Single Euro Payments Area (SEPA) is in motion

The European Commission, the European Central Bank and the European Payments Council officially launched, on 28th January, the first SEPA (Single Euro Payment Area) payment instruments for credit transfers in euros. To commemorate such an event the Internal Market and Services Commissioner, Charlie Mc Creevy, Gertrude Tumpel-Gugerell, member of the Administrations Council of the ECB and Gerard Hartsink, President of the European Payments Council organised "SEPA goes live", an event which took place in Brussels and attended by various distinguished guests from the European Payments Market.

As it is the case with euro notes and coins, there will be no difference between making a national or transnational payments. “All payments in euros will be national”, commented Gertrude Tumpel-Gugerell in her presentation of SEPA. Charlie McCreevy explained that “now Europeans have a common instrument to make payment transfers in euros all over the European Union and in four neighbouring countries: Iceland, Liechtenstein, Norway and Sweden”. Furthermore, he added: “SEPA will create a competitive and more efficient Single Market. The potential net benefits to payments markets over the next six years could amount to as much as 123 million euros.”

Consumers will also benefit from the lowest prices and more preasure will be produced on Bank returns, in this way, using the words of Commissioner McCreevy, “it is a challenge for banking”

The implementation of this system will be carried out in a progressive fashion functioning along side already existing national systems. The European transfers instrument has been the most simple to apply. A regulation from 2001 obliges that banks invoice all transactions in euros within the EU at the same price as any national transaction. SEPA will cut down the time spent for each transaction and will be accompanied by a harmonised security system using identification codes for bank accounts based on the BIC (Bak Identification Code) model and the use of IBAN (Internation Bank Account Number) numbers.

On the other hand, the automatic debiting mechanism will be installed further down the line on 1st November 2009. The third stage, consisting in “the end of national payment payment cards”, should come into being by the end of 2010. The European Commission and the European Central Bank have asked banks “to continue with their efforts to pass their users on swiftly to the new SEPA payment instruments”.

It is important that the new SEPA  payment instrument for automatic debit transactions is launched quickly and that the SEPA framework for payment cards is fully adopted”, they added. With exception to those that travel or live in countries outside of th EU, many consumers will only notice the SEPA application's existence by a change in their bank account number.

With this initiative European citizens can enjoy simplified and safe electronic payments throughout the EU as with any of their national payments. In SEPA  debit cards can be used to by anything in any other country within the euro zone, allowing for the speeding up of of transnational payments. Therefore, adoption of the new legislation would guarantee the transparency of the prices and the speed of transactions, signalling advance for all consumers.

Author: Macarena Rodríguez (Brussels).