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« Retail weak | Main | 68 episode 3: Mabel's Story »

SEPA is 0 today

By Dave Birch posted Jan 28 2008 at 7:54 AM

[Dave Birch] I'm sorry not be at the official high-level event, obviously, as I clearly see myself as distinguished, but I'm sure a good time will be had by all...

To mark the official launch of SEPA (Single Euro Payments Area), Charlie McCreevy (Internal Market and Services Commissioner, European Commission), Gertrude Tumpel-Gugerell (Member of the Executive Board, European Central Bank) and Gerard Hartsink (Chairman, European Payments Council) are organising this high-level event with distinguished guests from the EU payments market.

[From ECB: SEPA goes live]

I will probably join in the street party instead, as happy IT vendors citizens laugh, drink, carouse, dance in the streets and set off fireworks to celebrate this significant step in Europe's progress towards a single market. I intend a practical celebration as well: I shall log in first thing and try a SEPA credit transfer to one of our European forum friends.

Actually, I'm not sure that anyone other than payments nerds will notice SEPA day. Individuals don't make that many cross-border credit transfers (the actual payment instrument being launched today) and corporates are unlikely to change their banking and payment habits until they can automate all parts of a transaction, not just the payment (ie, they need e-invoicing etc). At the retail level, credit and most debit cards work fine, and in places where a national debit scheme was in place (eg, Finland) there were cards that had both the national non-interoperable scheme and an international interoperable (eg, Visa) scheme on the same card.

So why is anyone bothering, other than because of the European Commission? Well, someone whose opinions I always value, Peter Jones from our friends at Payment Systems Europe, wrote an interesting piece in European Card Review saying that a modeling and desk research exercise that they had carried out found that the likely benefits of SEPA on back office payments processing costs (that typically constitute between 15% to 25% of end user fees) are a potential savings of €11bn over the next decade. So European banks are investing something like ten billion in order to save a billion per annum. The good news for the rest of us should be that the reduced costs to banks and their reduced income because of price pressure should show up as reduced costs to business.

But I couldn't help but notice that Peter is very precise in his use of words when he says that if his predictions are correct then the benefits SEPA may deliver to the banking and processing industry will be sufficient to justify a proportion (my emphasis) of the investment. If you'd like to discuss how big a proportion with Peter in person, he'll be chairing the SEPA session at this year's Digital Money Forum.

These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]


I bet everyone knows this story, but i think it is a good time to remember it again:
Once upon a time, long time ago, there was Europay (eurocard and eurocheque) which was built for European Payments.
Of course, including "europe" in the naming convention doesn't make you european all of a sudden, but it could have been a good start base. EC is still pushing everyone for an alternative payment scheme which they had some time ago. And no one can assure these new infrastructures will not end up like the previous one.

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