— Net benefit seen at EUR 123 bln, useful for e-commerce
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The Single Euro Payments Area (SEPA) went live this week and European banks formally launched 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.
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 enables people to make payments throughout the euro area as quickly, safely and easily as they make national payments. In SEPA, all euro payments are considered domestic and are made with one set of payment instruments. It is thus a natural progression to the introduction of the euro and another major step in realising the full potential of the single market for
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.
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— Major cost-benefit
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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 November 1, 2009. For card payments the SEPA Cards Framework has been in force since January 1, 2008.
SEPA will make a significant contribution to the Lisbon Agenda by improving 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.
SEPA will create huge benefits, as shown by two studies by the ECB and the EC. In particular, the study carried out by the EC shows that the potential benefits from SEPA in payments markets alone could exceed EUR 123 bln over the next six years, and a further EUR 238 bln 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. According to the ECB study, banks may significantly reduce their costs, 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 have called on banks to maintain momentum in the SEPA process so that users can migrate quickly in a market-led process to the new 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.
As heavy users of payment instruments, corporates and public administrations stand to gain substantially from the efficiencies made possible by SEPA. They should therefore 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.
