Single Euro Payments Area

Vikas Aggarwal

April 10, 2023

ContentsWhat is SEPASEPA VisionNeed for SEPAStakeholders in SEPASEPA instrumentsImpact of SEPA on Payment

ProcessingBenefits of SEPA

What is SEPAThe Single Euro Payments Area (SEPA) is a project to allow consumers, companies and other economic actors will be able to make and receive payments in euro. The goal is to make payments in euro and across Europe as fast, safe and efficient as national payments are today.

SEPA enables customers to make cashless euro payments to anyone located anywhere in Europe, for example by credit transfer, direct debit or debit card

SEPA Vision

Courtesy: http://www.kingcashcow.com/articles-2/

The SEPA vision was set out by the EU governments in Lisbon Agenda, March 2000 which makes EU more dynamic and competitive

Need For SEPA One currency: the euro is the monetary basis for SEPA. The

single currency is the political driver For the establishment of a common market for payments One set of euro payment instruments – credit transfers, direct

debits and payment card; efficient infrastructures for the processing of euro payments

Common technical standards Common business practices A harmonised legal basis The continuous development of new customer-oriented

services, for instance e payments or m-payments

Stakeholders in SEPA Political drivers of SEPA – EU Governments, European

Commission and European Central Bank. European Commission:

◦ Represents the general interest of the European Union◦ Driving force in proposing, administering and enforcing legislation.◦ Chairs the EU forum on National SEPA coordination committees.

ECB (European Central Bank)◦ Central Bank for Europe’s Single currency – EURO◦ Catalyst of the integration of the EURO payments market.

SEPA Council Chair: ECB together with European Commission EBA (European Banking Association

◦ Drives Pan-European payment initiatives EPC (European Payment Council)

◦ Coordination and decision making body of the European Banking Industry◦ Responsible for development and maintenance of SEPA schemes

7

SEPA Instruments• SEPA Credit Transfer (SCT)• SEPA Direct Debit (SDD)

• CORE Scheme• Business to Business Scheme

• SEPA Card Framework (SCF)• Not an Instrument

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Payment Processing before SEPA Banking arrangements before SEPA.

• CSM = Clearing and Settlement Mechanism•LVPS = Low Value Payment System• HVPS = High Value Payment System

Domestic transaction Cross Border Transaction

Europe

Germany Netherlands

CSM - LVPS CSM - LVPS CSM - LVPS

CSM - HVPS CSM - HVPS CSM - HVPS

United Kingdom

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Payment Processing after SEPA Banking arrangements after SEPA.

SEPA Payments Non SEPA Domestic transaction Non SEPA Cross Border Transaction

Europe

Germany Netherlands

CSM - LVPS CSM - LVPS CSM - LVPS

CSM - HVPS CSM - HVPS CSM - HVPS

United Kingdom

SEPA BenefitsConsumers

◦ Consumers will be able to reach all accounts SEPA-wide from one home country account.

◦ More widely accepted payments cards will displace cash improving customer safety and security.

SME◦ For smaller businesses (SME) faster settlement and simplified processing will

improve cash flow and reduce costs. ◦ It will enable them to receive or make euro-payment anywhere within SEPA on the

same basis.

Merchants◦ Merchants will be able to accept payment cards from all SEPA countries and

back office processes will be simplified.

Banks Banks will have opportunities to develop innovative products, enter new markets

and win new customers as well as increase the efficiency of back office processes.

SEPA BenefitsCorporates

◦ For large merchants and corporates, common standards enable the construction of one standard platform for payments in the whole SEPA resulting in major savings. For example, one single file in a common format could be used to receive and send payments throughout SEPA.

Public administrations◦ For governments and public administrations, common schemes and standards

will enable the delivery of improved services to citizens at home and abroad.◦ It will also facilitate the delivery of transaction-related e-Government services.

Payment sector suppliers◦ The payment sector suppliers will have an opportunity to develop low cost new

technology products and services which will serve the single euro market..

Courtesy http://blog.celtrino.com/2014/02/get-one-months-free-sepa-compliance-with

-sepalink/#more-3864

Courtesy: http://www.kingcashcow.com/articles-2/ https://www.ebaclearing.eu/Overview-N=S2_Overview-L=EN.aspx