| With SEPA (the Single Euro Payments Area), the payment landscape in Europe will change. The Single Euro Payments Area project is an initiative of the European banking industry, led by the European Payments Council.
SEPA will be a region in which all electronic payments will be treated as domestic payments – even if they cross national borders. This means that citizens, companies and other legal entities will be able to make and receive payments in euros within Europe under the same basic conditions, rights and obligations, regardless of national location.
Definition
Although the project originated with the 12 euro-zone countries, all other members of the European Union (EU) and the European Economic Area (EEA) will also participate. SEPA is currently defined as consisting of the 27 EU Member States, Iceland, Liechtenstein, Norway and Switzerland.
The objective of SEPA
SEPA is intended to remove local barriers and to advance European integration with a competitive and innovative euro retail payments market that can bring with it higher service levels, more efficient products and cheaper payment alternatives.
The effect of SEPA
SEPA consists of the following:
- a single currency
- a single set of euro payment instruments – credit transfers, direct debits and card payments
- efficient processing infrastructures for euro payments
- common technical standards
- common business practices
- a harmonised legal basis
- ongoing development of new customer-oriented services
This means that every citizen, merchant, public administration and company with a banking relationship within Europe will eventually be affected by SEPA, as will everyone in the payment supply chain. In figures, this means that about 470 millions inhabitants, 25 millions corporates and 9,000 banks will be affected by SEPA.
Today, without SEPA
Today, all EU Member States have their own domestic systems for payment flows. These include differing standards, fee structures, payment instruments, legal frameworks and service level agreements for payment processing in domestic and cross-border markets.
Tomorrow, with SEPA
With SEPA, all payments in euros within the EU will be regarded as domestic payments – even if they cross national borders.
This means that a foundation will be created for the following:
- A harmonisation of prices for domestic and cross-border payment services in Europe.
- A common regulatory framework within the EU that governs the rights and obligations of providers and users of payment services. This includes regulation of service levels.
- Encouraging the use of the IBAN (International Bank Account Number) system. Additionally, the BIC may be required (the bank’s SWIFT identification code or Bank Identifier Code).
Milestones
The timeline for the implementation of SEPA stretches from now until 2010 and beyond. After the legal framework has been deployed, client adoption will take place in 2008, with its full completion expected within three years.
There are a few major milestones for the establishment of SEPA:
- The new SEPA instruments should be made available to all users – private individuals, corporates, and government bodies – in 2008.
- After a phase of parallel use, the current national schemes for credit transfers, direct debits and cards will be replaced entirely by the new instruments.
- Banks will implement the new schemes and standards at the inter-bank level. This covers clearing and settlement, data formats and rules.
- By the end of 2010, full migration will be completed.
Benefits of SEPA
The SEPA project will effectively transform the EU payments landscape and will bring about a number of long-term advantages. The principal beneficiaries will be individual customers and corporates who want to trade within SEPA.
These are some of the benefits for consumers:
- Consumers will need only one bank account. From this account, they will be able to make euro credit transfers and direct debit payments anywhere in SEPA as easily as they make domestic payments.
- The use of payment cards will be more efficient, as consumers will be able to use the same card for all euro payments and therefore will have less need to carry cash.
These are some of the benefits for companies:
- SEPA will help companies simplify their management of payments.
- Companies will be able to perform all their payments in euros from one bank account, using SEPA payment instruments. The processing of payments will be simplified, as all incoming and outgoing payments will use the same format.
- By consolidating their payment and liquidity management in one location, companies with SEPA-wide business will save not only on costs but also on time.
- Value-added services, such as e-invoicing and e-reconciliation, will help companies to optimise their processing of payments.
Learn more
If you have general questions about SEPA, please contact an account manager. For questions about infrastructure, please contact Karin Iben Winding, SEPA Coordinator, at kwi@danskebank.dk. | | See contact information for cash management services in various countries:
|