What is SEPA
The Single European Payments Area is an initiative to unify electronic payments in Euros across the 31 Countries (36 territories) and to ensure that they are as simple as domestic payments. It will ensure that cross border or domestic payments will benefit from the same basic conditions and rights regardless of where they are within the SEPA territories.
The SEPA region will ensure all the national electronic payment infrastructures and services adhere to a set of standards, as can be seen in the diagram below (diagram courtesy of the European Payments Council)
Today
Tomorrow
| 12 euro | 29 | |
|---|---|---|
| Population | 310m | 470m |
| Corporates | 17m | 25m |
| Banks | 7-8k | 9k |
| ACH Schemes | 10 | 20+ |
| Card Schemes | 14+ | 18+ |
| POS | 4.5m | 6.2m |
| ATM's | 238k | 326k |
| Electronic transactions | 50b | 73b |
| Today - Different Country Implimentations | Tomorrow - Harmonised SEPA |
|---|---|
| National / local solutions | Common solutions additional optional services |
| Different schemes, experiences, stnadards, consumer protection laws | Common core payment instruction and experiences consistent standards, application of harmonised consumer protection laws |
| No interoperability of national schemes | Improved interoperability |
| Different country implimentations | Harmonisation and consolidation |
| Cross-border complexity and risk | Reduced complexity, improved efficiency |
The forms of payments that will be covered by this legislation are
These initiatives have begun to affect the region as of the 1st of January 2007, with the requirement for an IBAN and are due to be fully in place by the end of 2010 thereby making payments faster, transparent and more secure for all entities across the region from individuals to Corporates and Banks.
The SEPA schemes are designed around the following components to give wide ranging benefits across the SEPA region
| SEPA Credit transfer | SEPA Direct Debit |
|---|---|
| Full SEPA-wide reach | Full SEPA-wide reach |
| Transfers into euro initiated from cutomer accounts | Recurrent and one-off payments in euro |
| Basic credit non-urgent transfers | |
| Both parties (Creditor & Debtor) hold accounts with SEPA Scheme Participants | |
| Uses IBAN & BIC as account codes | Uses IBAN & BIC as account codes |
| Based on UNIFI (ISO 20022) XML standards | Based on UNIFI (ISO 20022) XML standards |
| Common maximum 3-day time cycle (subject to PSD provisions) | 2-day time cycle unless it is a first payment when 5 days are necessary for set up and first payment |
| Accomodation secure customer reference data | Accomodation secure customer reference data |
| No deductions from principal amount separate fees | |
| No Value limit at scheme level (sending banks set own limits) | Limit will be set for C2B payments |
| Receiving banks accept payments any value | |
| Specific rules for "due date" - "settlement date" - "debit date" | |
| Clear sepecification on mandate data and contractual terms | |
| Dematerialises mandate - transmission to debtor bank | |
| Reflects FATF SR7 regulation | |
| Common rules for clearning settlement | Common rules for clearning settlement |
| Comprehensive rules for rejects and returns | Comprehensive rules for rejects and returns |
| Ability to provide additional optional servics | Ability to provide additional optional servics |