SEPA (or Single Euro Payment Area) is a united payment area in order to facilitate bank transfers in the Euro area. Established in 2008, SEPA’s goal is to amend the efficiency of cross-border and national payments with the same conditions for everyone and to ensure rapid transfer and transparent pricing. To offer customers the choice to pay anyone located anywhere in the in the EU by direct debits, payment cards and credit transfers, SEPA has been implemented by bank members of the EPC and by the EC.
Munich, February 27, 2014.
PressReleasePoint - After the creation of the Euro currency in 1999, SEPA is considered a principal step of the banking system in Europe. SEPA consists of the 28 European Union member states, Monaco and four other countries (namely Liechtenstein, Norway, Iceland and Switzerland). SEPA is an initiative of the EC and the European banking sector and started in January 2008 with the launch of the European bank transfer, putting its focus on credit transfers at first. In the period that followed this project has been focused on two other payment instruments (payment cards and direct debits). In 2006, 89% of payments have been represented by these three instruments. In 2010, SEPA payment became the predominant form of electronic payments.
Next steps of the SEPA migration in 2014
Firms, merchants, consumers, public administrations and payment service providers (PSPs) must be prepared to provide these three instruments which define common rules and procedures until the recently extended deadline of August 1st, 2014 (originally February 1st, 2014) for the Euro area. The SEPA project is not a simple one to put into practice because a lot of countries are involved. The entire plan has been defined before the crisis. Some states of the Eurozone remained in a volatile state in the last two years and sovereign debt problem has continued for Portugal, Greece and Ireland in 2013. One of this standardization’s goal is the reducing of cost by developing a common set of financial instruments and by reducing procedures allowing the company the optimization and centralization of payments. The simplification of international and national payments is another aim. In a long term perspective, the effect on the EU (economies of scale) is beneficial thanks to this solution. This solution will promote the development of businesses between European countries.
SEPA changes are integrated by PSPs
Payment Service Providers like PAYMILL are already prepared for the changes SEPA will bring. SEPA Credit Transfer (SCT) services have been offered by 4,516 PSPs since April 2013 according to the results of recent studies by Capgemini and The Royal Bank of Scotland (RBS). The adoption of SDDs (SEPA Direct Debit) is much lower and is a major cause for concern. 3,867 PSPs had subscribed for the SDD Core Scheme as of April 2013.
SEPA: benefits for PSPs
Harmonization through SEPA means that PSPs will be able to accept payment cards from all SEPA states and back office processes will be simplified. In addition, SEPA will offer PSPs an equal and open access to the European market (33 states), same banking rules, reachability and transparency (pricing) without forgetting security and integrity of payment systems.
Moreover, this unification will allow developing new low cost technology products and services.