How does STEP1 work?

STEP1 processes same-day single payments for retail and commercial transactions.

A STEP1 Participant’s position resulting from processed payment messages can never be negative, i.e., STEP1 Participants effectively have a zero-debit cap. STEP1 Participants settle their daily balances via a EURO1 Participant of their choice, which acts as their settlement bank, providing liquidity against the potential net balance but never seeing the individual payments constituting these balances.

Payments exchanged in STEP1 are for amounts that do not create the need for systemic risk protection. If a single STEP1 message exceeds the limit per transaction of either the sending bank or the receiving bank, it is rejected by STEP1. The minimum limit is EUR 2 million and the maximum limit is EUR 50 million. Any payment that does not exceed this amount but would result in a limit breach due to the current balance of the sender and/or receiver banks is put in an on-hold queue. This queue is continuously revisited during the opening hours of STEP1. Depending on the bilateral agreement between a STEP1 Participant and its settlement bank, the liquidity required to ensure the processing of on-hold payments can be injected into STEP1 intra-day whenever necessary.