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* SEPA: Easier Credit Transfers but Uncertain Cost Cuts







Since January 28, every credit transfer carried out in euros is processed in the same way across Europe, with identical procedures and the same time frame but at a cost that will remain different from bank to bank “for a certain time”.

The Single Euro Payments Area (SEPA) seeks to extend the possibilities offered by the common European currency to electronic and non-cash payments, which at
the moment are only possible in Europe under a range of different national schemes that make them more complicated and less reliable. The second step in the introduction of SEPA will be the launch at the end of 2009 of a common instrument for direct debits, after the full implementation of the Payment Services Directive, which constitutes the necessary legal framework to apply the foreseen measures. Direct debit payments are executed by a bank automatically  following instructions from the customer.

The final phase of SEPA’s entry into force will be the introduction by the end of 2010 of a European credit card, featuring a microchip and a common security system. The issuing companies will remain the same but the requirements for the new cards will be harmonised across Europe.
SEPAis designed to harmonise all credit transfers carried out in euros regardless of borders. This move is a direct consequence of the adoption of the euro, which since January 2002 has been the only currency used for cash payments across the eurozone, irrespective of the country. Brussels identifies benefits for consumers, business, public administration and banks thanks to the new common payment system. Consumers will be able to have a single bank account, used for all their financial operations in euros across Europe. In addition, all the operations will take a maximum of three days, regardless of the country of destination. At the moment, a range of procedures are either prohibited or more complex if carried out in a different country.

The Commission also hopes to see a decrease in the cost of operations covered by SEPA. Brussels thinks that making the use of services offered by banks easier regardless of the country concerned will allow customers to make the best choices and force banks to become more competitive and cut costs. But price differences for credit transfers are not expected to change overnight, according to the banking sector. The Commission is sure that the new system will bring bank costs down.