Money Matters

Money Matters

Picture showing a wallet | © photocase

Source: Picture showing a wallet | © photocase

Single European Payment Area

In the past, credit card payments, direct debits and bank transfers sometimes differed immensely from country to country in the EU, even after the introduction of the Euro. The different technical standards and transaction fees in the Euro countries further complicated intra-community trade.

The SEPA initiative of the European Banking Industry was subsequently enstated in order to simplify electronic payments within the Eurozone so that national and international transactions can both be performed with the same level of ease. The initiative is represented by the European Payment Council and supported by the European Central Bank and the EU Commission. In Germany, the Central Credit Committee (CCC) and the German Bundesbank represent German banking interests in SEPA projects.

With the help of the necessary legal framework at the EU and national levels, SEPA has simplified the following transactions:

  • banking fees, time frames for crediting accounts and IT banking infrastructure have been standardized in SEPA countries.
  • funds can be transferred electronically from any account set up in a SEPA country to any other SEPA account, just like in the home country.
  • direct debit payments from both businesses and consumers located in SEPA countries can be made anywhere in SEPA.
  • any credit card issued in SEPA is valid for payment and/or for withdrawals at ATMs in the entire area.

The legal foundation for these changes was laid by the EU Payments Service Directive which was transposed into German law on November 1, 2009. These new standards continue to strengthen the European Monetary Union and are already in place in over 4400 banks in more than 32 participating countries (EU Member States, Iceland, Liechtenstein, Monaco, Norway and Switzerland). SEPA taskforces are currently working on projects aimed at simplifying internet and mobile phone payments as well as the international transport of cash.