Apr 16, 2025 Hannah Kuck
ShareThe introduction of Instant Payments – also known as SEPA Instant – not only changes the speed of transactions but also redefines the framework for risk management and compliance in European payment systems. Currently, this mainly affects the eurozone, but by 2027, the scheme will be gradually mandated across all of Europe. Where verification once took hours or even days, now only seconds remain – too little for manual checks, too much for traditional systems.
In this new environment, fraud prevention and compliance must navigate a range of new challenges. Technological support through advanced AI-based software solutions like RiskShield can help bridge the gaps between regulation, operational practice, and technical feasibility. However, the challenges are complex and highly specific.
Real-Time Demands in Fraud Prevention
In the field of fraud detection, financial institutions face a fundamental dilemma: Instant Payments allow no room for delays, and fraud decisions must be made within milliseconds. Consequently, fraud analysts are challenged to deliver highly accurate assessments in an almost reaction-free time frame. Here, traditional rule-based systems often hit their limits – they’re either too slow or generate too many false positives. In the European market, it has been shown that up to 99% of automated alerts for real-time transfers include legitimate transactions – the result: increased manual review workloads, reduced customer satisfaction, and growing operational burdens.
Hinting at a better approach, current market trends clearly point toward adaptive, self-learning models. More and more financial service providers are using hybrid real-time fraud detection solutions that combine rule-based logic with data-centric machine learning. These systems continuously learn from new patterns and can identify both known and unknown fraud attempts.
Additionally, new regulatory measures demand more effective real-time fraud monitoring and validation solutions. Especially with the mandate for recipient verification (Verification of Payee - VOP) starting in October 2025, any such software must mitigate any misdirected payments, for example due to social engineering attacks.
At a Glance – Fraud Officer hurdles
- Milliseconds instead of minutes: Traditional checks are too slow for Instant Payments.
- False positives strain resources: Incorrect alerts require high manual effort.
- Trend: Adaptive systems with machine learning improve precision and reaction speed.
Compliance Between PSD3, DORA, and Operational Reality
The second challenge affects compliance. The launch of SEPA Instant Payments intersects with an environment shaped by numerous European regulations. PSD3, the new Payment Services Regulation (PSR), and DORA (coming in 2025) demand not only real-time transparency but also comprehensive logging, traceable decisions, and auditable processes – ideally around the clock, all year round. The problem however: Many banks still operate with fragmented systems designed for manual reprocessing. But the pace of payments no longer permits after-the-fact checks. Instead, regulatory relevance continues to grow: While Instant Payments are currently being mandatorily introduced primarily in the eurozone, the EU regulation envisions a gradual expansion of the scheme to the entire European single market – including non-Euro countries by 2027.
This becomes especially problematic when responding to internal policy changes or new regulatory requirements. Days or even weeks can pass between defining a new rule, adapting the necessary technical architecture, and implementing a real-world application. In a real-time transaction environment, such delays are no longer acceptable. The trend clearly moves toward full automation and real-time documentation. For deeper insight into regulatory developments and their operational impact, we recommend the on-demand webinar on the EU Instant Payments Regulation.
Software solutions with built-in audit trails, automated rule versioning, and explainable decision logic offer a way to manage these challenges. Regulatory pressure remains high – European authorities have made it clear that real-time compliance is no longer optional but a binding standard.
At a Glance – Compliance Officer hurdles
- PSD3, DORA & PSR demand automated real-time compliance: No room for manual reviews.
- Gaps between rule definition and implementation hinder effective oversight.
- Trend: Fully automated systems with audit trails and rule versioning gain importance.
Sanctions Screening Under High-Frequency Conditions
The third critical area is sanctions management. Until now, payment service providers must screen all transactions against up-to-date national and international sanctions lists. The new EU regulation on Instant Payments addresses this challenge by focusing on continuous, customer-based sanctions screening. Daily reconciliation of customer master data with current sanctions and watchlists is intended to reduce real-time burdens and ensure compliance.
This is complemented by modern AI technologies that can interpret name similarities in context, allowing for more accurate distinction between real matches and false alarms. Again, the trend is clear: Automation, real-time capability, and false positive reduction are the cornerstones of future-proof sanctions management in European payments.
At a Glance – Sanctions Officer hurdles
- Processes and personnel restrains
- Automated customer screening against lists daily despite weekend and holidays
- Trend: AI-based solutions reduce false alerts and boost efficiency.
Outlook: Role-Based Risk Management as a Systemic Issue
These challenges are not limited to specific actors– they are symptoms of a structural transformation in payments. Fraud prevention, compliance, and sanctions screening are becoming more closely interconnected– technically, organizationally, and strategically. The key lies in integrated risk management platforms that provide role-based support without losing cross-functional visibility.
Software solutions like RiskShield, which combine rule-based logic, machine learning, explainability, and real-time processing, are increasingly forming the backbone of this evolution. Not because they solve every problem, but because they make it possible to balance regulatory reliability, operational efficiency, and customer expectations.
The shift in payments is already underway. The question is no longer whether risk management will adapt – but how quickly. Now is the right time to challenge existing structures – and explore how technology can support the transition. Let’s talk about your next step in Instant Payment Risk Management.
For a deeper perspective on the strategic, technical, and organizational impact of the Instant Payments paradigm, we also recommend our whitepaper:
“Beyond Compliance – Mastering the Instant Paradigm.”
About our Expert
Hannah Kuck
Corporate Communications Manager
Hannah Kuck has been working as Corporate Communications Manager in Corporate Marketing at INFORM since August 2024. With a passion for creative and effective communication, she helps shape various areas of corporate communications - from press relations to content creation and storytelling.