SEPA - Single Euro Payments Area

The creation of the Single Euro Payments Area - SEPA was the result of the need to ensure that, following the introduction of the euro, payments would materialise the advantages of the new currency. In practice, SEPA will allow customers to make payments in euros to any European Union financial institution, particularly in the euro area, with the same reachability, charges and easy access as a national payment, whether the customer is a bank in the same country or anywhere in the European area. The initiative was taken by a wide group of European banks and respective banking associations and was launched in 2002. The European Commission and the Eurosystem have strongly supported this project from its start.

The ultimate objective is the creation of a single payments area in euros, fully operational as of the end of 2010 (but providing SEPA payments after 2008). This has led to the creation and development of pan-European payment systems for the most widely used retail payment instruments with higher growth potential at cross-border level in the geographical area covered – i.e. payment cards, credit transfers and direct debits.

SEPA’s process of creation and subsequent launch followed a number of important steps from 2005 to 2007, as a result of the work first developed by the EPC – European Payments Council – and further supported in every country by local initiatives undertaken by national banking communities. The Eurosystem has closely monitored progress in this field, in its quality as observer of EPC work, and has expressed its position on various occasions as regards the state of the project, in the performance of its role as catalyst.

Since the creation of the EPC, multiple activities have been developed by the different working groups in this structure devoted to the payment instruments considered in the SEPA context: credit transfers, direct debits, cards and cash. These activities have been developed in the technological and legal/regulatory field, covering the interoperability between infrastructures wishing to be SEPA-compliant and the definition of the standards to be used, as well as resulting adjustments at different levels. The Eurosystem has taken an active and cooperating position, but leaving the design of SEPA solutions to the market, sponsoring meetings with the different relevant stakeholders of the SEPA project, with a view to understanding the benefits to be ripped and the difficulties to be faced, encouraging their active involvement in ongoing initiatives.

Migration to SEPA

In Portugal, the preparatory works for migration to SEPA have been mainly carried out within the scope of both the Interbank Commission for Payment Systems (Portuguese acronym: CISP), which is an advisory body assisting Banco de Portugal in matters related to the payment systems, and the Interbank Working Groups (Portuguese acronym: GTI), which operates under the aegis of the Bank. Banco de Portugal, banks and the Interbank Services Company (Portuguese acronym: SIBS) have developed joint action, with a view to implementing the necessary adjustments to national retail payment systems, so that these become SEPA-compliant.

Within the CISP structure, the GTI on Cross-border Payments takes over the role of centralising issues related to the migration of the national banking community to SEPA. This group integrates the representatives of this community at the different levels of action of the EPC, in order to coordinate ongoing work, conductive to the effective implementation of SEPA in Portugal.

In order to facilitate the adherence of banks and other institutions to SEPA, as defined by the EPC, each country shall have one or more NASOs – National Adherence Support Organisation, ensuring a role as intermediary between the EPC and adherents to SEPA, namely payment instruments for credit transfer and direct debits. In the Portuguese case, Banco de Portugal and the Portuguese Banking Association have agreed on the establishment of NASO-PT, whose operation shall be ensured by Banco de Portugal and bank representatives, at the level of the Interbank Working Group/Cross-border Payments.

The performance of Banco de Portugal and ECB/Eurosystem

The performance of Banco de Portugal in this project must be seen in the context of its participation in the Eurosystem.

The Eurosystem has acted as catalyst and has raised awareness on the SEPA Project and on the benefits of further integration of the European retail payments market, gauging the point of view of the different relevant stakeholders: in addition to banks, consumers, companies (chiefly at financial management level), retailers, card processing companies, payment infrastructures (clearing houses), inter alia.

The Eurosystem, together with the European Commission and with a view to supporting SEPA implementation, has strongly committed to the publication of the Directive on payment services (2007/ 64/CE), which is expected to be fully transposed into national legislation by 1 November 2009.

The most relevant fact so far as regards the implementation of SEPA was the launch of SEPA payment instruments for credit transfers on 28 January 2008. More than 4,400 banks across Europe have joined - 24 of which operating in the Portuguese market -, accounting for over 85% coverage.

Involvement of national stakeholders

Information campaigns have been sponsored, intended for other relevant entities involved in the SEPA project – e.g. companies, retailers and consumers – namely in sessions at Banco de Portugal, in November 2007, addressed at various Public Administration entities, sectoral confederations (manufacturing, trade and services, tourism and agriculture) and also consumer representatives.

National implementation plan

The EPC and the Eurosystem have agreed that every national community should publish a progress report on SEPA implementation. Therefore, the SEPA national implementation plan is regularly updated, covering the main 12 points, uniformly defined for the countries involved.

Terms of reference

The Eurosystem, at the request of the EPC, has prepared the Terms of Reference, with a view to the consistency of the infrastructures processing payments in euros, in line with the requirements defined by the EPC, so that the different players may undertake a self-assessment of their systems.

For further information on SEPA, see the ECB’s and EPC’s websites.