The Single Euro Payments Area (SEPA) – the private-sector
project developed by European banks that seeks to ensure
standardised cross-border payment instruments are made available
across Europe – went live on 28 January for credit transfers.

The initiative has been designed with the goal of ensuring that
electronic payments made across the region – by bank transfer,
direct debit, credit or debit card – should become as
straightforward as domestic payments, thanks to the adoption of
common processing standards and systems. Direct debit changes are
scheduled for late 2009.

“We believe enormous benefits are going to accrue to consumers and
businesses in Europe,” said Charlie McCreevy, European Commissioner
for Internal Market and Services.

A report by the European Commission on SEPA compliance concludes
the combination of payments market harmonisation and e-invoicing
offers potential benefits of €123 billion ($178 billion) over the
next six years, and another €238 billion if SEPA can be used as a
platform for electronic invoicing. Europe’s banks can offset
revenue pressures caused by the new system through efficiency
improvements, taking advantage of scale economies and access to an
enlarged European payments market, adds the EC.

4,000 banks have signed up

According to the Brussels-based European Payments Council (EPC),
which has spearheaded the project, around 4,000 banks in Europe –
about one-half of all banks in the region but accounting for about
80 percent of transactions – have signed up. Speaking at the launch
of SEPA, EPC chairman Gerard Hartsink said “this is the end of the
beginning”, adding his organisation must now turn its attention to
new challenges such as direct debits and e-payment channels.

According to EPC’s own figures, there are 9,000 banks, 504 million
people, 18 card schemes, over 20 automated clearing houses, 6.7
million POS units and 339,000 ATMs in the 31 countries involved in
the SEPA initiative – the 27 EU nations plus Switzerland, Iceland,
Norway and Liechtenstein.

At present, only two players, Visa and MasterCard, cover all 31