European Single Payments Area to start 2014

Scofflaw

A cheaper and seamless cross-border euro payments system for bank customers in the European Union will be in place within two years under a deal negotiated on Tuesday.

EU states and the European Parliament agreed on Tuesday that the new single euro payments area (SEPA) will be completed by the legally binding deadline of Feb. 1 2014 for banks to end national barriers for cashless euro payments.

A consumer will be able to use just one bank account to make and receive euro payments across the 27-country bloc without hidden national bank charges.

A customer will be able to pay bills in one country from an account in another.

"All account users stand to gain because international competition among service providers should drive down prices," parliament said in a statement.

The European Commission, which drafted the law, has said that SEPA could save up to 123 billion euros ($160 billion)within six years by tearing down national payment barriers and eliminating fees on cross-border direct debits from 2012.

SEPA has been devised in close cooperation with the European Payments Council, a banking industry body.

The 2014 deadline represents a four-year delay on the original plans due to late approval of enabling measures before fixing an end date for full migration from national systems to the SEPA framework.

The full European Parliament and Council of EU states will formally endorse Tuesday's deal.

Interesting - so you'll be able, in effect, to bank anywhere in the EU/EFTA (and Monaco), and use that account as if it were domestic. Obviously a strongly integrative step both for the internal market and for the euro.

SEPA will impact on virtually all forms of payment services. It will impact payment operations, payment infrastructures, payment systems, rights and obligations in relation to payments. This section attempts to describe the impacts on the various stakeholders.

The EU Commission originally foresaw a massive financial benefit to the business sector, in the range of €50bn-€100bn. It foresaw much of this benefit as coming in the form of a transfer from the bottom line of the banking industry to the bottom line of bank customers, and mostly to the business sector and the public sector. However, more recently, many commentators challenge the basis of calculation of this benefit, and suggest much lower benefits. This benefit may consist of:

• General reduction of bank charges as competition between banks intensifies. Banks across Europe will compete for the larger customers in the domestic market.
• Economies within companies who sell into multiple markets - they will more easily be able to source the financial services for such operations from a single financial services provider, and they will be better able to negotiate fees in that context
• Economies within the financial departments of businesses as standardized processes, file formats, etc. facilitate economies of scale

cordially,
Scofflaw

thebman

Doesn't this cause massive issues if a country wishes to withdraw from the Euro?

It seems sort of like a lock in mechanism or a bigger one than we already have.

Scofflaw

thebman wrote: »

Doesn't this cause massive issues if a country wishes to withdraw from the Euro?

It seems sort of like a lock in mechanism or a bigger one than we already have.

Shouldn't do, since it applies to non-euro countries - non-EU countries, even.

cordially,
Scofflaw

Permabear

This post has been deleted.

SugarHigh

Wouldn't this negate a lot of the negative effects of an Irish bank collapse? You could basically do all your banking from another country.

Would this also speed up the amount of money being removed from Irish banks and deposited in foreign banks?

Sleepy

If this were to apply to mortgages there could be some fun ahead...

liammur

Permabear wrote: »

This post had been deleted.

It won't please the US investors who recently bought into BOI. But a good move for the consumer.

Scofflaw

SugarHigh wrote: »

Wouldn't this negate a lot of the negative effects of an Irish bank collapse? You could basically do all your banking from another country.

Would this also speed up the amount of money being removed from Irish banks and deposited in foreign banks?

Ideally, it could lead to a situation where Irish bank customers had a sufficiently EU-wide spread of banking that the failure of an Irish bank wouldn't be a systemic issue. Same for other countries, obviously. On the other hand, it could also create through EU-wide competition a situation where you have banks that are systemic at the European level...mind you, since some of the difficulty in the crisis is that the solutions are European, but the banks are national, perhaps that makes sense too.

cordially,
Scofflaw

thebman

Scofflaw wrote: »

Shouldn't do, since it applies to non-euro countries - non-EU countries, even.

cordially,
Scofflaw

Oh right my mistake then, seems like an odd thing for someone to do though to have a bank account in a different currency. Expensive fees for converting between currencies etc...

later12

SEPA has been implemented by Ulster Bank Ireland Limited, but it's been available to banks for the past 2 years. It is worrying that this scheme, which after allis the brainchild of the European banks, has had such poor enthusiasm to date. Something like 10% of banks have migrated to SEPA as far as I recall.

It's a good start, but under SEPA European banking is still nowhere near as integrated as one might expect in a single market.

Indeed as Mario Monti said in his report into the single market last year:

http://ec.europa.eu/bepa/pdf/monti_report_final_10_05_2010_en.pdf

excessive reliance by some Member States on the self-regulating abilities of financial markets resulted in delays and inadequacies in designing and putting in place the appropriate regulatory and supervisory frameworks to accompany effectively the process of financial liberalization and of creation of the single market for financial services. This contributed to the fragility of this important component of the single market.

Pete_Cavan

SugarHigh wrote: »

Wouldn't this negate a lot of the negative effects of an Irish bank collapse? You could basically do all your banking from another country.

Would this also speed up the amount of money being removed from Irish banks and deposited in foreign banks?

I thought Irish banks were in a better position now than most European banks after NAMA taking toxic loans and all the taxpayers money that has gone into banks here. Could it be a case that depositers from other countries may look to move their money to Irish banks?

thebman

Pete_Cavan wrote: »

I thought Irish banks were in a better position now than most European banks after NAMA taking toxic loans and all the taxpayers money that has gone into banks here. Could it be a case that depositers from other countries may look to move their money to Irish banks?

Even if they are they have a toxic brand image still.

later12

Pete_Cavan wrote: »

I thought Irish banks were in a better position now than most European banks after NAMA taking toxic loans and all the taxpayers money that has gone into banks here. Could it be a case that depositers from other countries may look to move their money to Irish banks?

It's not true to say that NAMA and the ELG guarantees have placed the Irish banks in a better position than their European counterparts since the Irish government, who is providing this assistance, has itself had its reputation called into question.

There was a time when a western state's intervention was an earnest testament to the safety of that institution which it sought to protect.

We're not in that particular Kansas, anymore.