Single European Payments Area Goes Live

by Philip Morton, Investors Offshore.com

28 January 2008

The SEPA (Single Euro Payments Area) went live on Monday, and European banks formally launched the first SEPA payment instrument for credit transfers, the European Commission has announced.

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 Commission and the European Central Bank explained in a joint statement that: "This is a logical extension to the introduction of the euro and will produce substantial benefits through a more competitive and efficient payments market."

SEPA is designed to enable people to make payments throughout the euro area as quickly, safely and easily as they make national payments.

Under SEPA, all euro payments are considered domestic and are made with one set of payment instruments. SEPA is thus a natural progression from the introduction of the euro, and another major step in realising the full potential of the single market for Europe.

SEPA payments can also be used for euro payments within the EU but outside the euro area, as well as in a number of neighbouring countries.

The statement went on to add that: "The European Central Bank (ECB) and the European Commission (EC) welcome the official launch of SEPA and acknowledge the substantial preparatory work undertaken by European banks, through the aegis of the European Payments Council, to create SEPA."

"This week therefore marks an important milestone in the SEPA migration process with the official launch of the first 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 EC observed that: "SEPA will make a significant contribution to the Lisbon agenda. It will improve the efficiency of EU payments markets and stimulate innovation, thereby increasing the competitiveness of the European economy. In the public sector, SEPA could be used as a platform to drive e-Government, thus contributing to the efficient delivery of public services."

To mark the official launch of SEPA, Charlie McCreevy (Internal Market and Services Commissioner, EC) Gertrude Tumpel-Gugerell (Member of the Executive Board, ECB) and Gerard Hartsink (Chairman, European Payments Council) on Monday hosted a SEPA launch event in Brussels, with distinguished guests from the EU payments market in attendance.

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