The integration of the non-cash payments systems in Europe is the logical follow-up to the introduction of the euro. It is expected that the realisation of the Single Euro Payment Area will result in tremendous gains and potential savings for society and bring benefits to all stakeholders. An efficient single market for payment services will increase competition, facilitate new business opportunities, the realisation of economies of scale and foster specialisation and innovation. Because there are such large economic benefits, the realisation of the Single Euro Payment Area is also of political importance.
SEPA was always seen as a market-led process which would be supported by regulatory action where necessary. Without preconceived ideas, this paper explores ways to support, underpin and enhance the self-regulatory activities of industry. However, whilst the preference is for market-led solutions, regulatory action is not ruled out where there is a risk of market failure that could put the economy wide benefits of the project at risk.
Given the importance of the SEPA project and the role to be played by the European Commission and the European Central Bank in its successful development, at service level Commission and ECB staff are engaged in increasing co-operation and coordination of SEPA related work-streams.
As a practical example of this cooperation, both institutions have undertaken close consultation in the preparation of the present paper as well as in the Eurosystem's Fourth Progress Report on SEPA. Both institutions have a shared vision for SEPA and have identified the same issues that could undermine its success.
The Single Euro Payment Area requires the removal of legal, commercial and technical barriers that keep national markets apart. The legal barriers are addressed in the proposal for a Directive for a New Legal Framework (NLF) for Payments in the Internal Market.
This proposal has been adopted by the Commission on 1 December 2005 and is now in the hands of the Council and the European Parliament. In order to contribute to the realisation of SEPA according to deadlines that have been set for the project, it is of crucial importance that the NLF is approved by the end of 2006. This paper does not mean to interfere in any way with the adoption of the NLF. The focus of this paper is rather on the current self-regulatory initiatives of industry towards SEPA in order to ascertain whether those initiatives will be sufficient to realise the vision of the European Commission for SEPA (this vision is described in Section 2 of this paper).
After Regulation (EC) No 2560/2001 obliged bank to charge equal prices for crossborder and domestic payments, the banking industry reacted quickly by creating the European Payments Council in 2002. The banking industry has since then put considerable effort and resources into ensuring that SEPA will be realised through self regulatory, market-led actions. The EPC work to date has been to design European schemes for interoperable payment solutions, with regard to both technical and commercial standards and infrastructures. The future work of the EPC will mainly be to finalise the design and to oversee the implementation of the solutions developed.