SEPA and developing a new model for the EU payments market

Mark Dunleavy looks at how EU rules under SEPA are pushing banks to improve payment services to companies. While compliance issues may have been tackled, solid solutions still need to be developed and there remain idiosyncrasies.

The relatively calm reception that has greeted the Single European Payments Area (SEPA) since its introduction on 28 January 2008 brings to mind the image of a gliding swan. What seems serene on the surface actually conceals a lot of hard work.

When plans for SEPA were finalised by European Union (EU) finance ministers in May 2007, it was claimed that its creation would liberate commerce in the EU, saving its combined economies between €50m and €100m every year. Both businesses and consumers welcomed the reduction in red tape that came with being able to make and receive payments across international boundaries from their domestic bank accounts.

A major SEPA 'winner' would, for example, be an import/export company operating in the Euro zone, which could now consolidate its existing bank accounts as it no longer needed to maintain accounts abroad.

Compliance, but what next?

The resulting picture for the banks is much more complex. Coming after a decade of near-constant legislative changes, it is no surprise that many banks have exhibited signs of SEPA fatigue, electing to modify their internal systems to reach 'just over the line' compliance. While such solutions are not efficient in the long-term they do achieve one important short-term aim: buy an organisation time until it can adopt the right platform to meet its ongoing needs.

How the credit crunch will impact future and ongoing development projects is open to debate.

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