SEPA Fact Check: the SEPA Benefits Projected by EU Governments, the Eu...

SEPA Fact Check: the SEPA Benefits Projected by EU Governments, the European Parliament, the European Commission and the European Central Bank

29 November 13

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(Note: the European Payments Council is not part of the institutional framework.)

In August 2013, we noticed this remark on Twitter: “# is the most stupid thing ever. No one needs this [expletive].” With emails addressed to the European Payments Council ( ) in September 2013, a commentator pointed out (bold added): “I would like to register my absolute disapproval of your payments system. How you think this will make Europe more ‘dynamic and competitive’ is really beyond me. (...) This just wraps us up in more bureaucracy (...) the authorities in Europe lack an understanding of what we need.” In response, the shared an invitation to consider the testimony of payment service users who reported on the tangible benefits generated with migration to the Single Euro Payments Area ( ). The verdict of this market participant however, remained: “There is no justification [for ].” It has to be recognised that opinions on the merit of further European Union ( ) payment integration may differ. The comments cited here and similar observations occasionally articulated in the debate however also indicate that misunderstandings persist as to who invented the concept and mandated migration to . This author clarifies (again): it was not the .

is a European Union ( ) integration initiative pursued by the governments and the institutions, i.e. the European Commission, the European Parliament, the Council of the representing Member States and the European Central Bank. The is not part of the institutional framework. The is one stakeholder group among many impacted by the policy-maker-driven programme. The is not responsible for the overall management of the process. The is therefore, not in a position to address concerns of any citizen with regard to policies in the area of payments determined by the institutions.

In February 2012, the legislator, (i.e. the European Parliament and the Council of the representing Member States), formally adopted the ‘Regulation ( ) No 260/2012 establishing technical and business requirements for credit transfers and direct debits’ (the Regulation). From 1 February 2014 onwards, organisations making payments in the euro area will have to carry out credit transfer and direct debit transactions in line with the core provisions set out in the Regulation. Effectively, this means that as of this date, existing national euro credit transfer and direct debit schemes in the euro area will be replaced by Credit Transfer and Direct Debit. The Regulation is the first legislative act in the context which defines also compliance requirements to be met by payment service users, (earlier payments legislation adopted between 2001 and 2009 focused on engaging payment service providers in the process. For more information, refer to the Website page, entitled ‘ Legal and Regulatory Framework’ included in the links below.) This blog cites the expectations articulated by the governments and institutions driving the programme on the benefits to materialise once is completed.

According to the governments and the institutions, further integration of the euro payments market will strengthen the common currency and result in faster, more efficient payment services for payment service users in a more competitive market.

“The replacement of existing national payment systems by holds a market potential of up to 123 billion euros in benefits over six years for the users of payments services - provided that migration to the new payment instruments takes place rapidly.”

Study carried out at the request of the European Commission: ‘SEPA: Potential Benefits at Stake. Researching the Impact of SEPA on the Payments Market and its Stakeholders' (Capgemini), 2007.

“I have yet to meet an informed person who does not see the need and potential of . Clearly, we need to complete euro monetary integration and to create an efficient payments market supporting the single market, which is one of the great European achievements.”

Charlie McCreevy, then EU Commissioner for Internal Market and Services, January 2009.

“SEPA can significantly contribute to the modernisation of public administration (...) as well as to the efficiency and growth of the wider European economy by developing value-added-services such as e-invoicing.”

Council of the EU representing EU Member States, December 2009. (The Council of the EU is the EU institution where the Member States’ government representatives sit, i.e. the ministers of each EU Member State with responsibility for a given policy area.)


Also the European Commission has consistently articulated the expectation that the legal and technical harmonisation exercise will contribute to streamlining business processes beyond payments by replacing paper-based procedures with standardised electronic solutions. The Commission Communication ‘A Digital Agenda for Europe’ (2010) is one of the seven so-called flagship initiatives of the Commission’s ‘Europe 2020 Strategy’ (see links below). The Digital Agenda for Europe defines the key enabling role that the use of information and communication technologies will have to play if Europe wants to succeed in its ambitions for 2020. Section 2.1.2 of the Digital Agenda for Europe, states: “SEPA will also provide a launch platform for value added services linked to payments, such as the development of a European e-invoicing framework.”

“Requiring banks to comply with rules will enable their clients to use a single bank account to make euro payments to and from all countries. (...) Transfers should become cheaper, faster and safer. (...) Businesses could set up cross-border direct debits in euro between any two bank accounts anywhere in the , enabling them to bill customers regularly across borders. (...) Businesses could also organise all cross-border euro payments from a single euro account in a country of their choice in order to improve money management and speed up cash flows at lower cost.”

European Parliament press release, 14 February 2012.

“The advantages of are considerable for the euro area (...) in particular, the project is an important element for the integration of financial services in Europe. The Eurosystem, under its mandate, is committed to supporting the project to promote the smooth operation of payment systems, both as a contribution to the efficiency of the euro area economy and as a way to support continued trust in the euro.”

Mario Draghi, President of the European Central Bank, October 2013. (The Eurosystem comprises the European Central Bank and the national central banks of the EU Member States whose currency is the euro.)

“Within the boundaries of the approach of this paper, we also find an overall positive effect on a country’s GDP by 0.02% if instruments were effectively implemented and adopted.”

European Central Bank Working Paper ‘Retail payments in the real economy’, August 2013.


pioneers on the demand side confirm: migration to generates tangible benefits

The proof of the pudding is in the eating. The representatives of businesses, public administrations and government agencies who reported on their successfully completed implementation projects in the Newsletter (see links below) confirm that timely migration to is manageable, feasible and beneficial. There is no doubt that the scope of change required to ensure compliance is extensive, but it does pay off. Full compliance will lead to more streamlined internal processes, lower IT costs, reduced costs based on bank charges, a consolidated number of bank accounts and cash management systems, and more efficiency and integration of an organisation’s payment business. Early adopters that fully reaped the advantages offered with the payment schemes and technical standards emphasise that compliance is just the first step, organisations can then focus on generating the efficiencies.

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