Brussels, 21/12/2011 (Agence Europe) - Under an agreement reached by the EU institutions on Tuesday 20 December, the new single European payment area (SEPA) for electronic payments should be phased in by February 2014.
The SEPA system was initially introduced by member banks of the European Payment Council (EPC) on a voluntary basis to lay down common rules and standards for credit transfer and direct debit transactions in euro in a single country.
Under the deal struck on Tuesday by EP and Council of Ministers' negotiators, migration of banks to SEPA is to be compulsory for both direct debits and payment transfers from 1 February 2014 onwards.
The SEPA Regulation lays down common rules and standards for credit transfer and direct debit transactions in euro. It aims to create an integrated market with the same basic conditions, rights and obligations, for credit transfer and direct debit payment services, covering the 27 EU member states, Liechtenstein, Monaco, Switzerland, Norway and Iceland.
In a press release, the EP points out that cross-border payment services should become faster, cheaper and safer for EU citizens. The deal, which has still to be approved by the full Parliament and the Council, lays down EU-wide rules which should ensure that payment service providers compete fairly, eliminate hidden national bank charges, and accelerate transfers. This could save up to €123 billion within six years, benefitting clients, banks, and businesses.
Advantages to citizens. For EU citizens, it will no longer matter in which member state a bank account is held. Transfers should become cheaper, faster and safer. For example, EU citizens moving within the European Union could use a single euro account, into which a salary earned in another country could be paid. They could also pay bills in one country through an account held in another. All bank account users stand to gain, because international competition among service providers should drive down prices. Increased competition among banks to supply services should also help to cut today's inflated costs, and where costs are already low, they should remain so.
The European Parliament's negotiators sought to make the migration to SEPA standards easier for bank clients, by enabling banks to offer conversion services from national systems and to phase out the need to provide the business identifier code (BIC) - the international bank account number (IBAN) sufficing. Another gain is a requirement to apply non-discriminatory charges to transfers, irrespective of the amount involved.
Advantages for business. Businesses could set up cross-border direct debits in euro between any two bank accounts anywhere in the EU, enabling them to invoice customers regularly across borders. By eliminating multilateral interchange fees on cross-border direct debits as of 2012, the regulation will enable businesses to establish their payment centres in any EU member state. They could also organise cross-border euro payments from a single euro account in the country of their choice to streamline financial management and speed through treasury flows at a lower cost.
The EU Council of Ministers pointed out that the economies of scale and common rules introduced by the SEPA system will make it easier for payment service suppliers to make payments within the EU. EU Internal Market Commissioner Michel Barnier welcomed the agreement and its benefits for European workers, students, holiday home owners, tourists and pensioners living abroad. The deal will need to be endorsed by the EP and the Council of Ministers once it has been translated into all EU official languages.
Commenting on the SEPA deal, rapporteur Sari Essayah (EPP, Finland) said: “The SEPA is a fundamental element of the internal market. The internal market cannot function well without SEPA. Moreover SEPA will provide the basis for other developments in the single market.”
Economic and Monetary Affairs Committee Chair Sharon Bowles (ALDE, UK), said “What today's agreement shows is that even as we grapple with the crisis, the EU institutions continue to work diligently to deepen the internal market in financial services, with the euro at its core. This agreement is a vote of confidence in the euro, and I am convinced that it will be a good deal for consumers and businesses.” (LC/transl.fl)