Single European Payments Area (SEPA)
The Single Euro Payments Area (SEPA) initiative for the European financial infrastructure involves the creation of a zone for the Euro in which all electronic payments are considered domestic, and where a difference between national and intra-European cross border payments does not exist.
The initiative aims to improve the efficiency of cross border payments and turn the fragmented national markets for Euro payments into a single domestic one.
SEPA will enable customers to make cashless Euro payments to anyone located anywhere in the area using only a single bank account and a single set of payment instruments. The initiative includes the development of common financial instruments, standards, procedures, and infrastructure to enable economies of scale. This should, in turn, reduce the overall cost to the European economy of moving capital around the region (estimated today as 2%-3% of total GDP).
The main objectives of SEPA are:
- competition in respect to higher number of competitors, fewer niches or special fields or incompatibilities through standardization;
- increasing surveillance of (electronic) money flow particularly regarding money laundering and terrorism funding (unofficially also for surveillance of illicit work [10-30% of GDP's], organized crime and taxes).
- reduction of cash money and increase of electronic money through reduction of costs of electronic money;
- reduction of costs of electronic money and of payment transactions through competition at the side of payment providers and banks - both are considered as the biggest losers of the SEPA standardization process at an estimated € 40,000,000,000 per year);
- standardization of Euro payments with equal time limits, equal fraud levels, equal processes, all-electronic straight through processing, no differences between national and international payments in the SEPA area;
- strengthening trust and reliability on a pan-European basis.