SEPA makes first step towards Euro harmony


28 Jan 2008

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After six years of planning, the Single Euro Payments Area (SEPA) was officially launched in Brussels today, marking the beginning of the standardisation of payment systems in the Eurozone so that making a payment into a bank account anywhere in Europe should be the same as between Irish banks.

While there is a single currency within the Eurozone, many contend that it is not, strictly speaking, operating as a single currency if credit transfers from country to country are not as free as those transacted within the borders of the individual country itself. SEPA hopes to make all electronic payments within the Eurozone as simple as domestic transactions.

However, SPEA is a voluntary concept meaning that countries can participate of their own free will and are not under any legislative obligation to join this European initiative.

“The initiative has been six years in the making, and it’s planned that by 2011 the majority of bank customers should be using SEPA systems,” said Colm Lyons, managing director of Dublin-based online payment service provider, Realex.

“It’s an underlying infrastructural change that will pave the way for significant benefits for both businesses and people in terms of payment processing.”

The initiatives coming from SEPA will be felt by Irish businesses who have bases in several European countries, especially importers and exporters, in a situation where making and receiving payments can be time-consuming as companies are required to hold separate bank accounts in the countries they are doing business with.

A Single European Payments Area should mean that one, and only one, bank account is needed and that processes such as direct debit and direct credit will be made effortless.

“The processing of electronic payments is something that happens every day and each person, business and bank in the country are involved. Normally everything works and therefore we don’t hear about the systems and the processes that support the payments,” explained Lyons.

“While SEPA will be implemented over several years, its impact and the level of change needed is not clear in certain areas but the scale of the change should not be under-estimated.

“A high degree of collaboration among the payment industry, users, processors and financial institutions, was important to ensure delivery of the benefits,” Lyons noted.

By Marie Boran

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