SEPA - Overview

SEPA changes the euro payments landscape

Within the Single Euro Payments Area (SEPA), the European payments landscape is essentially borderless. Cashless payments such as credit transfers and direct debits made in and to countries belonging to the SEPA community are just as simple, quick and cost-effective as domestic payments.

For credit transfers, this has already been a reality since January 2008. Whereas national payment schemes differed considerably before, new technical standards and harmonized formats are now in use, allowing companies and consumers to use the SEPA Credit Transfer (SCT) to make euro credit transfers across Europe under the same terms and conditions.

A similar simplification has been realized for direct debit payments through the introduction of two SEPA Direct Debit (SDD) instruments – the SEPA Core Direct Debit and the SEPA Business-to-Business Direct Debit – in November 2009. Besides the capability to replace the current domestic legacy direct debit schemes, the SEPA Direct Debit can also be used for cross-border direct debits. As such, it was a truly new instrument, since cross-border direct debits did not exist before.

However, the slow migration from existing credit transfers and direct debits to SCT and SDD has led the European Commission to present a  proposal for regulating the end dates for SEPA migration.  The idea is to have SCT and SDD fully replace existing credit transfers and direct debits, rather than existing in paralell.

The Commission, which received support from the European Central Bank as well as from many industry participants, was of the view that an end-date is needed to ensure the success of the SEPA project.

This proposal has been reviewed and finally approved by the European legislators, namely the European Parliament and the Council of the EU.  All three EU institutions have agreed in the so-called "trilogue negotiations" on a common and final version of the Regulation ("Regulation establishing technical requirements for credit transfers and direct debits in euros").

The law will contain  a SEPA-migration end date of 1 February 2014 for both Credit Transfers and Direct Debits.  This means that SEPA migration is no longer a voluntary project but instead now has become a regulatory project, because the use of SCT and SDD will become mandatory.  To be ready to migrate no later than in the course of 2013, corporate preparations for it should commence right away.

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SEPA Newsletter #17

Our 17th SEPA newsletter outlines the latest SEPA news:
Transition period for SEPA migration end date: In its statement of January 22, 2014 the German SEPA Council (SEPA-Rat) has confirmed that electronic payments in the existing legacy format can still be accepted after the SEPA migration end date of February 1.
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Last Update: 18.2.2014
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