The Sepa revolution quietly creeps in
Sepa and the PSD: a brief history
The goal of the Single Euro Payments Area is the treatment of all euro payments in the euro area as domestic payments and the removal of the differentiation between national and cross-border payments, thus creating increased payment efficiency in Europe – something that is sorely needed. According to the European Payment Council, at least six out of seven payment transactions in the region still use cash, a method that it calculates costs the economies of the EU15 about €50 billion a year. Consultancy McKinsey estimates that the use of cash for payments is a loss-maker for banks in nine of the EU’s 27 member states.
Three payment instruments are at the heart of Sepa:
• The Sepa Credit Transfer (SCT) came into effect on January 28 2008. It guarantees transparency of pricing with a maximum guaranteed execution time of three days, although for the majority of payments this will be reduced to just one day from 2012 as a result of the Payments Services Directive. Payments are made gross and separate from charges, with no deduction from principal amount – in contrast to payment regimes in many European countries.