The European Payments Council, which oversees payments for the European banking industry, has announced plans to launch the SEPA Core Direct Debit Scheme and the SEPA Business to Business Direct Debit Scheme on Nov. 2. The Direct Debit services enable card users in Europe to make and receive domestic and cross-border euro direct debit payments throughout the 32 SEPA countries — the 27 EU member states, Iceland, Liechtenstein, Norway, Switzerland and Monaco.
Banks throughout the Single Euro Payments Area, known simply as SEPA, will be required by the EU regulation on cross-border payments to comply with the Core Direct Debit by Nov. 1, 2010. But banks in SEPA are already making progress, according to EPC. Thus far, just more than 2,600 banks representing 70 percent of SEPA payment volumes have signed up for the new schemes and are ready to roll out SEPA Direct Debit services by Nov. 2, 2009. Of those 2,600 banks, approximately 2,300 are offering SDD Core and SDD B2B services.
Gerard Hartsink, chairman of EPC, says the schemes have been part of Europe's payment plans since 2002.
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"Following the introduction of euro notes and coins in 2002 the political drivers of the SEPA process — the Economic and Financial Affairs Council, the European Commission, the European Parliament and the European Central Bank — called on the payments industry to bolster the common currency by developing a set of harmonized schemes and frameworks for electronic euro payments," he said. "The SEPA Credit Transfer Scheme, the SEPA Direct Debit Schemes and the SEPA Cards Framework developed by the EPC in close dialogue with the customer community strengthen the monetary union. The SEPA schemes also support cross-border trade within the internal market."
The implementation of SEPA payment services based on global ISO standards offers greater efficiencies for businesses and public administrations, while consumers can rely on a single set of euro payment instruments that cover 32 countries: one bank account, one bank card, one SEPA credit transfer and one SEPA direct debit.
But it goes beyond just payments benefits, says the European Commission. The commission expects legal and technical harmonies that have resulted from SEPA to also facilitate the dematerialization of business processes by replacing paper-based procedures with standardized electronic solutions such as e-invoicing.
The introduction of the SEPA Direct Debit Schemes requires a uniform EU-wide legal framework for payments; the launch date aligns with the Nov. 1, 2009, deadline for EU member states to transpose the Payment Services Directive into national law.
"Moving forward, the focus must be on accelerating migration to the new euro payment instruments," Gerard said. "Today, more than 4,500 banks offer SEPA credit transfer services. Eighteen months after the launch of the SCT, 4.4 percent of all euro credit transfers in the EU are actually based on the SCT scheme. The current rate of SEPA market uptake is in line with expectations considering the average timelines required for the rollout of other major EU integration initiatives."
Gerard adds that the European Commission, the European Central Bank and EU governments should implement SEPA-communication campaigns similar to those spearheaded with the euro was first introduced so that consumers fully understand what SEPA is. He also says that public administrations, which account for up to 20 percent of e-payments in the euro area, need to speed up their SEPA schemes implementation.
