Launch of the Single Euro Payments Area – Central Bank
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The Single Euro Payments Area (SEPA) is now live and European banks will formally launch the first SEPA payment products for credit transfers. This marks the first step in a migration process during which customers will move in a market-led process from existing national electronic payment products to the new SEPA instruments. This is a logical extension to the introduction of the euro that is expected to produce substantial benefits through a more competitive and efficient payments market.
SEPA enables people to make payments throughout the euro area as quickly, safely and easily as they make national payments. In SEPA all euro payments are considered domestic and made with one set of payment instruments. SEPA is thus another major step in realising the full potential of the single market for Europe. SEPA payments can also be used for euro payments within the European Union (EU) outside the euro area as well as in Switzerland, Norway, Iceland and Liechtenstein.
As heavy users of payment products, corporations and public administrations stand to gain substantially from the efficiencies made possible by SEPA. They should, therefore, play an important role in the success of SEPA by being early adopters of SEPA instruments. In the public sector, SEPA could be used as a platform to drive e-Government, thus contributing to the efficient delivery of public services.
The Central Bank of Malta and the banking sector have been preparing to provide SEPA services for over a year, and will launch the initiative with the introduction of the SEPA Credit Transfers service. Through this service funds to a beneficiary’s IBAN account can be delivered to the majority of banks in the euro area and the European Economic Area (EEA). These banks are identified through their Bank Identifier Code (BIC) code.
All Maltese banks are able to offer the new credit transfer service. This development is expected to result in two substantial benefits. The first is a reduction in costs in line with the expectations of consumers and EU Regulation 2560/2001. The second is a reduction, to a maximum of three days, in the time taken for a transfer to be delivered to a beneficiary’s account. In the coming months further benefits will become available to users of cards as well as through the launching of a Direct Debit Scheme, which will permit consumers to authorise payments to vendors securely from any account.
The Central Bank of Malta is also launching a consultation process to seek the opinion of institutions, consumers and society in Malta on the implementation of the Payment Services Directive, which will provide the legal basis for payment services provided under the SEPA initiative. This Directive will provide a sounder regulatory regime that outlines the rights and obligations of users and providers of payment services, including payment cards. It will also provide more competition and innovation through the launching of new payment institutions. In time, the Directive should accelerate the reduction in the use of cheques as the latter will attract higher charges when used across borders, even within the euro area. Cheque payments are also costly and inefficient to process domestically. The Directive promotes the use of direct debits as a direct replacement to cheques and provides a harmonised legal basis for their operation across the EU.
To mark the launching of the SEPA Credit Transfer service, the management and staff of the Central Bank of Malta chose to submit their annual donation to Id-Dar tal-Providenza, which this year amounted to EUR4,660, directly into one of that institution’s accounts with a local bank instead of using a cheque as in previous years.