Making bank payments across the EU can often be bothersome and costly, however new rules to be discussed by MEPs today could soon change all that. If the report gets approved, eurozone banks would be required to treat credit transfers as nearly the same as domestic payments from 1 February 2014 on. This should make them cheaper, faster and safer . We spoke to Finnish MEP Sari Essayah, who is responsible for steering the legislation through Parliament.
Her report on upgrading the Single Euro Payments Area (SEPA), which will be voted on tomorrow, reflects the deal struck between the Parliament and member states in December, which promises to streamline cross-border payments and make them almost indistinguishable from domestic transfers. The Christian Democrat MEP said both consumers and companies would be able to enjoy the advantages. "If a person is working abroad, she or he does not need a new bank account in that country, but may receive her or his salary to the one bank account in his/her home country. Or having a villa in Spain and a direct debit for water and electricity, the payments could be made from a bank account in one's home country. Also companies benefit from not needing more than one bank account in the whole Europe for each payment purpose."
She continued: "Easy payments make it also very easy to buy goods and services via Internet from all over EU and thus a citizen has real options to compare prices and get the best price. Buying a computer from the cheapest e-retailer may save hundreds of euros, and thus prices are forced down everywhere in the market. SEPA is in many ways essential for a well functioning internal market, since one has to make payments in every case."
Opening up competition in the payments sector could boost the European economy by at least €123 billion over six years and this could climb to even €300 billion, according to the impact assessment published by the Commission. Mrs Essayah commented: "In the case of credit transfers or direct debits the payment costs are mainly included in the yearly payment for one's bank account. In the long run these payments should also become cheaper through competition. As these costs, however, cannot be openly seen by consumers, the effect of reducing these costs may also not be openly seen, although the savings could potentially be significant."
SEPA covers 32 European countries. In addition to countries that have the euro as their currency, it also includes non-EU countries such as Switzerland, Norway, Monaco, Iceland and Liechtenstein. According to the report, banks in non-Eurozone countries member states will have until 31 October 2016 to comply
The new payment system will rely on the sole use of the internationally recognised IBAN number to identify citizens' unique payment accounts in EU. The current need for bank customers to supply a bank-identifier "BIC" code will be phased out. In addition consumers may instruct their banks to limit direct debit collection to a certain amount or period.