Single Euro Payments Area (SEPA): Full speed ahead!

In 2001, a study was conducted for the European Commission looking at the intra-Community cross-border credit transfers of 40 private individuals. The equivalent of EUR 100 was transferred in each transaction. The 1473 credit transfers examined took 3 business days on average to reach the payee. On one occasion, the funds took 43 days to arrive while 2 credit transfers remained ‘in transit’ for months. The cost of the credit transfers was so high as to bring into question the expediency of the transactions. The total average cost of credit transfers executed successfully exceeded 23 euro while the most expensive transaction cost almost 61 euro.1 In contrast, the overwhelming majority of credit transfers within Member States were executed within 1 day, typically costing euro cents or at most a few euro. Considering the creation of the single internal market and the introduction of the euro, this situation was unsustainable, and therefore, in order to change this situation the vision of the single euro payments area (SEPA) was born. The objective was to execute payments in euro as efficiently and cheap as possible, providing the same rights, obligations and basic terms irrespective of borders and assuring that a single payment account in any Member State is sufficient to make euro payments within the EU. The first article on SEPA was published in the MNB Bulletin in September 2008. In the four years since then, significant progress has been made particularly in the field of two major products: credit transfers and direct debits denominated in euro. After the initial, fundamentally market-driven process and self-regulation, in 2012 the Regulation of the European Parliament and of the Council2 eventually established uniform rules and requirements for credit transfers and direct debits denominated in euro as well as the end-date by which migration from the previous, diverse national legacy products to such credit transfers and direct debits must be completed. By default, the migration must be completed by 1 February 2014 in the euro area and by 31 October 2016 in non-euro area countries. Now there is no more finger-pointing and waiting for others to act: everyone can go full speed ahead. Under the compulsion of the EU Regulation, even more payment service providers (banks, savings cooperatives and other institutions participating in payment services) will offer SEPA products, further information campaigns will stimulate demand from customers, intensifying competition may improve the terms of payment services, and national migration plans will push for the changeover, thus there is every hope that the share of euro credit transfers based on SEPA standards will increase even faster from the 27.3 per cent level seen in April 2012 in the euro area. In Hungary, 1 July 2012 is already a special date in this process as the intraday HUF credit transfer system launched in Hungary on that date is based on SEPA standards.