SEPA (Single Euro Payment Area)

The Single Euro Payments Area (SEPA) denotes a single euro payments’ area in which national and cross-border payments are harmonised. The first SEPA-related changes were effected on 28 January 2008. SEPA will have a direct effect on Latvia after its transition to the euro; the indirect effects will reach us sooner as the neighbouring countries are already using the euro.

The establishment of the single area is based on the Payment Services Directive (PSD) which was approved by the European Parliament on 24 April 2007. The PSD aims to ensure that EU cross-border payments, especially credit transfers and direct debits, and card payments are as easy, efficient and secure as national payments. The Directive provides the legal platform for the formation of the single euro payments area. At the same time the Directive enhances the rights and protection of all use
rs of payment services (consumers, retailers, large and small enterprises and administrative agencies).
SEPA includes all EU Member States and also Iceland, Norway, Liechtenstein and Switzerland.

Which areas does SEPA govern?

1. Payment orders. The non-cash transfers among the banks which have joined the SEPA system were effected from 28 January 2008. In case of the electronic payments’ system the rules shall lay down the use of international bank account number (IBAN) and bank identifier code (BIC); the payment delivery terms; the rights and liabilities of the participants; the conditions of payment forwarding, receipt and rejection; legal basis and other details.

2. Direct debit (also, ‘automatic payment of bills’). Transition to the SEPA direct debit settlement scheme started on 2 November 2009. Implementation of the SEPA direct debit scheme means that, once Latvian banks join the scheme, their customers will have a chance to use direct debit for payments to other ES member states as well. For example, customers will be able to pay their telephone bills or pay for other services received from providers based outside Latvia. Also the customers of Latvian banks, as the recipients in direct debit operations, can accumulate, in a single account, all direct debit payments from all customers who pay through banks based in the European Union, Iceland, Lichtenstein, Norway, Switzerland and Monaco.

3. Bank cards. The application of the SEPA system will enable the use of all of the cards issued by the banks of EU Member States in all other Member States. Starting in 2008 all of the banks in EU have to issue bank cards equipped with a chip conforming to the EMV standard and these cards can be used for payment and for withdrawing money from ATMs in all EU Member States. From the end of 2010 all cards in use have to be applicable in the whole SEPA payment area.

How does SEPA influence the clients of Swedbank?

Swedbank as a member of the Swedbank Group has offer its clients all of the new possibilities arising from SEPA.

From 28 January 2008 all our clients have the possibility to make euro transfers to banks which have joined the SEPA system. This way you are able to use additional possibilities to forward information to the payee and our additional guarantees which the SEPA system provides.

The provision of banking services does not depend on state boundaries and this way it is possible to settle payments in Europe so that the enterprise only has one account in one bank. For the clients of Swedbank this means easier access to the international market, because as a subsidiary bank of Swedbank we are represented in many European countries.