08 November 2013

EPC: Fact check - The rationale for SEPA

This blog cites the rationale for a Single Euro Payments Area, as defined by the EU governments and EU institutions, i.e. the Commission, the EP, the Council of the EU representing EU Member States and the ECB driving the SEPA programme.

Javier Santamaría, Chairman of the European Payments Council (EPC) clarifies (again): Compliance requirements, including mandatory migration deadlines, relevant to SEPA that must be met by payment service users and payment service providers in the EU are determined by the EU legislator, i.e. the European Parliament and the Council of the EU representing EU Member States (not by the EPC). With regard to the 1 February 2014 SEPA migration deadline applicable in the euro area mandated by EU law, the EU authorities have warned time and again that all market participants must ensure compliance or else risk that payments could be disrupted.

Who invented the SEPA concept?

SEPA is an EU integration initiative in the area of payments. With the introduction of the euro currency in 1999, the political drivers of the SEPA initiative – EU governments, the European Parliament, the European Commission and the ECB – have focused on the integration of the euro payments market.

Why is there an EU law that mandates migration to SEPA?

During a public consultation carried out by the European Commission in 2009, a majority of respondents echoed requests by the ECB, the European Parliament and the Council of the EU representing EU Member States “for a regulation at European level so as to provide a clear signal to market participants that SEPA migration was now irreversible".

Who determines the compliance requirements, including mandatory migration deadlines, relevant to SEPA that must be met by payment service users and payment service providers in the EU?

The EU legislator, i.e. the European Parliament and the Council of the EU representing EU Member States.

Avoid the risks of non-compliance

The EU authorities have warned time and again: “After 1 February 2014, payment service providers will not be allowed to process payment orders that do not comply with the legal requirements as laid down in applicable EU law".

“The reasonable transition periods applied will allow customers and banks to get used to the adjustments in domestic payment transactions, provide legal certainty, avoid the cost of operating dual payments systems and bring forward the substantial future benefits of SEPA.” Commissioner Barnier, 20 December 2011

“There is no Plan B: migration to SCT and SDD is required by law, not only for payment service providers, but also for big billers, SMEs, public administrations and consumers. Payment service providers will be obliged to refuse further processing of payments that are not delivered to them in the right technical format after the 1 February 2014 deadline applicable in the euro area. Ignoring the risks of non-compliance, including the hope of a slow response on the part of the responsible authorities, would be a mistake.” ECB/Ruttenberg, April 2013

“[The Council of the EU] underlines that the provisions of Regulation (EU) No 260/2012 have to be fully respected by all market participants in euro area Member States; and emphasises that competent authorities should cooperate intensively, on a national and international level, to ensure effective and harmonized compliance with the Regulation. [The Council of the EU] underlines that end-users such as ‘big billers’, SMEs and public administrations have their own responsibility to ensure SEPA migration. [The Council of the EU] stresses that all payment orders which are not submitted in the format requested by Regulation (EU) No 260/2012 after 1 February 2014 may not be processed by all payment service providers in euro area Member States, which otherwise would be sanctioned.” Council of the EU representing EU Member States, SEPA-conclusions, 14 May 2013.

“The SEPA migration requirements set by law have to be fully respected without exception. While payment service providers play a central and crucial role in migration to SEPA, end-users such as ‘big billers’, public administrations and in particular SMEs, have their own responsibility to ensure that they are able to send and receive payments in euro also from 1 February 2014 onwards.” Statement adopted by the SEPA-Council, 23 September 2013

Migration to SEPA is mandated by EU law (not by the European Payments Council)

SEPA compliance requirements that must be met by payment service users and payment service providers in the EU are determined by the EU legislator, i.e. the European Parliament and the Council of the EU representing EU Member States – not by the European Payments Council (EPC). The EPC is not an EU legislative body. More generally, the EPC is not part of the EU institutional framework. The EPC is one stakeholder group among many impacted by the policy-maker-driven SEPA programme. The EPC is not responsible for the overall management of the SEPA process. When the EU governments and EU institutions first launched the SEPA process in the late 1990s, the EU authorities expected the banking industry to contribute the resources required to develop European instruments for electronic euro payments.

Full blog

© EPC