SCT Inst : what makes SEPA instant transfer challenging ?

As technologies evolve, consumers adopt new behaviors and increasingly expect faster, easier-to-use services. The payments sector is no exception to this rule! The ability to offer real-time transfers has become essential to keeping pace with the market and effectively responding to customer expectations. Find out how SEPA Instant Credit Transfers (SCT Inst) work and the key aspects you need to know

SCT Inst : What is it ?

SEPA Instant Credit Transfer (or SCT Inst) is a payment service that enables real-time fund transfers between bank accounts located within the SEPA zone (Single Euro Payments Area—covering 37 Member States in 2024).
This system guarantees funds are available in the beneficiary's account within ten seconds of the transaction. Launched in 2017 by the European Payments Council (EPC), SCT Inst defines a set of rules and standards to harmonize instant euro payments across the region.

Key points and functions of SCT Inst

• Service Availability: SCT Inst offers a continuous service—available 365 days a year, 24/7.
• Instant Payments: Transactions are credited in less than 10 seconds.
• A €100,000 Ceiling: While the initial transaction limit was €15,000, SCT Inst now allows transfers of up to €100,000.
• Enhanced Security Measures: Strong fraud prevention and data protection mechanisms to combat risks such as fraud, money laundering, and terrorist financing.
• Boosting Market Competitiveness: SCT Inst fosters greater competition in the payment sector, pushing providers to enhance service quality and develop innovative payment solutions.

SCT Inst : What are the advantages?

• Round-the-clock availability, including on public holidays.
• Cross-border transactions with the same efficiency as domestic transfers within the SEPA zone.
• Lightning-fast execution: Payments are completed in less than 10 seconds, and the funds are immediately available to the recipient.
• Improved cash flow management for businesses, ensuring instant liquidity.
• Designed for modern digital tools, allowing users to execute transactions easily via mobile apps or computers.

The different stages of SCT Inst

Here are the key steps in SCT Inst :
1️#The payer initiates an SCT Inst transfer request.
2️#The transaction is forwarded to the Clearing and Settlement Mechanism (CSM).
3️#The beneficiary's bank receives the payment message.
4️#A confirmation message (positive or negative) is sent to validate or reject the transaction.
5️#If successful, the funds are instantly available to the recipient.
6️#The payer's bank is notified of the transaction outcome.
7️# The reason is communicated to the sender if the payment is declined.

What are the challenges for financial institutions?

SCT Inst is a major innovation that represents a significant advancement for financial institutions, opening new payment industry opportunities. Speed and reliability are critical to meeting customer expectations in today's digital-first world. However, real-time processing presents operational constraints and challenges. One key challenge is false positives in fraud screening systems, which may require manual intervention, potentially exceeding the 10-second time limit.

Customer experience : speed & reliability

Modern users expect financial services to be constantly accessible, efficient, and trustworthy.
By offering instant and transparent money transfers, financial institutions can meet customer expectations, fostering trust and loyalty in the long term.

Transaction security

The rise of instant payments increases the risk of fraud due to the speed of transactions. To mitigate this, financial institutions must implement robust security measures to protect sensitive customer data and maintain the integrity of transactions.

What solution has Skaleet put in place?

Get ahead with Skaleet! We provide an advanced, flexible, and API-first Core Banking Solution tailored to modern banking needs.
Since early 2024, we have been directly connected with SCT Inst participants, enabling us to process outbound and inbound transactions seamlessly. Real-time accounting synchronization ensures accurate reconciliation with the direct participant's account.

Our solution guarantees uninterrupted availability, with servers running 24/7, all year round.
From a regulatory perspective, Skaleet ensures compliance with ISO 20022 standards for payment file generation and meets all the regulatory updates imposed by the EPC. Additionally, we can manage timestamps if the PSP does not handle this feature.

Want to Learn More? Contact Our Team Today!