SEPA (Single Euro Payments Area) could lead to €21.9 billion in annual savings and the cancellation of 9 million bank accounts in the European Union. It could also unlock €227 billion in liquidity and credit facilities. These are the key findings of an economic analysis of SEPA that PwC was asked to perform for the European Commission.
From 1 February 2014, SEPA-compliant products replace standardised domestic payment products, such as credit transfers and direct debits, throughout Europe by. This will create a single, integrated payments market in Europe.
An integrated payments market is particularly interesting for businesses. Of the €21.9 billion in potential savings, the corporate sector will account for €16.1 billion annually. SEPA will help businesses to save on processing costs as well as on operating expenses. Gone is the need to keep separate bank accounts in different European countries.
The standardisation will also make businesses more flexible in their choice of bank. In the banking sector, a reduction in operating expenses and external clearing costs may well more than compensate for the loss of processing and account-related income.
But not everyone will benefit from SEPA in equal measure. It is mostly the corporate sector, but banks too, that will reap the economic rewards. Consumers will mainly benefit from better protection thanks to SEPA; they will have the option to cap collection mandates and to whitelist and blacklist creditors.
In addition, SEPA will encourage competition in the internal market and allow faster adoption of e-billing, mobile payment systems and the single standardisation approach XML ISO 20022, to be used by all financial standards initiatives.
To see the ‘European Commission’s role in SEPA’ webpage please follow this link.