5 October 2012
SEPA, the new domestic form of payment transfer
Although SEPA did not receive regular attention until recently, SEPA transactions have been processed since 2008.
SEPA Credit Transfer (SCT) – the new European payment method – was introduced in February 2008. So far, this SEPA transfer method has primarily been used as an alternative to international payments (formerly referred to as cross-border transactions). Until 2011, over 90 percent of Equens’ SCT traffic consisted of payments between banks in two different countries. This year, however, we have seen an increase in the use of SEPA payments for national transactions (formerly referred to as domestic transactions).
The explanation for this rise is the increased interest in SEPA among banks and other market players. Furthermore, a growing number of organisations have started preparations for the migration, resulting in an increase in the number of transactions. We have noticed that the terms ‘domestic’ and ‘cross-border’ are still widely used in the market, for example during operational meetings with banks. Furthermore, many banks use different systems and strategies for processing the two payment flows. This is striking, since SEPA is specifically intended to make cross-border payments redundant!
As from February 1, 2014, a payment between banks in two different SEPA countries will be processed in the same manner and in accordance with the same EPC deadlines. Therefore SEPA will be the new domestic and the new cross-border form of payment transfer. This is the exact purpose of SEPA: integrating international payments to bring us one step closer to a Single Euro Payments Market. The above examples show that the preparations for SEPA are well underway, but the ultimate goal is not yet in sight.
From a technical point of view, the preparations are going well, since by now most stakeholders are aware that systems and processes need to be modified in time. The next step is to generate and increase awareness within banks, organisations and market parties that the payments market is about to change. All parties involved need to know that in sixteen months’ time, payments – for services and goods – will no longer be subject to borders in Europe.
This article was also published on Dialogue online.