Banks and businesses in eurozone countries will have an extra six months to comply with new standards for two of the most common ways of sending euros to another account in Europe, under plans approved by the European Parliament on 4 February. The original deadline of 1 February will be changed to 1 August. MEPs approved extending the transitional period to ensure there are no disruptions to payments as a result of delays in implementing the new Single Euro Payments Area (SEPA) standards.
Extending the deadline
The Parliament's decision concerns the deadlines for moving to the new SEPA standards for credit transfers and direct debits. Credit transfers are payments for which people instruct their bank to transfer an amount to another bank account, while for direct debits they give authorisation for a payment in advance and then the beneficiary draws the amount from the payer’s account.
Data from the European Central Bank shows that in December 2013 74% of all credit transfers and only 41% of direct debits complied with the new SEPA standards.
SEPA: making payments as easy as ABC
The SEPA initiative started about a decade ago with the aim of making payments in euros to another member state as fast and safe as payments within a country. To achieve this, technical and legal barriers had to be overcome.
One of the big changes was the introduction of the International Bank Account Number (IBAN) that has a common structure and enables identifying the bank customer’s account, the bank branch and the country where the account is held.
The project has also established common conditions for payments. For example, how much time the bank has to transfer the money. As a result banks and other businesses have had to invest in the IT systems processing payments.