NOT LONG AGO the Single Euro Payments Area (Sepa) was seen as the triumphant culmination of the introduction of the euro and the realization of a true single market. Now Sepa is regarded by many as a lame-duck initiative that has failed to deliver benefits for corporates and consumers and that has cost banks hundreds of millions of euros in wasted technology development and running costs.
Across transaction banking – now a core component of many banks’ business strategies following the financial crisis – there are murmurings of discontent. Some industry veterans even privately wish for the destruction of the Sepa project, such has been the scale of the distraction it has caused for banks at a time when corporates need all the help they can get to improve working capital management.
Certainly the European Union political establishment, which decided in the Lisbon Agenda in 2000 to harmonize payment costs for cards, direct debits and credit transfers by 2010, is much maligned. "The project was politically motivated – the technical and practical challenges and cost implications were never really considered," says Ruth Wandhöfer, EMEA head for payment strategy and market policy at Citi.
To be fair to the European Commission, which drives Sepa and the associated Payment Services Directive (PSD) at an institutional level, Sepa and its implementation have been largely determined by the European Payments Council (EPC), a bank industry body.