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The 2008 guide to SEPA: Now a Reality

Welcome to the fourth edition of ABN AMRO’s Guide to the Single Euro Payment Area (SEPA). Since last year’s edition, SEPA has become a reality, with the launch of the SEPA Credit Transfer (SCT) on 28 January 2008. Despite concerns that the banking industry would not be ready for this huge change in payments, most banks met the deadline. During the first month, ABN AMRO and The Royal Bank of Scotland (RBS) processed several hundred thousand SEPA transactions.

Despite widespread scepticism regarding the level of awareness among corporates, many clients chose to take early advantage of the benefits of the SCT. Indeed, the strong – and growing – uptake of the SCT demonstrates that SEPA is already meeting the commercial needs of many corporates and financial institutions.

The introduction of the SCT is the first concrete milestone in progressing towards the ultimate goal of a harmonized payments environment encompassing all countries and currencies in Europe. This vision will be realized through the implementation of all the SEPA instruments and the adoption of the Payment Services Directive (PSD), which provides the legal foundation for the creation of an EU-wide single market for payments. Practically, the use of a standard format for euro payments to any country in Europe’s SEPA region under standard terms is a great achievement.

Symbolically, the launch of SEPA – in the form of the SCT – is an important moment in Europe’s economic development. It marks the culmination of the introduction of the euro and creates a true single market. It will inevitably offer new ways for companies to operate in Europe, enabling them to build closer relationships with their banks and suppliers, and give them the opportunity to improve cash flow efficiency.

Encouragingly, SCT volumes started higher than originally expected and have risen sharply.

The number of SCTs processed by both ABN AMRO and The Royal Bank of Scotland in March was up 50% on February’s figure. If this pace continues, the migration of a significant percentage of legacy payments to SEPA may be achieved earlier than estimated.

The remaining SEPA instruments will be introduced in a phased approach. In particular, the SEPA Direct Debit (SDD) will become an effective regional instrument when the PSD is transposed into national law in the member states, scheduled for November 2009. Although the introduction of the SDD and PSD may present challenges along the way, the end goal of an optimized payments landscape will have significant benefits for both corporates and consumers.

The basics of SEPA are now in place but the challenge lies in getting the detail right. We are here to guide you through SEPA and help you capitalize on the opportunities it will create.

Brian Stevenson

Chief Executive

Global Transaction Services,

The Royal Bank of Scotland

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