A significant transformation is taking place in Cyprus’s banking framework, where interbank and cross-border transactions will be executed in just 10 seconds starting from January 9, 2025, replacing the current processing time of one to two days. This new system will operate 24/7.
The implementation of this instant payment infrastructure was recently announced, indicating that it will encompass all banks in Cyprus as well as those in the Single Euro Payments Area (SEPA). Customers will benefit from immediate payment capabilities across banks within Cyprus and the SEPA zone, greatly reducing the time it takes for transactions when compared to traditional banking methods. The initiative aims to facilitate quicker and more secure payment options for both personal and business use throughout the SEPA region.
Interestingly, even though the new system will enhance efficiency, the cost of money transfers will remain unchanged. In fact, regulations will require banks to apply the same fees for instant transfers as they currently do for standard transfers.
Additionally, banks in Cyprus may introduce supplementary optional services for their customers, such as enabling money transfers through the recipient’s phone number or email address rather than requiring an IBAN. This feature is designed to provide consumers with more flexibility in handling their financial transactions.
The move to implement this advanced payment infrastructure aligns with the European Regulation on Instant Payments that came into effect in April of the previous year. However, financial institutions in Cyprus will initiate the efficiency improvements starting next week.
Moreover, banks on the island are expected to enhance their systems to improve security, with a compliance deadline set for October 9, 2025. These security upgrades will grant payers the legal right to verify that an account number or IBAN corresponds with the recipient’s name, thereby enhancing trust in the transaction process.
Banks will be required to modernize their electronic systems to integrate improved security measures that aim to minimize errors, detect fraudulent activities, and identify any suspicious transactions during payment processes.
Per directives issued by the Central Bank of Cyprus, banks are mandated to enable the receipt of instant payments by January 9, while facilities for sending instant payments must be established by October 9. Additionally, various payment and electronic money institutions in the country have until April 9, 2027, to fully adhere to the instant payment guidelines.
These changes mark a crucial evolution in the financial landscape of Cyprus, positioning the banking sector to offer more efficient and secure services to its customers while complying with broader European standards.