BRUSSELS – The EU Single Euro Payments Area (Sepa) goes live today, with a Brussels launch party at the Charlemagne building held by the European Commission (EC), European Central Bank and the European Payments Council.
Sepa will enable cross-border credit transfers with a single currency to be made in no more than three days across the 27 EU member states, plus Liechtenstein, Iceland, Norway and Switzerland, without deductions from the principle amount. It marks the latest effort towards creating a single European market.
Although not in the single currency’s eurozone, many UK banks are already Sepa-compliant. They make up about 85% of the UK payments market, according to payments association Apacs.
UK transaction processor Vocalink says it has already processed its first Sepa transaction from Austrian bank Bawag to Fortis bank in Belgium, while a number of large banks – including ABN Amro, Bank of America, Citigroup, Fortis, Lloyds TSB, Royal Bank of Scotland and Santander – have already outsourced their Sepa compliance through Vocalink.
Sepa transactions will continue to run alongside existing payment forms. “We would like to have an end date, but we’ll have to come back and revisit it because it wasn't agreed on,” says European internal market and services commissioner Charlie McCreevy.
The EC says Sepa can save €123 billion wasted through costs and inefficiency in cross-border payments over the next six years. An additional €238 billion could be saved if Sepa is extended for electronic invoicing.
But industry sources say many banks will struggle to meet Sepa compliance deadlines and many corporate customers will not be fully Sepa-compliant until after 2010. A wave of consolidation is also expected, as the bigger banks expand their share of the market and the smaller institutions are forced to specialise or outsource transactions.