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SEPA end date set for 1st February 2014

The European Parliament agreed the SEPA end-date today, making it legally binding for banks to offer SEPA payment processes from 1st February 2014.

Here's the Parliament's press release:

Cross-border bank transfers should become faster, cheaper and safer for EU citizens thanks to "single European payments area" legislation passed by Parliament on Tuesday. EU-wide rules to ensure that banks compete fairly, eliminate hidden national charges, and accelerate transfers could save up to €123 billion within six years, benefitting clients, banks, and businesses.

"This regulation really benefits citizens. It will enable them to make payments from one bank account to others all over Europe, just like a normal domestic payment. It will be possible to make all cross-border credit transfers and direct debits in the same way as normal domestic payments. A person working abroad will not need to open a new bank account in the host country, but may receive his or her salary in the home country bank account. Companies will benefit too, by not needing more than one bank account in Europe for each payment purpose", said SEPA rapporteur Sari Essayah (EPP, FI).

The single European payments area (SEPA) regulation lays down common rules and standards for euro credit and direct debit transactions among banks. It would not apply to personal credit or debit card payments.

Requiring banks to comply with SEPA rules will enable their clients to use a single bank account to make euro payments to and from all SEPA countries.

To this end, the rules will ensure that euro credit transfers or direct debits that are possible within SEPA countries are also possible across frontiers between them.

The legally-binding deadline for banks to migrate to the new system is 1 February 2014. Parliament's negotiators insisted on a single deadline for all euro credit and debit payments to make the switch to the new system easier to understand for EU citizens.

Benefits to citizens

For EU citizens, it will no longer matter in which Member State a bank account is held. Transfers should become cheaper, faster and safer.

For example, EU citizens moving within the Union could use a single euro account, into which a salary earned in another country could be paid. They could also pay bills in one country through an account held in another.

All account users stand to gain, because international competition among service providers should drive down prices.  Increased competition among banks to supply services should also help to cut today's inflated costs, and where costs are already low, they should remain so.

Parliament's negotiators sought to make the migration to SEPA standards easier for bank clients, by enabling banks to offer conversion services from national systems and to phase out the need to provide the Business Identifier Code (BIC) code (the IBAN international bank account number should suffice).

Another gain is a requirement to apply non-discriminatory charges to transfers, irrespective of the amount involved.

Benefits to businesses

Businesses could set up cross-border direct debits in euro between any two bank accounts anywhere in the EU, enabling them to bill customers regularly across borders.

By eliminating multilateral interchange fees on cross-border direct debits as of 2012, the regulation will enable businesses to establish their payment centres in any EU Member State.

Businesses could also organise all cross-border euro payments from a single euro account in a country of their choice in order to improve money management and speed up cash flows at lower cost.

The new legislation was adopted in the first reading with 635 votes in favour, 17 against and 31 abstentions.

Interestingly, Financial Services Club member Edith Rigler sent me this text from Germany about the end-date:

German Bundesbank welcomes SEPA end-date regulation and stresses its support for the changeover – Deutschen Bundesbank

In its press release of 14th February 2012, the German Bundesbank welcomes the endorsement by the European Parliament of the regulation establishing technical requirements for credit transfers and direct debits in euros and the amendment of regulation (EC) Nr. 924/2009. This implies clarity about the milestones for the phase-out of national procedures for credit transfers and direct debits. These will be replaced by SEPA (Single Euro Payments Area) instruments in all euro countries from 1st February 2014. Carl-Ludwig Thiele, Member of the Board of the Deutsche Bundesbank said: “With SEPA we create an effective European payments area in the EU, the strongest economic area globally. SEPA is therefore an important factor for international competition”.

Germany is the largest payments market in Europe. In view of the rapid changeover until February 2014 all stakeholders in the payments area are required to start implementation as quickly as possible. Thiele said:” The German Bundesbank will support the SEPA process via an intensive dialogue with all participants in the German SEPA-Council as well as with the public sphere”.

During the negotiations leading to the regulation the German delegation was able to achieve the acceptance of important points. These include the continuation of ELV (Elektronisches Lastschriftverfahren; electronic direct debit) until 1st February 2016 as well as enabling Member States to permit payment service providers to accept from users payment instructions with national account numbers and domestic sort codes until that date.

The German SEPA-Council consists of the most important representatives of the banking industry and end users, with the goal of achieving a user-friendly SEPA implementation in Germany. The German Bundesbank and the German Ministry of Finance chair the SEPA Council.

Original German text 

22-digit account number IBAN – not so terrible – Handelsblatt

The international bank account number (IBAN) becomes mandatory in Europe from 2014 onwards. In Germany there was much resistance against the 22-digit IBAN and German banks continued to use the combination of account number and eight-digit bank sort code. Due to the pressure exerted by Germany, customers can use old account numbers for domestic payments traffic during a transition period until 1st February 2016. Existing direct debit mandates continue to be valid for SEPA instructions.

Original German text

About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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4 comments

  1. Just in time for the Euro to break up!

  2. Whilst this is a great step forward, it will not totally remove the need for seperate “in country € bank accounts”. Currently you are unable to pay taxes in at least Italy and Spain from anything other than a local in country € bank account. These types of rule would need to change too…

  3. Interesting expression: SEPA end date – the date on which SEPA ends….

  4. “It would not apply to personal credit or debit card payments.” This quote is not quite correct. SEPA is tied up with PSD Payment Services Directive. This directive ensures that if a merchant accepts Visa/Mastercard/Maestro/Electron etc. in their own SEPA Country they HAVE to accept any of the above cards issued in any other SEPA region. The two laws are intertwined. The banks must ensure that the merchants have the proper equipment to process these transactions.

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