What is SEPA?
SEPA (Single Euro Payments Area) is the area where private customers, companies and other economic entities can make and receive domestic and cross-border payments in euro under the same basic conditions, rights and obligations, regardless of their location.
Which countries are covered by SEPA?
Currently SEPA covers all of the European Union (EU) Member States, as well as Norway, Iceland, Lichtenstein, Switzerland and the Principality of Monaco.
What encouraged the initiation of the SEPA project?
Historically developed different retail payment markets in EU Member States prevent the utilisation of all opportunities presented by the EU internal market. Business companies providing services in several EU countries or natural persons changing their place of residence encounter particularity of local payment instruments. The adaptation not only takes time and additional costs, but also limits competition between payment services and the spread of innovations at the EU level. Moreover, the absence of common standards and efficient infrastructure determined a lower level of cross-border payment services than that of domestic payments. EU institutions (European Commission, European Central Bank) are of the opinion that there should be no substantial differences between domestic and cross-border payment services in the EU internal market.
What is the purpose of the SEPA project?
The purpose of the SEPA project is the expansion of the market where the same payment instruments are used. This is used to ensure a higher level of services, stronger competition, more effective products and cheaper methods for making payments and to create conditions for innovations and new services.
Who implements the SEPA project?
European Payment Council (EPC) is responsible for the coordination of common interbank aspects. It is the main body of European banks that coordinates and adopts SEPA related decisions. EPC prepared SEPA credit transfer and SEPA direct debit schemes (rules and requirements) and adopted guidelines on the operation of payment cards in the SEPA area. Following these guidelines, the providers of payment services (banks, credit unions, payment institutions) prepare the final offers of payment services for customers, propose additional services, if needed, update interfaces and communicate with customers.
SEPA payment instruments will become widespread only when the users of these services are ready to use them. Enterprises and public sector institutions play an important role here, since they are the most important users of payment services.
Who coordinates the implementation of the SEPA project in Lithuania?
At the end of 2007, domestic commercial banks, foreign bank branches, the Association of Lithuanian Banks and the Bank of Lithuania established the SEPA Coordination Committee. Seven working groups were created to deal with specific tasks. The Committee prepared and approved the Plan of Replacement of Payment Instruments with SEPA Payment Instruments in Lithuania, which will be updated, taking into account the latest information, conclusions of the analyses performed and remarks and suggestions of market participants.
The future goal should be the inclusion of more participating institutions into the project of preparation for SEPA by attracting various groups of payment service users or associations representing these groups: consumers, small and medium-sized enterprises, large enterprises, developers of IT services and other interested parties.
What are SEPA payment instruments?
Payment instruments offered by SEPA are the following:
SEPA credit transfers;
SEPA direct debits;
SEPA card payments.
What are SEPA credit transfers and how are they different from the existing credit transfers performed in Lithuania?
SEPA credit transfers are credit transfers in euro performed in accordance with the scheme established by the EPC in the whole SEPA area. SEPA credit transfers are very similar in terms of their features to the credit transfers in litas currently performed in Lithuania, with the exception of some information fields (for example, payment code), which are absent in the SEPA credit transfer scheme. Credit institutions operating in Lithuania search for solutions of the problem of information field mismatch in order to maintain the current level of service.
Will it be necessary to change the bank account number due to SEPA credit transfers?
No. An account with an account number in IBAN format is required to initiate and/or receive SEPA credit transfers. All bank accounts used in Lithuania are already numbered according to the IBAN format.
Are SEPA credit transfers already performed in Lithuania?
Yes. SEPA credit transfers have been available in Lithuania, as in the whole SEPA area, since 28 January 2008. Thirteen banks and foreign bank branches operating in Lithuania that cover around 98 per cent of the retail payment market have the right to perform these transfers. Although all these banks can accept SEPA credit transfers and credit the funds into the beneficiary’s account, not all banks currently offer the possibility to initiate SEPA credit transfers. Please inquire your bank regarding the possibility to initiate SEPA credit transfers. Information on SEPA payment instruments offered by banks is also available on the website of the Bank of Lithuania.
Is there a possibility to make SEPA credit transfers by initiating payments in currencies other than the euro?
Should SEPA credit transfers cost the same as the existing credit transfers in litas?
No. According to Regulation No 2560/2001 of the European Parliament and of the Council of 19 December 2001 on cross-border payments in euro, the providers of payment services must equalise the prices of domestic and cross-border credit transfers in euro. The Directive does not obligate the providers of payment services to equalise the prices of credit transfers in different currencies.
What is SEPA direct debit and how is it different from the existing direct debits performed in Lithuania?
SEPA direct debit is the service of collecting the funds in euro provided in accordance with the schemes established by the EPC in the whole SEPA area. The EPC approved two SEPA direct debit rulebooks: SEPA Core Direct Debit Scheme Rulebook and SEPA Business-to-Business Direct Debit Scheme Rulebook.
SEPA direct debit (core scheme) has substantial differences, compared to the currently provided funds debiting services: a more important role has been granted to beneficiaries (for example, when accepting and storing permissions) and the protection of payers’ funds has been ensured (for example, the possibility to redeem the funds within eight weeks after the debiting of funds).
Are SEPA direct debits already performed in Lithuania?
In most SEPA area countries, SEPA direct debit services are provided from 1 November 2009. Up to now, the service of direct debit in euro was not in demand in Lithuania. Therefore, the Lithuanian banks are inclined to start providing direct debit services, when Lithuania changes the national currency to the euro. Still, some banks may start providing this service earlier.
What is a SEPA payment card and how is it different from the cards already available in Lithuania?
SEPA payment card is such a payment card, where the entities participating in its issue, processing of operations and other processes follow the principles established in the SEPA Cards Framework adopted by the EPC. Differently from now, card holders will have to use the PIN code always: both when performing operations at ATMs, and when settling for goods and services. In addition, they will be able to settle in the whole SEPA area using a single card. These changes should be implemented by the end of 2010.
Are SEPA payment cards already available in Lithuania?
Yes. All new payment cards issued by banks are smart cards that comply with the EMV standard. Still, in order to comply with all principles established by the EPC, the changes of card servicing infrastructure (card readers, ATMs) are required. It is planned to implement these changes by the end of 2010.
How will the principles of SEPA payment cards affect trade and service enterprises in Lithuania?
Due to new technological solutions, it will be necessary to update the software and replace the hardware in trade centres, where card readers that do not yet process smart payment cards of the EMV standard and integrated cash desk systems are installed. It will also be necessary to upgrade the hardware in automatic gas stations.
What are the benefits of SEPA to private consumers?
SEPA payment instruments will be available in the whole EU, and customers will only need a single account. They will be able to perform credit transfers and direct debit payments in euro from this account in the whole EU as simply as domestic payments. A larger selection of service providers and thus stronger competition will ensure a high quality of services and optimal fees. Similar requirements, transparent service fees, strict money transfer time limits will ensure transparent and straightforward payment processing.
What are the benefits of SEPA to the public sector?
SEPA will help the public sector ensure a more efficient provision of public services and provide the following opportunities:
To upgrade internal systems and review internal processes by standardising and automating them;
To reach the payer or beneficiary simply in any SEPA country;
To select the provider of payment services from any SEPA country;
To search for the best price to quality ratio of payment services;
To integrate SEPA payment instruments into the current electronic government projects (electronic procurement, electronic signature, electronic accounts, etc.).
What are the benefits of SEPA initiative to enterprises?
SEPA will help enterprises simplify the administration of payments.Enterprises will be able to perform all their financial operations in euro in a centralised way from a single account by using SEPA payment instruments. A larger selection of service providers and thus a stronger competition will ensure a high quality of services and optimal fees. The processing of payments will be simplified, since payments will be standardised. Enterprises operating in multiple EU Member States that concentrate payment and liquidity management in one location not only will incur lower expenses, but also save time.
The services that create the value added, for example, electronic presentation of accounts, electronic reconciliation of the presented and paid accounts, will help enterprises to further improve the administration of payments. These services are currently mostly offered at the national level, since it is difficult to do it at the cross-border level due to the different payment formats used.
Have the requirements for the interface between the provider of payment services and the customer been established?
No. However, in the environment of the provider of the EPC payment services and the customer, it is recommended to use messages based on the ISO20022 standard and the XML syntax. This would allow customers to change the provider of payment services simplier and would create a possibility to use additional services (for example, structurised payment destination).
When is it planned to finalise the SEPA project?
At the moment, there is no legal act establishing the expiry date of the current payment instruments, i.e. the date by which market participants should fully migrate to SEPA payment instruments, although the European Commission and the European Central Bank are actively discussing the need of such a legal act.