Single Euro Payments Area
From Wikipedia, the free encyclopedia
The Single Euro Payments Area (SEPA) initiative for the European financial infrastructure involves the creation of a zone for the Euro in which all electronic payments are considered domestic, and where a difference between national and international payments does not exist. The project aims to improve the efficiency of international payments and also to develop common financial instruments, standards, procedures, and infrastructure to enable economies of scale. This will replace the complex and costly international infrastructures (=SWIFT) that are currently in operation, thus reducing the overall cost to the European economy of moving capital around the region (estimated today as 2.5%-3% of total GDP). National credit transferts could become more expensive, while intereuropean credit transfers will certainly become cheaper. Ordinary people may not improve their situation while international companies most certainly will.
Contents |
[edit] Overview
There are two major milestones for the establishment of SEPA:
- Pan-European payment instruments for credit transfers, direct debits and debit cards, will be available from 1 January 2008, in addition to national ones
- At the end of 2010, all present national payment infrastructures and payment processors should be in full competition to increase efficiency through consolidation and economies of scale.
The European Commission is establishing the legal foundation through the Payment Services Directive. The commercial and legal frameworks for payment instruments are being developed by the European Payments Council (EPC), made up of European banks, and are due to be finalised during 2006. The EPC is committed to delivering three pan-European payment instruments:
- For credit transfers: ECT – Electronic Credit Transfer
- For direct debits: SDD – SEPA Direct Debit
- For cards: SEPA Cards Framework
Businesses, merchants, consumers and governments are also interested in the development of SEPA; the European Associations of Corporate Treasurers (EACT), TWIST, the European Central Bank, the European Commission, the European Payments Council, payments processors and pan-European banking associations (EBF, EACB, ESBG) are playing an active role in defining the services which SEPA will deliver.
SEPA impacts all banks operating in 29 countries — the 25 EU member states, the three European Economic Area countries (Liechtenstein, Iceland and Norway) and Switzerland. Its planned delivery date is 1st January 2008, when banks will start migrating customers over to the new system. By 2010, the majority should be on the SEPA framework. As a result, payment banks throughout the SEPA area (not just the Eurozone) will need to invest heavily in technology with the capacity to support SEPA payment instruments.
The European Commission is establishing additional legal foundation through a Payment Services Directive and the commercial and legal frameworks are being developed by the European Payments Council (EPC), made up of European banks, and due to be finalised during 2006.
The introduction of SEPA means that it will be possible, for the first time, for banks and corporates to compete for customers both in Europe and internationally. It also provides a business opportunity for a range of other organisations, including payment processors such as Voca Limited, to help banks reduce costs and develop new payment services.
Multi-national businesses and banks have the opportunity to consolidate their payments processing onto common platforms across the Eurozone. They will benefit from substantial efficiencies by choosing among competing suppliers offering a range of solutions and operating across borders.
For consumers, the benefits of SEPA could mean cheaper, more efficient and faster payments transfer when moving money in Euros from one Eurozone country to another.
[edit] Key dates
| 1957 | Treaty of Rome creates a European Community |
|---|---|
| 1992 | Maastricht Treaty creates the euro |
| 1999 | Introduction of the euro as an electronic currency, including introduction of the RTGS system TARGET for large-value transfers |
| 2000 | Lisbon Agenda. The meeting creates a European Financial Services Action Plan |
| 2001 | EC Regulation 2560/2001 harmonises fees for cross-border and domestic euro transactions |
| 2002 | Introduction of euro banknotes and coins |
| 2003 | First pan-European ACH (PE-ACH) goes live. EC Regulation 2560/2001 comes into force for euro transactions up to €12,500 |
| 2004 | 10 additional countries join EU |
| 2006 | EC Regulation 2560 cap increases Euro transactions up to €50,000 |
| 2008 | SEPA pan-European payment instruments will become operational in parallel to domestic instruments |
| 2010 | SEPA payments will become the dominant form of electronic payments |
| 2011 | SEPA payments will replace all national payments in the eurozone |
[edit] External links
[edit] Articles
- "Towards a Pan-European Infrastructure" (European Central Bank)
- "The Road to the Single Euro Payments Area" (Die Bank)
- Making Sepa a reality (EPC, on the FBF website)
