Payment systems

The Single Euro Payments Area: SEPA

Since the introduction of euro banknotes and coins on 1 January 2002, citizens of the euro area have been paying in cash using the same currency in any of the member states, as easily as they once did in their respective countries using their former national currencies.

However, what has now become a reality for cash payments is still a project for other types of payments. The implementation of the euro as a single currency in euro area countries will be complete only when the Single Euro Payments Area (SEPA) becomes a reality; i.e., when individuals and companies can make cashless payments throughout the euro area from a single account located anywhere within the area, using a single set of payment instruments and as easily, efficiently and safely as they can in their home country.

However, the objective of SEPA is not only to improve euro payment processes between countries, but also to develop common instruments, standards, procedures and infrastructures. When this project is complete, all payments in the SEPA area will be considered internal and the current differentiation made between domestic and cross-border payments will no longer exist.

This project is directed by the European Payments Council (EPC), the main decision-making and coordinating body of the European banking industry in this matter. It is also responsible for defining new instruments and the standards needed for guaranteeing the efficiency of payments in the SEPA.

From an institutional point of view, the European Commission and the central banks will collaborate closely during the process, helping to eliminate any possible technical, legal or commercial obstacles, and endorsing the objectives to create a single area.

The European Commission has drawn up the Payment Services Directive, which when adopted shall establish a set of rules applicable throughout the European Union (EU).

Meanwhile, the central banks frequently contact stakeholders to analyse the project's progress and the degree to which the agreed requirements and expectations have been met. The European Central Bank (ECB) periodically publishes progress reports reflecting the results of these analyses.

Since January 2008, citizens and companies can order transfers using the new SEPA instrument, in addition to the existing domestic transfers. When the new Law on Payment Services transposing the Payment Services Directive comes into effect, it will also be possible to use the new pan-European direct debit instrument.

With regards to payment cards, the aim is to eliminate all legal, operative and business barriers to guarantee the necessary interoperability so that this instrument can be used without any geographical restrictions.

As from 2010, after producing the appropriate standardisation and making the necessary adaptations to the various infrastructures that process these transactions, these pan-European instruments will be used in the main, making SEPA an irreversible reality.