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Brussels, 16 December 2010

Single Euro Payments Area (SEPA): Commission sets deadline for pan-European payment system

A Belgian citizen working in The Netherlands receives his salary on his Belgian bank account as quickly as his Dutch colleagues. A German family pays all its gas and electricity bills for their holiday home in Greece by simple direct debit from their German account. A Romanian student on exchange in Italy does all her payments in euros effortlessly from her Romanian account in euros. Similarly, companies will also benefit from SEPA. A German export/import company trading with Latvia, Cyprus and Norway will optimise cash flow by easily collecting funds in euro from debtors in these countries using a single account in Germany. These are just some examples of what could soon be made easier and cheaper. Indeed, the European Commission has today proposed to set EU-wide end-dates for the migration of the old national credit transfers and direct debits to the recently created Single Euro Payments Area (SEPA) instruments. It will mean that national credit transfers and direct debits are phased out and the recently created pan-European systems take their place, respectively 12 and 24 months after the entry into force of the Regulation. This will reduce the costs of payments, increase competition and make cross-border payments as easy as domestic ones. The Commission's proposal now passes to the European Parliament and the Member States for consideration.

Internal Market and Services Commissioner Michel Barnier said: "We have a Single Market, many countries share a single currency and soon we will move to a single pan-European payment system in Europe. It means that making payments cross-border will become as easy as making them at home. Consumers will only need one bank account and their payments will be faster, cheaper and safer. Businesses will benefit from one set of standards and much simpler processes. The proposal adopted today fixes end-dates to make this pan-European system a reality, hopefully as early as 2012."

The Single Euro Payments Area (SEPA) is the area where more than 500 million citizens, over 20 million businesses and European public authorities can make and receive payments in euro under the same basic conditions, rights and obligations, regardless of their location. The objective of SEPA is to increase efficiency and competition so that high-quality and competitively priced electronic payment products exist throughout the whole of the EU. This would mean that Europeans can rely on one bank account to make euro payments across 32 countries1 while enjoying highly competitive services provided by banks. Thanks to SEPA, as from 2012 money transfers will reach the beneficiary at least by the end of the next business day or faster and no deductions will be made to the amounts transferred. As a result, the process of paying bills will be even more convenient. SEPA benefits not only customers. Businesses will enjoy common standards; faster settlement and simplified processing for payments that will improve cash flow, reduce costs and facilitate the access to new markets.

Self-regulatory efforts have proven not to be sufficient to drive forward concerted migration to SEPA. According to available European Central Bank (ECB) data, as of October, only 9.6 % of all credit transfers in the euro area were executed using a pan-European payment instrument. If this trend continues, the full benefits or implementation of the SEPA would only be felt after more than 25 years. Only rapid migration to pan-European, i.e. SEPA credit transfers and direct debits, will generate the full benefits of an integrated payments market. The proposed Regulation will ensure a quick and smooth migration to pan-European credit transfers and direct debits by phasing out the existing national payment instruments.

In order to ensure interoperability, the use of certain common standards and technical requirements such as the use of international bank account numbers (IBAN), bank identifier codes (BIC) and a financial services messaging standard (ISO 20022 XML) will be mandatory for all bank account payments in euro in the EU. The proposed regulation also takes into account user concerns such as the possibility to limit a direct debit collection to a certain amount and/or frequency of payments. Banks and companies which send out a large number of bills (for example electricity or telecommunications providers) are encouraged to adopt measures to make SEPA migration as easy as possible for bank account holders.

The proposed Regulation will also increase transparency and competition between payment services providers and between payment services themselves, notably through the ban on hidden fees between banks for direct debit transactions, which are currently charged in six Member States (Spain, France, Sweden, Belgium, Portugal and Italy).

Background information

While acknowledging progress, the first report on the implementation of the SEPA Roadmap 2009-2012, published today and the latest report on SEPA migration by public administrations show that important actions are still not sufficiently addressed or are running behind schedule. Awareness-raising activities and active marketing of SEPA instruments throughout the payments industry is an area requiring more effort. Similarly, migration by public administrations remains disappointingly low in the majority of Member States and does not reflect the important catalyst role that public administrations, as high-volume payment users, could play in encouraging SEPA migration.

Both of the above reports therefore confirm the need for regulatory action to provide certainty on an end date for SEPA migration.

See also MEMO/10/688

More information

1 :

These are the 27 EU Member States plus Iceland, Liechtenstein, Norway, Switzerland and Monaco.

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