What is SEPA & what are the main changes it brings?
The Single Euro Payments Area (or “SEPA” for short) is where more than 500 million citizens, over 20 million businesses and European public authorities can make and receive payments in euro under the same basic conditions, rights and obligations, regardless of their location.
The introduction of the euro has helped to make cash payments anywhere in the euro area just as easy as at home. But until recently it was not so easy to pay for goods or services electronically in another euro area country, for example with your bank debit card – a means of payment favored by many Europeans today. And when you wanted to transfer money from your home bank account to an account in another euro area country, the payment could take much longer, and sometimes the beneficiary did not get the full amount.
From 1 February 2014, existing national payment schemes will be closed down, following which euro electronic payments will be processed through new SEPA schemes.
By that stage, all national direct debits and credit transfers must be SEPA-compliant. This will include everything from staff payroll to paying creditors or receiving a euro electronic payment from customers within SEPA.
National sort codes and account numbers will be replaced by an International Bank Account Number (IBAN) and a Business Identifier Code (BIC).
What will it mean for your businesses?
From 1 February 2014, all euro direct debits and credit transfers within the designated 34-country area will be executed under the same conditions. This will create a more efficient borderless payment area by standardising euro electronic payments.
All businesses must be ready for SEPA, as all existing national systems will close on 1 February 2014. You will need to ensure that your pay-roll, direct debit and accounting systems are SEPA ready before 1 February 2014 so that you are able to make euro electronic payments after that date.
A key benefit for businesses is that faster settlement and simplified processes will improve cash-flow and potentially reduce cost.
For more information you may visit the getting ready for SEPA website