Single Euro Payments Area (SEPA) becomes fully operational today (1 August 2014) across all eurozone countries. The SEPA Regulation (EC 260/2012), adopted in 2012, initially set 1 February 2014 as its ‘go live’ date but the Regulation was amended in January to extend the deadline by 6 months.  

What is SEPA?

SEPA aims to creates a true European Single Market for retail payments in euro where transfers, direct debits and payments between Member States are as easy and fast as the equivalent domestic transactions.  

The European Commission’s view is that electronic payments in the euro area should now be as easy as cash payments and it envisages that SEPA will greatly facilitate euro payments for citizens and businesses and increase competition between banks. SEPA should bring the advantages of bank transparency; lower prices for basic payment services in countries that are currently high-cost; more efficient cross-border transactions; and only one bank account needed for the whole euro area.

How will SEPA affect businesses and consumers?

SEPA will allow consumers to use just one euro bank account for all credit transfers and direct debits, no matter where in Europe the recipients or businesses may be.

On the business side, companies will be able to broaden their reach in Europe, and reduce their costs as a standardised framework can now be provided for all their payments.

What does this mean for non-eurozone countries?

In the UK and other non-eurozone countries, SEPA will apply to euro-denominated transactions from 30 October 2016, which should bring the same benefits as described above for both payers and payees alike.