined Barclays in 2019 in product management and moved to FI Sales two years later. Elmira now heads the EU FI Cash Sales team at Barclays.

    Gulru Atak Gundem

    Head of Europe Transaction Banking 

    Gulru Atak Gundem is an accomplished banking executive with a wealth of experience in driving innovation, developing strategies, business management, and building lasting partnerships in the institutional banking sector. Prior to Barclays, she spent a prominent 20-year career, where she served in various roles and led several transformational initiatives. In her latest role at Citi, Gulru led franchise growth and innovation agenda of the institutional banking franchise, focusing on new business models and partnerships. She also served as the Head of Innovation for Citi's transaction banking business, where she played a pivotal role in defining and executing the global innovation strategy by leveraging emerging technologies. Gulru now heads the Europe Transaction Banking business at Barclays.

    Parsys 5
    iParsys for Double Pixel component