| Single Euro Payments Area goes live |
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| Monday, 28 January 2008 | |
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SEPA (the Single Euro Payments Area) goes live on Monday and European banks will formally launch the first SEPA payment instrument, for credit transfers.
This marks the first step in a migration process over the next few years during which customers will move in a market-led process from existing national electronic payment instruments to the new SEPA instruments. The European Central Bank (ECB) and European Commission (EC) said in a statement that this was a logical extension to the introduction of the euro and would produce substantial benefits through a more competitive and efficient payments market. Important milestone SEPA is the new Single Euro Payments Area that aims to make payments throughout the euro area as quickly, safely and easily as they make national payments. All euro payments in SEPA are considered domestic and are made with one set of payment instruments. SEPA payments can also be used for euro payments within the EU outside the euro area, as well as in a number of neighbouring countries. The ECB and EC said that the launch marked an important milestone in the SEPA migration process with the official launch of the SEPA payment instrument for credit transfers. For technical and legal reasons, the launch of the SEPA payment instrument for direct debits will take place subsequently, but should occur no later than 1 November 2009. For card payments the SEPA Cards Framework has been in force since 1 January 2008. The ECB and EC believe that SEPA will improve the efficiency of EU payments markets and stimulate innovation, thereby increasing the competitiveness of the European economy. They also claim that SEPA could be used in the public sector as a platform to drive e-Government, thus contributing to the efficient delivery of public services. Value-added services Studies by the ECB and EC estimate that the potential benefits from SEPA in the payments markets alone could exceed €123 billion over the next six years, and a further €238 billion if SEPA can be used as a platform for electronic invoicing. The two studies also show that the process of SEPA migration will be a challenge, especially for banks. Banks may significantly reduce their costs, according to the ECB study, but will face increased competition. SEPA will also offer banks an opportunity to market new, value-added services related to the payment chain. The ECB and the EC called on banks to maintain momentum in the SEPA process so that users can migrate quickly in a market-led process to the new SEPA payment instruments and the costs of dual payments, i.e. existing national payment instruments plus the new SEPA standards, can be kept to the minimum. This also calls for the rapid launch of the new SEPA payment instrument for direct debits and the full adoption of the SEPA Cards Framework by relevant stakeholders. “Corporates and public administrations stand to gain substantially from the efficiencies made possible by SEPA as heavy users of payment instruments,” the ECB and EC said. They hope that they will play an important role in the success of SEPA by being early adopters of SEPA instruments in a market-driven process avoiding deterioration in the price and performance characteristics compared with existing national payment instruments. The official launch of SEPA will be marked with a launch event in Brussels on Monday night, hosted by Charlie McCreevy (Internal Market and Services Commissioner, EC), Gertrude Tumpel-Gugerell (Member of the Executive Board, ECB) and Gerard Hartsink (Chairman, European Payments Council). Related articles
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