Since 28 January 2008, every credit transfer carried out in euros is processed in the same way across Europe, with identical procedures and the same timeframe, but at a cost that will remain different from bank to bank “for a certain time”.
The European Commission launched the first step of the Single Euro Payments Area (SEPA) yesterday. SEPA is designed to harmonise all credit transfers carried out in euros regardless of borders (see EurAcitv 28 January).
This move is a direct consequence of the adoption of the euro, which since 2 January 2002 has been the only currency used for cash payments across the eurozone, irrespective of the country.
The European Commission has presented SEPA as a development that could allow “net benefits to payment markets” of 123 billion euros in six years, according to a study published yesterday, carried out by Capgemini on behalf of the Commission.
Brussels identifies benefits for consumers, business, public administration and banks thanks to the new common payment system. Consumers will be able to have a single bank account, used for all their financial operations in euros across Europe. In addition, all the operations will take a maximum of three days, regardless of the country of destination. At the moment, a range of procedures are either prohibited or more complex if carried out in a different country.
The Commission also hopes to see a decrease in the cost of operations covered by SEPA. Brussels thinks that making the use of services offered by banks easier regardless of the country concerned will allow customers to make the best choices and force banks to become more competitive and cut costs.
But price differences for credit transfers are not expected to change overnight, according to the banking sector. “Lowering prices is not the objective. Our target is to work in a competitive environment,” said the general manager of the Italian Banking Association (ABI), Giuseppe Zadra, whose country is one of the most expensive in Europe for small consumer operations, such as money withdrawals or credit transfers.
The Commission is sure that the new system will bring bank costs down: “SEPA will allow banks to realise huge operational savings through product standardisation and channel simplification,” reads one of the press releases issued yesterday by the EU executive body.
“We had to bear huge investments for SEPA, whose returns will be slow and uncertain,” pointed out Zadra. In a letter to Commission President José Manuel Barroso, the European Credit Sector Association (ECSA) stressed the necessity of shared responsibility with other stakeholders during the next two phases of SEPA.