Why non-EU banks must act now on SEPA Instant Payments

Here’s one for your next pub quiz: which nine countries are in the Single European Payments Area (SEPA) but not in the European Union? I repeat—not in the European Union? 

If you said Iceland, Norway, Liechtenstein, Switzerland, Monaco, San Marino, Andorra, Vatican City, and the United Kingdom – you are correct. 

These nations are not EU member states. However, they are in SEPA, meaning they will be impacted by the Instant Payments Regulation (in some way). 

While EU banks face legal deadlines to implement instant payments by 2025, non-EU banks in the European Economic Area (like Norway and Iceland) must comply by 2027.  

Meanwhile, banks in SEPA that are not in the EU or EEA (like the UK and Switzerland) are not required to comply with any regulatory deadline at all. 

So, if you’re a bank in, say, Norway, should you be worried about the 2027 deadline now?  

And if you’re in the UK, is there any point in getting ready for SEPA Instant at all? 

The answer, to both, is yes. 

Because the driving force behind SEPA Instant Payments after 2025 isn’t regulation. It’s the risk of losing your customers. 

Forget regulations—focus on your customers

Consider this scenario: it’s November 2025 and SEPA Instant Payments are ubiquitous in the EU. One of your biggest customers is a thriving London-based fashion retailer that specializes in raincoats. Business is booming. 

As a global bank, you have a foothold in every market the retailer operates in, and they have accounts in each region. One in London, another in Oslo. Several in Amsterdam, and so on. 

With SEPA Instant, they can send and receive payments within the EU immediately. No more worrying about cut-off points with Target2 and classic SEPA payments. Now, there’s more time for late Friday night deal-making during busy buying seasons. They have more cash on hand, can pay suppliers instantly, and even offer earned wage access for daily pay, boosting staff retention. 

The retailer wants to extend these benefits to their UK and Norwegian business. But you haven’t implemented SEPA Instant for non-EU countries yet. And that’s causing issues. 

They ask when you plan to. You tell them you may do the UK someday, but it’s not guaranteed. And you’re going to wait for the 2027 deadline for Norway.  So, they start shopping around. Eventually, they find another bank that offers SEPA Instant for the entire SEPA region and switch. 

Don’t get caught in the rain

The point is this: If one bank offers instant payments across all SEPA countries while another doesn’t, customers with accounts in non-EU SEPA countries are likely to choose the more connected option. 

In other words, banks that delay full SEPA Instant implementation risk losing corporate clients. Any non-EU SEPA banks moving too slowly could see their customers migrate to more proactive competitors. A unified customer experience becomes a powerful competitive advantage. 

Early adopters have a lot to gain by securing market share and strengthening customer loyalty. EU-based banks already have an edge. Much of the groundwork has been laid to meet the 2025 deadlines. These banks can leverage their existing infrastructure ahead of 2027 and in regions like the UK. 

And while preparing additional core banking systems for 24/7 processing may be a challenge, tactical solutions exist. Instead of waiting two to three years to upgrade core systems, banks can deploy a stand-in module as a quick fix to enable 24/7 processing immediately. 

For some, getting ready could be expensive and time-consuming. But there’s a lot to gain with action—and much to lose by waiting. 

Be proactive

If you’re an EU bank with operations in a non-EU SEPA region, you should act now. Don’t wait for deadlines or any other reason. This is about staying competitive and meeting customer demands. Consider extending SEPA Instant to non-EU SEPA countries as a matter of urgency. Make it part of your current project if you can. 

If upgrading your core banking system is necessary, then do it now. There’s no real benefit to waiting for a regulatory push. Plus, 24/7 payment schemes will eventually be introduced in the UK, Switzerland, and others. Starting now, while payment volumes are lower, reduces risk and builds readiness early. 

Granted, replacing 30+ year-old systems is a huge task. But there are faster routes to market. It’s likely you already use a stand-in module to mimic 24/7 capabilities in the EU—why not extend this functionality to all EEA countries, the UK, and beyond? This would allow you to meet customer demands, gain a competitive edge, and prepare ahead of deadlines without waiting for full system upgrades. 

Besides, if a regulatory deadline arrives sooner than the time it takes to upgrade your core systems, you’ll likely rely on stand-ins anyway. Proactively extending your existing solutions now saves time, money, and stress later. 

Look ahead

As the SEPA Instant Payment scheme rolls out, the question for non-EU and non-EEA SEPA banks isn’t whether to adopt SEPA Instant, but how quickly they can do so. Instant payments are becoming the norm in Europe, and waiting until the last minute could leave banks at a significant disadvantage. Early adoption enables banks to: 

• Meet customer expectations for real-time transactions. 

• Stay competitive with EU-based financial institutions. 

• Capture market share. 

A focus on compliance leaves little room for growth. Waiting will mean losing momentum—and customers. Start now to save time, reduce costs, and position yourself as a leader in the evolving payments landscape.

Need help with the Instant Payments Regulation?

Speak to RedCompass Labs.

We’re currently helping some of the world’s biggest banks get ready for the regulations. If you’d like help, reach out to the team today.