What is a 'Single Euro Payment Area (SEPA)'

The single euro payment area (SEPA) is a payments system created by the European Union (EU) which harmonizes the way cashless payments transact between euro countries. European consumers, businesses, and government agents who make payments by direct debit, credit card or through credit transfers use the SEPA architecture. The single euro payment area is approved and regulated by European Commission.

BREAKING DOWN 'Single Euro Payment Area (SEPA)'

The purpose of the single euro payment area (SEPA) initiative is to make cross-border electronic payments as inexpensive and easy as payments within one country. Also, the system brings more competition to the payments industry by creating a single market for payment services, thus bringing down prices. More than 520 million people live in countries covered by the SEPA, and those customers make more than 122 billion electronic payments per year.

SEPA currently includes 34 countries in Europe. It encompasses the 28 EU member states along with Iceland, Norway, Liechtenstein, Switzerland, Monaco and San Marino. The single euro payment area remains an ongoing, collaborative process between these parties. SEPA is in the process of harmonizing rules regarding mobile and online payments.

SEPA is managed by the European Commission and the European Central Bank (ECB) on a collaborative basis, through the European Payments Board. The board is chaired by the European Central Bank, which together with representatives from government and consumer groups, works to govern the board and steer its agenda.

History of the Single Euro Payment Area

The story of SEPA began in 1999 when the banking industry through the Euro l Bank argued that a monetary union should also have a single payment area. The view was that it would lead to further integration of EU economies. However, it was not until 2007 that the European Union passed the Payment Services Directive. The Directive formed the legal basis for the establishment of the Single Euro Payment Area.

In 2011, SEPA payments replaced national payments. Later, in 2017, SEPA unveiled a program whereby participating banks would transfer up to 15,000 euros in ten seconds.

In 2018, the European Commission proposed to extend rules forbidding banks to charge extra cross-border transaction fees to non-EU countries as well. This proposal dictates all people in the EU have the right to transfer euros across borders at the same cost as they would pay for a domestic transaction. The new rules will also require that consumers are informed of the cost of a currency conversion before they make a payment abroad in a currency different than their home currency.


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