Setting the direction for cross-border instant payments with OCT Inst
The EPC scheme can deliver value rapidly while laying the foundations for broader interoperability
By Annick Moes
Annick Moes is Head of Industry Issues, Cooperation Initiatives and Communications at the Euro Banking Association (EBA). She is responsible for the EBA’s market practices and regulatory guidance stream, which provides the European payments ecosystem with a pan-European perspective and practical support. She has been working in European payments for over 20 years.
As euro instant payment volumes are growing steeply across the SEPA region, the next stage will be to extend that same speed, certainty and transparency across currencies and beyond European borders.
To this end, the European Payments Council (EPC)’s OCT Inst Scheme represents one of the most practical ways forward. Unlike other emerging initiatives, it does not require an entirely new network to be built. Instead, it extends Europe’s existing instant payment infrastructure beyond SEPA, enabling payment service providers (PSPs) to build on existing foundations rather than having to start from scratch – and the level of effort and cost involved in the adoption of the scheme reflects that reality.
OCT Inst: The foundations of broader interoperability
While OCT Inst leverages SEPA building blocks, it also lays the groundwork for future developments. As emphasised by a number of speakers at the recent EBAday conference, direct interlinking between domestic instant payment systems remains a longer-term ambition because it offers immediate reach across participating networks. However, achieving that goal requires significant investment, governance and regulatory coordination across jurisdictions. OCT Inst serves as a bridge, delivering value from 2027 while laying the foundations for broader interoperability and potentially guiding the way for one-leg-out (OLO) schemes globally.
OCT Inst is also designed to complement – rather than compete against – other emerging initiatives, including Swift’s Cross-border Retail Payments Scheme. OCT Inst enables instant settlement for the euro leg of a payment, while Swift’s scheme provides complementary capabilities around messaging, tracking and interoperability across multiple currencies and jurisdictions.
So, what is needed for the OCT Inst Scheme to succeed? There are two key factors:
- Reach to scale. As with any payment instrument, OCT Inst’s success will ultimately depend on achieving critical mass. But this is not unique to OCT Inst. Every emerging payment initiative – from tokenised money to payment system interlinking – requires the build-up of sufficient reach before meaningful benefits can be realised. Encouragingly, industry expectations are that adoption will continue to grow. During an EBAday session titled Across currencies and borders: how to take instant payments to the global level, panellists estimated that the reach of OCT Inst could extend to 30% by 2027, with one speaker suggesting it could even be as high as 55%.
- Transparent charging. For PSPs and their customers to embrace cross-border instant payments, the cost of these transactions should be as predictable as the payment experience itself. Clear and transparent charging practices – respecting the full amount principle – will be central to ensuring beneficiaries receive the expected amount and that customers have certainty over costs.
For now, OCT Inst remains an optional scheme, but a ‘coalition of the willing’ is already building momentum. Last November, for instance, 10 international banks committed to becoming reachable through EBA CLEARING’s RT1 OCT Inst Service by 2027 and are encouraging others to work towards the same timeline.
Enabling industry to set its own direction
During EBAday, a roundtable dinner hosted by EBA, EBA CLEARING and Swift convened RT1 OCT Inst frontrunner institutions, members of the EBA Expert Group on Cross-Border Payments and early adopters of the Swift Cross-border Retail Payments Scheme. There was strong consensus on the next step needed: building sufficient momentum to achieve critical mass across the region. Indeed, if PSPs in Europe are to successfully embrace this opportunity, they will have to rapidly move from making commitments to execution and adoption.
History suggests that optional initiatives may not remain optional indefinitely. OCT Inst presents the industry with the opportunity to shape the future of cross-border instant payments proactively and collaboratively, in line with the expectations of European businesses and consumers.
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