Single Euro Payments Area: Wikis


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The 32 member states of the Single Euro Payments Area

The Single Euro Payments Area (SEPA) initiative for the European financial infrastructure involves the creation of a zone for the euro in which all electronic payments are considered domestic, and where a difference between national and intra-European cross border payments does not exist. The project aims to improve the efficiency of cross border payments and turn the fragmented national markets for euro payments into a single domestic one: SEPA will enable customers to make cashless euro payments to anyone located anywhere in the area using only a single bank account and a single set of payment instruments.[1] The project includes the development of common financial instruments, standards, procedures, and infrastructure to enable economies of scale. This should in turn reduce the overall cost to the European economy of moving capital around the region (estimated today as 2%-3% of total GDP).[2]



There are two major milestones for the establishment of SEPA:

  • Pan-European payment instruments for credit transfers started 28 January 2008. Direct debits and debit cards will be available later (before 2011).
  • At the end of 2010, all present national payment infrastructures and payment processors should be in full competition to increase efficiency through consolidation and economies of scale.

For direct debits, the first milestone has been missed due to delay in the implementation of enabling legislation, the Payment Services Directive (PSD), in the European Parliament. Direct debits will not be available until 2009. This will put severe pressure on the second milestone.[3]

The European Commission has established the legal foundation through the Payments Services Directive (PSD). The commercial and technical frameworks for payment instruments are being developed by the European Payments Council (EPC), made up of European banks, and are mostly finalised as of July 2007. The EPC is committed to delivering three pan-European payment instruments:

  • For credit transfers: SCT – SEPA Credit Transfer
  • For direct debits: SDD – SEPA Direct Debit
  • For cards: SEPA Cards Framework

To provide end-to-end straight through processing (STP) for SEPA-Clearing the EPC committed to delivering Technical Validation Subsets of ISO 20022. Whereas bank-to-bank messages (pacs) are mandatory for use, customer-to-bank message types (pain) are not; they are strongly recommended however. Because there was tolerance left for interpretation, it is expected that several pain-specifications will be published across SEPA-countries.

The Euro Banking Association (EBA) has introduced a Pan-European Automated Clearing House (PE-ACH), via its EBA CLEARING subsidiary. It provides a clearing and settlement mechanism needed for banks to exchange SEPA credit transfers and direct debits. Both services were implemented in time for the launch of SEPA in January 2008. Other organisations, such as existing national payment processors, have also announced their intentions to clear and settle SEPA payment instruments.

Businesses, merchants, consumers and governments are also interested in the development of SEPA; the European Associations of Corporate Treasurers (EACT), TWIST, the European Central Bank, the European Commission, the European Payments Council, the European Automated Clearing House Association (EACHA), payments processors and pan-European banking associations (European Banking Federation, EBF; European Association of Co-operative Banks, EACB; European Savings Banks Group, ESBG) are playing an active role in defining the services which SEPA will deliver.

Since January 2008, banks are migrating customers over to the new payment instruments. By 2010, the majority should be on the SEPA framework. As a result, banks throughout the SEPA area (not just the Eurozone) will need to invest heavily in technology with the capacity to support SEPA payment instruments.

The introduction of SEPA will increase the intensity of competition among banks and corporates for customers across borders within Europe. It also provides a business opportunity for a range of other organisations, including payment processors such as VocaLink and Equens and SIA-SSB, to help banks reduce costs and develop new payment services.

Multi-national businesses and banks have the opportunity to consolidate their payments processing onto common platforms across the Eurozone. They will benefit from substantial efficiencies by choosing among competing suppliers offering a range of solutions and operating across borders.

For consumers and organizations, SEPA could mean cheaper, more efficient and faster payments transfer when moving Euro from one Eurozone country to another.

Territorial coverage

SEPA consists of 32 countries:

It includes the following territories that are considered to be part of the EU in accordance with Article 299 of the Treaty of Rome: Martinique, Guadeloupe, French Guiana, Réunion, Gibraltar, Azores, Madeira, Canary Islands, Ceuta and Melilla and Åland Islands. [1]

Vatican City and San Marino which use the Euro by agreement with the EU will be part of SEPA[citation needed]. The principality of Andorra will not, despite its de facto adoption of the euro as its currency, because it does not have an official currency[5].

Montenegro and Kosovo that use the Euro as their official currency without an agreement with the EU are not part of SEPA.


SEPA is an initiative of the European Payments Council. It is supported by the European Central Bank and the European Commission, the latter strongly involved via the Payment Services Directive.


There is a common misconception that all wire transfers in the SEPA region are (by law) free to the consumer.[citation needed] The European Parliament merely mandated that a bank charge the same amount for local/national wires as for SEPA wires (which may be transnational). Banks still have the option of charging a wire transfer fee of their choosing, as long as it's charged uniformly to all SEPA banks [6].[citation needed]

Main objectives

The main objectives of SEPA

  • Standardization of Euro payments: equal time limits, equal fraud levels, equal processes, all-electronic straight through processing, no differences between national and international payments in the SEPA area; strengthening trust and reliability on a pan-European basis.
  • Competition in respect to higher number of competitors, fewer niches or special fields or incompatibilities through standardization.
  • Reduction of costs of electronic money and of payment transactions through competition at the side of payment providers and banks — both are considered as the biggest losers of the SEPA standardization process at an estimated € 40,000,000,000 per year).
  • Reduction of cash money and increase of electronic money through reduction of costs of electronic money.
  • Increasing surveillance of (electronic) money flow particularly regarding money laundering and terrorism funding (unofficially also for surveillance of illicit work [10-30% of GDP's], organized crime and taxes).

Key dates

1957 Treaty of Rome creates a European Community
1992 Maastricht Treaty creates the Euro
1999 Introduction of the euro as an electronic currency, including introduction of the RTGS system TARGET for large-value transfers
2000 Lisbon Agenda. The meeting creates a European Financial Services Action Plan
2001 EC Regulation 2560/2001 harmonises fees for cross-border and domestic euro transactions
2002 Introduction of Euro banknotes and coins
2003 First pan-European ACH (PE-ACH) goes live. EC Regulation 2560/2001 comes into force for Euro transactions up to €12,500
2006 EC Regulation 2560 cap increases Euro transactions up to €50,000
2008 SEPA pan-European payment instruments become operational in parallel to domestic instruments on 28 January.[7]
2009 PSD - Payment Services Directive (PSD) to be implemented in national laws by November
2010 SEPA payments will become the dominant form of electronic payments
2011 SEPA payments will replace all national payments in the Eurozone

Progress Report

In November 2008, the European Central Bank published its 6th progress report on SEPA (see links below)

In barely disguised diplomatic language, the ECB expressed frustration at the lack of clarity on many aspects of the SEPA, and implored the banks, regulators, and the software industry to get on with the job. It has set out ten questions for which it wants answers, and has set out a timetable for those answers. The questions mainly require clear and unambiguous decisions at European level, but given the multi-national nature of SEPA, the collective answer requires national commitment in each country.

The main ECB criticism is of the SEPA governance process, which is poorly resourced, lacking in clarity, and failing to involve a sufficiently wide range of interested parties.

The European Central Bank regards SEPA as an essential element to advance the usability and maturity of the Euro currency. SEPA went live in Jan 2008, but only 1.5% of credit transfers within Europe are executed according to SEPA standards.

The main points presented in the 39-page report are:

  1. Banks must create greater awareness of SEPA, and must offer better products, based upon the SEPA infrastructure. Government should accelerate programs to adopt SEPA as the standard for its disbursements.
  2. The banking industry must commit to work together to remove obstacles which might compromise the Nov 1 2009 launch date of the SEPA Direct Debit. Debates on the launch date, the validity of existing DD mandates, and interchange fees must be closed out rapidly.
  3. Bank systems need to be improved to enable end-to-end straight-through-processing, originated by files submitted or by e-payment, e-invoicing, and m-payments.
  4. The ECB wants to see a target end date for migration to SEPA products, and for exiting out of older credit transfer and direct debit.
  5. The SEPA card framework in its current form has not yet delivered the reforms which the ECB wants. In particular, ECB wants to see a European card scheme emerging.
  6. The ECB perceives a lack of consistency in card standards. It wants to ensure that a clear set of standards are adopted and promoted throughout the industry.
  7. A common, high level of security for Internet banking, card payments and online payments is needed.
  8. Clearing and settlement organisations in many countries have made good progress on SEPA, and several are upgrading from national to pan-European.
  9. The banking industry, and its representative body, the EPC have not sufficiently involved other stakeholders. Furthermore, the EPC itself does not have sufficient resources or support to enable it to complete its task.

In this situation, the ECB has set out 10 issues which it wants to see resolved, and has set deadlines by which it wants to see clear responses.

  • Deadline end-March 2009
    • How will the legal continuity of Direct Debit mandates be ensured?
    • In the longer term, what is the proposal for the methodology of the multilateral interbank arrangement for national and crossborder SEPA Direct Debits? (In simpler terms, where two banks are involved in a SDD transaction, what fee will be payable by one bank to the other?)
  • Deadline end-June 2009
    • A review and revision of Regulation 2560/2001/EU should be agreed for implementation by November 2009 to coincide with the Payment Services Directive and the launch of the SEPA Direct Debit. Regulation 2560 limits the pricing of cross-border transactions.
    • When will todays legacy Credit Transfer systems be turned off and fully replaced by the SEPA Credit Transfer?
  • Deadline 1-November 2009
    • Will we have a situation where all banks which currently offer Direct Debits will offer SEPA Direct Debits?
    • Will we have the Payment Services Directive transposed into national law in all of the SEPA countries? Will banks and other service providers have achieved full compliance?
  • Deadline end-December 2009
    • What is the agreed framework for future e-invoicing systems?
    • When will today's Direct Debit systems be turned off and fully replaced by the SEPA Direct Debit?
    • A clear declaration is required regarding the creation of additional European SEPA-compliant card schemes.
  • Deadline end-December 2010
    • Full-scale implementation of "SEPA for cards". Among other things, this will require an EMV chip on all cards issued in SEPA countries.

See also

The Structured Creditor Reference ISO 11649 that will be in Rulebook 4.2. ISO 20022 XML that is currently technical solution behind SEPA. offers SEPA-XML validation service. See also


External links



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