SEPA for Customers
SEPA will affect everyone from individuals to large corporates bringing wide ranging benefits for Euro payments both domestically and cross border. Individuals will be able to make cross border payments from a single home account to anywhere in the SEPA region with the same speed, ease and cost.
Merchants and corporates will be able to accept payment by card from anywhere within SEPA and receive the funds quickly and efficiently, improving cash flow and reducing their overheads.
Corporates will also benefit from simplified back office systems leading to greater efficiency and better validation of payments reducing payment failures.
The table below highlights the benefits for specific benefits for Consumers and Corporates.
| Consumers | Corporates | |
|---|---|---|
| Common SEPA standards |  |
|
| More options for making payments |  |
|
| One account serves all Europe | |
|
| Transparency and clarity of charges | |
|
| Common processes with reduced costs/complexity | |
|
| Predictable execution times | |
|
| New SEPA Direct Debit Scheme | |
|
| Common Scheme Governance | |
|
| Transaction pooling / STP multi country operations, better liquidity management | |
|
| End to end automated processes | |
|
| EU wide acceptance of payment cards | |
|
| Increased card transactions through cash displacement | |
|
| Reduced fraud | |
|
| Increased choice of processing services | |
|
| Lower cost standard software and services | |
Merchants should benefit for all the areas highlighted above.
Customer FAQ
Why do we need SEPA? I thought the introduction of the euro made cross border payments quick, cheap and easy.
Despite the introduction of the single currency, some banks can take up to seven days to transfer funds between some countries. Consumers can also be hit by double-charging - once by the sender, once by recipient bank - according to Beuc, the European consumer organisation.
Account holders can in effect lose up to seven days interest on cash and electronic deposits and withdrawals as a result of "value-dating". This delays the crediting of deposits, for example.
Most debit cards only work domestically, limiting payment choices for many consumers when abroad.
And consumer protection can vary widely: in France, for example, cardholders may be required to write in to their issuer before a card is registered as lost.
And SEPA will change all that?
It should help. From 2008 transfers should take no longer than three days - and one day by 2012. And there should only be one charge - which should be no more than for a domestic transfer.
Bank credits must be value-dated on the day money arrives in an account. Domestic payment cards are to be enabled for purchases in other EU countries.
Additionally, Europeans should benefit from common consumer protection standards, for example in terms of liability when a card is lost.
Who is affected by SEPA?
All consumers in the EU, as SEPA is directed at the Euro Market and will not affect currencies outside of the Euro.
I own a home in one European country but work in another? Will SEPA simplify my finances?
It should. Currently Europeans with overseas holiday homes typically open a local bank account for payments and, if they let out their property, for rental income to be paid into. Indeed, utility companies will often only accept payments from local bank accounts. In future there should be less need to run such accounts.
In future, rather than having to set up a local bank account, you should be able to rely on your existing home account and payment cards - with more predictable transaction timeframes, charges and speed of payment.
That's all very well but I live in London. Will it be easier for me to deal with the eurozone?
Banks will still charge you exchange rates that will include a fee to offset the currency exchange, but the three day timeframe will apply for transfers and payments from sterling to eurozone.
When will these changes come into effect?
They will start to take effect from 2008, although not all banks may be ready to address all the business requirements of SEPA from day 1. This is illustrated by research that shows that 63% of banks lack of coordination across the areas which will cause issues as we move towards the SEPA deadlines.
No surprise there then. What problems should I look out for?
For some consumers a three day transfer standard may actually be slower than they're used to. For example in Belgium transfers can take as little as a day, in Estonia just a few hours.