The introduction of SEPA compliant cross-border schemes for euro payments began in early 2010. The SEPA payment schemes and frameworks have been successfully delivered by the European banking industry, however, European officials recently announced the end date for full and complete migration to the Single European Payments Area as 1st February 2014.
How will SEPA work?
For European payments, businesses will have a number of options:
- Through their banks
- Directly to SEPA compliant Payment Bureaus such as SmartDebit.
- Through a SWIFT (Society for Worldwide Interbank Financial Telecommunication) Closed User Group
- Via European Cred and Debit Card networks.
- Through web based secure products
The original plan for processing all the European transactions was to go through a single Pan-European Automated Clearing House (PE-ACH). However, there are and will be numerous SEPA compliant regional ACHs (Automated Clearing Houses).
How are Euro payments currently made?
Cross border electronic payments are generally made via SWIFT (the global payment organisation). This can incur much higher costs, anywhere between £10-25 per transaction. Even with the majority of European transactions being made in a single currency (apart from the UK’s, of course), the high cross border costs have remained.
The aim is that SEPA should replace existing schemes and transactions. This should ensure that euro payments across the continent will be subject to a uniform set of standards, rules and conditions. It is hoped that this will result in cross-border barriers being removed, bringing lower transactions costs as well as payments circulating more easily, quickly, securely and efficiently.
The attraction for UK organisations
Whilst the UK continues to trade in Pounds Sterling and payments continue to be submitted via the Bacstel-IP service, there has been limited impact on the internal domestic payments (such as Direct Debits).
SEPA has a number of attractions for UK businesses operating across Europe in Euros. Companies will see a decrease in bank transaction charges and benefit from the simplicity of dealing in Euros in standard formats, resulting in quicker speeds and certainty for payments across Europe.
A further benefit of the SEPA scheme is too offer large organisations the opportunity to centralise their banking arrangements and possibly deal with just one bank in Europe. This is because most large organisations trading across Europe often have separate bank accounts in every country in which they are operating.
SEPA and SmartDebit
SEPA opens the door to Europe for SmartDebit and our clients. The scheme would allow us to administer collections from other European countries via a single integration, making it a lot easier and cheaper for our clients to trade on the continent.