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The European Central Bank (ECB) and the European Commission describe SEPA (Single Euro Payments Area) as "an integrated market for payment services which is subject to effective competition and where there is no distinction between cross-border and national payments within the euro area. This calls for the removal of all technical, legal and commercial barriers between the current national payment markets.”

The European Payment Council as part of SEPA project, also implemented the Payment Services Directive to apply further consistency to payment laws across Europe and establish the legal basis for SEPA. The project has taken a long time as the table of major SEPA milestones shows.

The major milestones in creating SEPA

Source: ECB

The impact of SEPA

Companies had to invest considerably in migrating to SEPA standards and systems. For many it was a lengthy project requiring expense and valuable human resources. Some of the impacts include:

  • simpler: SEPA payment instruments allow companies to perform all euro-denominated payments centrally, from a single account, with all incoming and outgoing payments in the same format.
  • centralisation of payments: Companies will be able to consolidate their payments and liquidity management in one location.
  • time saving: The Payment Services Directive obliges payment service providers to process payments within certain time limits (one business day for electronic payment orders).
  • electronic SEPA services, such as e-invoicing or e-reconciliation will help companies to further optimise the handling of payments. Today these services are often offered only nationally, as different formats and rules make cross-border use difficult.
  • SEPA also provides an opportunity for companies achieve greater efficiency and cost savings by adopting the ISO 20022 XML standards.

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