Of Special Interest


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17th February 2012

SEPA payments date set as 1st February 2014

The European Parliament has set the date by which all banks in the Single European Payment Area must offer SEPA wide direct debits and direct credits as February 1st 2014. Although it is still technically possible for this date to be changed it is unlikely to alter. There have been many delays mainly because banks pleaded for more time. Most banks are now resigned to deliver the services by the time set. Sensibly the parliament has also decided on only one transfer date. The original plan had been to first introduce payments and then credits.

Banks have had three issues to contend with. First the necessary systems changes required. Second the loss of the highly profitable international transfer fees, in most cases hundreds of times more than they charge for domestic payments - assuming that is there is any charge for domestic payments. Third, and not limited only to the banks, is the need for education of the public and the need for the public to remember a longer and in some cases not as easy to remember codes. The European Parliament has sensibly also ordered the ending of the BIC Branch Identifier Code) identifier codes which are not needed given that the IBAN (International Bank Account Identifier) has all the necessary information included.

The parliament believes that the changes could save customers €123bn (£103bn $161bn ¥12.6bn Y1,014bn) over 6 years - this is largely comprised of less fees earned by the banks. The parliament adds that other benefits are that individuals working in other countries within the area will no longer have to open up new bank accounts and then separately arrange transfers to their home countries. Similarly companies will no longer have to open up separate accounts in each country they want to make sales in.

SEPA should not be confused with the Eurozone. SEPA consists of the 27 European Union members, the four European Free Trade Area members - Liechtenstein, Iceland, Norway, and Switzerland - and the principality of Monaco. The German central bank made the sensible point that whilst February 2014 was the final date banks could bring in the systems in before that date and should do so. Although banks may bring in the systems before the final date it is most unlikely they will bring in the required low level of charges that will apply from this date unless forced to do so by the national parliaments.