Brussels, 29/01/2008 (Agence Europe) - On Monday 28 January during celebrations marking the launch of the Single Euro Payment Area (SEPA), Commissioner McCreevy (in charge of the internal market), declared, “This morning is the first credit transfer using the new SEAP standards”. He added that, “After several years of hard preparation by the European banking industry and the EPC in particular, we now have a common standard for exchanging payment messages in Euros throughout the EU”. 4000 banks in the EU27 and four countries of the European Economic Area (Iceland, Liechtenstein, Norway and Switzerland) have joined the SEAP project, which aims to help companies and individuals make and receive cross border payments in Euros as rapidly, safely and cheaply as they do in national payments (EUROPE 9585).
The launch of European credit transfers, which should now not take any longer than three working days, is the first step of SEPA. The introduction of cross-border direct debit, which will begin in November 2009 at the latest. This date coincides with the entry into force of directive 2007/64/EC on payment services, which will provide legal security industry and consumers need when using such a service. Cross border direct debits will also enable an Italian motorists to pay monthly payments linked to their car insurance contract agreed in Luxembourg from their bank accounts in Turin, for example. Banks will be expected to implement a framework by 2010 for these payments with cards that are compatible with SEPA standards.
As pointed out by the Ecofin Council last week, one of the reasons for the success of SEPA is the harmonisation of new payment services by the public authorities, which account for between 20% and 30% of all payments made in the EU. Mr McCreevy affirmed that, “As heavy users of payment instruments, public authorities can help create critical mass by being early adopters of SEPA products”. He also believes that other transaction services for public bodies could at some stage develop in public procurement, taxation and customs. In a press release, the European payment Council is recommending that the public authorities demand SEPA standards for direct debits when they are launched for appeals for tender in payment service markets.
Compared to the initial costs of attaining compliance by the banks, potential savings in SEPA appear substantial. According to a Commission study, they will rise to €123bn over the next six years for payment markets alone and €238bn for additional savings if SEPA results in e-bills.
MasterCard decision. SEPA implementation could help new actors on the credit card markets competing with the Visa MasterCard monopolies. According to McCreevy, the recent Commission decision on multilateral interchange fees (MIF) that MasterCard applies to cross border transactions made through debit and credit cards gives the green light to those who want to come onto the payment sector market (EUROPE 9569). He highlighted the fact that this decision does not ban these commission if investments in a payment network are expected to require a return on investment. Eurocommerce, the retail banking organisation in Europe is urging the abolition of MIF. In a press release its Secretary General Xavier Durieu declared, “the Commission's decision on MasterCard should result in the progressive abolition of MIF in every country across Europe. When applied to other card schemes and at national level, this will allow new players to enter the market and to establish healthy competition in the payment cards market to the benefit of all stakeholders”. The Commission is also expected to make a much awaited decision on MIF applied by Visa.
The UEAPME (the Voice of SMEs in Europe), however, was the only organisation to raise some doubts. It considers that although the first SEPA products is, “a positive step forward…it is not yet mature enough to be used in practice by small and medium sized businesses”. According to the UEAPME, the new SEPA system contains several weaknesses: remittance information sent during payments are not structured; in future cross border direct debits, the day's deadline for companies between the issuance of the payment order and the possibility of refusing it are too short for SMEs. Gerhard Huemer, speaking on behalf of the UEAPME declared that it was too early to recommend to their clients a swift migration to the new system as long as the faults remained uncorrected. (M.B.)