Single Euro Payments Area Research Articles

НАПРЯМИ ТА ОПЕРАТИВНІ ЗАХОДИ РЕАЛІЗАЦІЇ РЕГУЛЯТИВНОЇ ТРАНСФОРМАЦІЇ ЦИФРОВОГО РИНКУ ЄС

The article delves into the strategies and actions required for the EU’s digital market regulatory overhaul. A primary goal of the EU Digital Single Market is to align public and private services throughout the European Union. An interoperable cross-border digital infrastructure hinges on three pivotal factors: Framework compatibility of digital administration within the EU, creating a single euro payment area within the financial sector, and enhancing electronic identification and trust services for electronic transactions within the internal market. It is established that the European Union has developed an interconnected digital public infrastructure within its Digital Single Market, facilitating frictionless cross-border collaboration among individu- als, enterprises, and governmental bodies. There is a strong emphasis on digitalization instigating swift transformations within the EU labor market, exerting influence over labor’s character, caliber, and efficiency. Notably, four essential components are requisite for attaining an all-encompassing, constructive, innovative effect of digitization on the EU labor market: financing, national regulatory frameworks, European Union regulations, and rejuvenated collective initiatives. The article outlined future directions for the regulatory transformation of the EU digital market. Priority is given to areas with high potential for returns and where practical operational measures can be implemented. The analysis of these directions and the operational measures re- quired for transforming the European Union’s digital market has led to the conclusion that the EU is currently engaged in revis- ing the European Interoperability Framework. This framework facilitates the interaction of government administrations across the EU, enhancing communication and cross-border service provision. In the realm of payments, enhancements are underway for SEPA, including its integration into the interoperability of instant payments across the EU. Additionally, efforts are being made to expand and reform electronic identification systems. Cross-border digital public infrastructure is vital in establishing the EU’s Digital Single Market, an initiative currently undergoing dynamic development to enhance the compatibility of various digital infrastructures among EU member states. This effort aims to improve service delivery throughout the European Union. The enforcement of the EU Digital Markets Act (DMA), which has recently come into effect, plays a pivotal role in the ongoing transformation and standardization of regulations within the EU digital market. It introduces more competitive rules and ensures a potentially higher level of consumer rights protection than other global economic regions. However, it is worth noting that national competition authorities have been granted substantial enforcement powers under the DMA, which may affect the overall dynamics of the EU’s Digital Single Market.

The internal cards market in Europe from 2002 to 2020: A success or a failure?

This article evaluates the history of the internal payment cards market in Europe from 2002 to 2020. It finds that despite such initiatives as EAPS, Monnet and PayFair, the European card industry has failed to create an independent pan-European card scheme. Thus, although Europe enjoys a unified payments market, with well-functioning domestic cards markets, pan-European cards acceptance across the Single Euro Payments Area is entirely reliant on co-branding with international (ie non-European) card schemes. While cards have become the most commonly used cashless payment product in the European internal market, the European payments industry has failed to deliver on policy objectives regarding sovereignty in the European payments market.

Promoting the Integration of Payment Markets: A Stakeholder’s Vision

We validate stakeholder theory using a natural experiment in the European payments industry, the Single Euro Payments Area (SEPA), supported by unique primary data. SEPA is an important part of the single European market, on the back of the creation of the single currency in 1999. SEPA created a new environment of competition across Europe by making national borders irrelevant. Interviews with Portuguese experts directly involved in the realization of SEPA make it possible for us to provide a new taxonomy of stakeholders according to their power and role. Our study highlights the association between stakeholder theory and a strategic project at the European level and invites further research on the theoretical underpinnings of large-scale ventures.

The European Automated Clearing Association and the role of clearing and settlement mechanisms in Europe’s evolving payments landscape

This paper presents a concise history of the Single Euro Payments Area (SEPA), with particular emphasis on its impacts on clearing and settlement practices, and on the role of the European Automated Clearing Association as a forum to support the standardisation, harmonisation and consolidation of European payment systems. The paper provides policymakers, scholars and practitioners with an introductory overview, and will help readers, especially those new to SEPA, to understand both its history and more recent developments in the euro area. The conclusions highlight the indispensable role of clearing and settlement infrastructures as a backbone for the payment services delivered by banks, as well as the importance of collaboration for infrastructural evolution.

Developments in fast payments in the Single Euro Payments Area

The European Payments Council introduced the SCT Inst scheme to benefit end users by enabling real-time euro payments between payment service providers (PSPs) throughout the Single Euro Payments Area. The rapid development of the scheme during its first four years is testament to the collective vision and work of European PSPs in support of real-time payments. This paper explores the SCT Inst scheme’s significant progress, in addition to related developments and challenges in the field of payments. The paper finds that a critical mass of SCT Inst scheme participants and reachable payment accounts is forming in the euro area through a natural, market-based process in response to the benefits of the scheme for end users and PSPs.

Single euro payment area (SEPA) and banking industry: discriminatory pricing vs. non-discriminatory pricing

Single euro payment area (SEPA) and banking industry: discriminatory pricing vs. non-discriminatory pricing

Approaching Monetary Integration in the Context of the Imperative to Ensure the Sustainable Growth in the EU

Sustainable economic growth is an essential objective at the European Union level. The purpose of this paper is to investigate the impact of monetary integration on economic growth, assuming that the introduction of the euro significantly stimulated the process of European financial integration. We used a fixed-effects methodology for panel data for the EU 28 countries for the period 2004–2018. We find that the main factors through which monetary integration contributessignificantly and positively to economic growth areeconomic growth Single Euro Payments Area (SEPA)cards, trade, monetary freedom, convergence of interest rates, convergence of exchange rates and cross-border holdings of short-term debt, with significant differences between Eurozone and non-euro countries, which confirms the hypothesis that the introduction of the euro had a significant impact on economic and financial integration.

SEPA Instant Credit Transfer: Where are we now and where are we heading?

Launched by the European Payments Council in November 2017, the Single Euro Payments Area (SEPA) Instant Credit Transfer (SCT Inst) is an instant payments scheme enabling euro credit transfers within the SEPA area to be made in under 10 seconds. SCT Inst was designed for everyone: consumers, businesses, large companies and administrations. It works like a regular SEPA credit transfer but much, much faster; it is also open and accessible to users and service providers 24 hours a day, seven days a week. This paper reviews the progress of SCT Inst since its launch, its critical success factors, challenges and what the future holds for it.

MODEL PAYMENT ORDER IN THE SEPA SYSTEM

The process of modernisation, rationalisation and automation aimed at increasing productivity and cost-efficiency is not feasible without the continuous investment and application of modern information technology. Single Euro Payment Area (SEPA) is a single payment system in EUR, within and between the European Union (EU) member states and the European Economic Community (EEC). Performing payment transactions by manual or semi-automatic input (template) is time-consuming and includes a high probability of error. Development of a model for automating the execution of a payment order enables faster and errorless execution of payment transactions. This paper describes a platform for the exchange of digitised contents for payment orders in the SEPA system and methods used in the development of an automated system for the exchange of data with business banks. The paper presents the improvement in the execution of payment orders using the SEPA system and also offers directions for further development.

It-Based Usury Free Financial Innovations

Despite development and extension of different ways of financing in financial markets, encompassing Islamic and conventional financing, the mechanism of Electronic Funds Transfer (EFT) of project financing both as borrowed and non-borrowed methods has not been considered at most. Moreover overall IT infrastructures development namely Real Gross Settlement System (RTGS), Automatic Clearing House (ACH), Scriptless Security Settlement System (SSSS) and International Bank Account Number (IBAN) for authentication process and the international meta bank network of Single Euro Payment Area (SEPA) and also international integrated banking networks including the Society For Worldwide Interbank Financial Telecommunication (SWIFT) and Interbank Information Transfer Network (Shetab), and other accomplished endeavors are not efficient in absorbing international contributions for project financing through foreign exchange funds in the different countries, satisfactory E-Payment mechanism in informative portal systems for investment projects are weak. In this way, the role of applying E-Payment systems for attracting foreign investment through retail resources mobilization and design of financial instruments with the capability of transacting in the secondary markets should be reconsidered. In this paper by having a glance at different types of investment project financing, we introduce a new project financing mechanism based on E-Payment with non-usury financial instruments to complete investment project financing chain in the form of Rastin Profit and Loss Sharing (PLS) banking.Sharia compliance of financing instruments in one side and accessibility in absorbing international retail foreign exchange sources on other side are two fundamental discussible items in this paper. In this way by designing a new system of "Non-Usury Scriptless Security Settlement System" (NSSSS) with non-usury mechanisms -avoiding legislative (Sharia) circumvention- can provide the two cited goals in designing non-usury financing instruments through IT-based non-usury financial innovations which includes of Rastin Certificates in Rastin PLS banking, and Non-Usury Bonds namely Rastin Swap Bonds.

Facilitating the interoperability of high-value and international payments: The ISO 20022 migration of the Eurozone

The European Central Bank has launched a project to consolidate its real-time gross settlement system TARGET2 with its other settlement platforms, including its securities settlement (TARGET2 Securities) and instant payments settlement (TIPS) platforms. This consolidation will require a single gateway to access the various systems, the introduction of centralised liquidity management, and the standardisation of all messaging in accordance with the ISO 20022 universal financial industry message scheme. The project will have a significant impact on banks, affecting almost their entire payments IT infrastructure. It will also change business rules and processes, and impact on their liquidity management. Clearly, banks will have to dedicate significant resources to fulfil their obligations before the actual migration takes place in November 2021. The project follows a global trend for the migration of high-value and cross-border payments to the ISO 20022 standard, with the Dollar Zone, Sterling Zone and SWIFT all starting similar projects. This paper describes the content, the approach, the timeline and the impact of the consolidation on banks. It also illustrates why TARGET2 consolidation represents the biggest challenge since the implementation of the euro and the Single Euro Payments Area. Finally, the paper outlines the key decisions banks must make on the road to migration.

Supporting the smooth uptake of instant payments: Pan-European infrastructure principles revisited and checked against the live RT1 system

In November 2017, the Single Euro Payments Area (SEPA) witnessed the introduction of realtime euro payments following the launch of the European Payments Council’s SEPA Instant Credit Transfer scheme and the first systems capable of processing instant payments. In preparation for this major date, which also saw its own instant payment platform, RT1, go live, EBA CLEARING published a white paper on pan-European infrastructure considerations. The paper focused on crucial drivers of success for instant payments and how they could best be supported in the infrastructure layer. A year after the publication of this paper, the company revisited these drivers, as well as the elements, processes and arrangements it had implemented at the level of its RT1 system in order to support them. The aim was to determine whether these measures had contributed to the uptake and smooth day-to-day processing of instant payments. The present paper provides a summary of this reality check.

The impact of the distributed ledger technology on the Single Euro Payments Area development

Research background: The year 2016 ended the period of the migration from national payment services to the SEPA instruments. At the same time, however, it has become apparent that some problems remained unresolved. Overcoming them requires finding suitable technological solutions. The potential of the distributed ledger technology (DLT) is currently being explored by the financial sector and its implementation may affect the SEPA schemes in a variety of dimensions.
 Purpose of the article: The aim of the article was to determine the potential impact that the DLT transfer to the banking sector may have on the functioning of the SEPA in the future. The paper presents SEPA?s assumptions and the current status of the project as well as the DTL?s concept. It describes the technology transfer implications for the banking industry and compares the SEPA schemes currently operating with those based on the DLT. It also indicates the opportunities and threats that are the consequence of the new technology implementation and examines their significance for the SEPA.
 Methods: In the article, a qualitative analysis is supplemented with a quantitative one. Elements of descriptive statistics have been used to characterize the functioning of the main pillars of the SEPA schemes. The final conclusions are based on the comparative analysis of the SEPA schemes and developed DLT applications.
 Findings & value added: The existing problems might be solved by supplementing the SEPA payment schemes currently operating with the applications based on the DLT. The systems that will be subsequently developed will provide the required real-time processing and a global reach. They will also extend the functionalities of the SEPA schemes with the ability to transfer other currencies. The implementation of this technology will result not only in new financial products but, first of all, in creating new business models. Consequently, we may expect a modification of the currently operating SEPA schemes, based on their supplementation rather than total replacement in a short time frame.

Impact of the single euro payment area on performance of banking sector

Impact of the single euro payment area on performance of banking sector

Impact of the Implementation of the SEPA Project on SMEs

1. Introduction introduction of a common currency, the euro, and subsequently the use of the common currency in the Eurozone was the main impulse for creating a common payment area for cashless payments. A project, named SEPA--Single Euro Payments Area, was established with the aim to create a common area for payments in EUR. main mission of SEPA was to abolish borders and implement cashless payments in euro (Et al., 2013). In SEPA, consumers, companies and other economic entities accept and receive payments in euro within their individual countries, and between the countries, under the same terms and conditions and with the same rights and duties, regardless of their geographical location. (Schlossberger, 2012). aim of the SEPA project is to harmonise payment services in the EEA = European Union countries (herein the EU) + Iceland, Lichtenstein, Norway, Monaco and Switzerland. For the reasons stated above, the project is supported by the European Central Bank (hereinafter the ECB) and the European Commission (hereinafter the EC). European Council (hereinafter the EPC) created common rules and implementation procedures for putting SEPA into practice. A major milestone for the implementation of SEPA in practice was the adoption of (EU) No. 260/2012 of the Commission and the European Parliament, establishing technical and business requirements for credit transfers and direct debits in euro and amending (EC) No. 924/2009. In the CR the implementation of SEPA payment tools into practice is carried out through cooperation between the Czech National Bank (hereinafter the CNB), the Ministry of (MF) and the Czech Association (CBA). 2. Literature Review Apart from the author of this paper, [e.g. Schlossberger, O., 2012, Payment (Management Press, Prague) or Schlossberger, O., 2011, Cross-border System Cuts State Boundaries, an anthology from a conference entitled Hradecke ekonomicke dny, 286-291, (Gaudeamus, Hradec Kralove)], only a few other authors in the CR are dealing with the issue of SEPA, mostly on a general level, focusing on the issue of financial markets. For example, prof. Jan Jilek in his publication Jilek (2), J., 2013, Finance in Global Economics--Cash and (GRADA, Praha) or a publication by a team of authors, prof. Mejstnk (3), M., Pecena, M. and P. Teply, 2014 Banking in Theory and Practice (Karolinum, Praha). SEPA, with a focus on the legal issue of the project and regulation of payment services, is covered in a publication by authors Prof. Tyc and Mr Kyncl--Kyncl, L. and V. Tyc4, 2013, Regulation of Online Financial Services in the European Union. issue of European payment transactions was also discussed by Prof. Michal Tomasek, focusing on the legal issues in this area, in, for example, Tomasek, M., 1997, Payment Transactions in the European Union--Part I (Komercni banka and Association, Prague). To name some foreign publications, we should mention a publication from Slovakia, published several years ago, Klimikova, M.5, 2008, Payment (MARADA, Bratislava, SR), which discussed the use of SEPA project results in companies (see p. 138 an.). From the several publications discussing SEPA as a project and its basis from an information point of view, we should point out Prof Jurgen Bott6, 2009, The Single Euro Payments Area: New Alliances Required to Tip the Market (ECRI, Research Report No. 10), covering, amongst others, incentives for the providers of these payment services and their users when transferring to SEPA products. 3. SEPA--Project to Rationalise Contact impact of the SEPA project on small and medium-sized enterprises shall be researched, and therefore it is important to define the terms. In the EU countries SMEs represent major economic subjects, in terms of the number of employees they represent 99% of all businesses and generate 70% of GDP in the EU, and 37% in the CR. …

The impact of SEPA in credit transfer payments: Evidence from the euro area

This paper analyses the effect of the implementation process of the Single Euro Payments Area (SEPA) project on credit transfer payments in euro area countries during the period between 2008 and 2013. Using both univariate and multivariate fractional regression models, we found that, when controlling for socio-demographic, economic, technological and institutional factors, the progress in the migration to SEPA formats had a relevant positive impact on the share of payments made with credit transfers. Our results provide for the first time empirical evidence of the direct effect of the implementation of SEPA on payment habits and set the basis for the discussion of some of the possible implications of payments digitalization from both economical and societal perspectives.

Evolution of EU Retail Payments Law

This paper traces the evolution of EU payments law for retail payments, identifying four phases of its development. In spite of the EU’s founding principle of free movement of payments, the first two phases of EU payments law were characterized by negative integration and soft law measures with limited effects on the performance of cross-border payments. The introduction of the euro started the third phase of EU payments law in which the EU became more aggressive in its approach to regulating payments. Nevertheless, EU legislation was mainly aimed at triggering and supporting “voluntary self-regulation” by the banking industry. As a result, EU payments law acquired a hybrid character. The ensuing Single Euro Payments Area (“SEPA”) is composed of publicly- and privately-made rules which became mingled together into a single system. Finally, the fourth phase of the development of EU payments law has witnessed, on an unprecedented scale, EU public regulation colonizing areas that used to be in the private domain. It also marks a nuanced shift of objectives of EU payments law: integration is no longer the overarching objective but “regulation for competition” has surfaced as an equally important goal.

Digitalisation in payments: From interoperability to centralised models?

‘Digitalisation’ seems to be the current buzz word, and it is used to discuss various things from 3D printers via always-on health sensors powered by smartphones to challenges in financial services by new ‘non-bank’ players (so-called FinTechs), which track relationships with the clients. Payments, as an electronic product offered by banks for decades, are taken here as the subject of study to analyse the impact of digitalisation and future developments in payments. This is based on three examples representing three antagonistic concepts: interoperability, centralisation, and distributed systems. The examples highlighted here are: first, the implementation of the Single Euro Payments Area in Europe and a comparison between some original objectives with the current status of realisation; second, the development of so-called business platforms, such as Google or Facebook, which facilitate exchange between the agents in a multi-sided market; third, the emergence of digital currencies such as Bitcoins with decentralised ledgers and decentralised consensus systems used as means of payment. For all three examples, the form of digitalisation, the current implementation, potential limitations and future development paths are compared. Finally, the question of what a future payments ecosystem will look like and whether there will be a shift from interoperability to centralised models are discussed with the clients.

SEPA Card Clearing as an open standard for card processing in the euro area

The establishment of the Single Euro Payments Area (SEPA) for credit transfers and direct debits was finalised via Regulation (EU) 260/2012 of the European Parliament and the European Council. But without the card payment sector, the vision of a harmonised single payment market remains incomplete. A harmonised market for cards should provide a framework within which merchants in Europe can accept a variety of SEPA-compliant card brands and products, and choose from a variety of acquirers without being artificially constrained by legal, technical or procedural aspects associated with the respective card schemes. This paper focuses on SEPA Card Clearing (SCC), a project aimed at harmonisation, which is nearing completion in the acquirer-to-issuer domain. The aim of SCC is to create a new common ISO 20022 standard as an open standard (ie irrespective of a specific card scheme) for clearing and processing debit card and credit card based transactions between banks that takes into account the different market needs with respect to clearing and settling debit and credit card transactions, based on existing standards in different countries. Therefore, with SCC, a clear ‘unbundling’ of card schemes and processing can be achieved. This should support open and fair competition and, in so doing, lower the market entry barriers for new players. In technical terms, the SCC Framework is based on the SEPA Direct Debit (SDD) scheme and its concomitant SDD-message standards and business processes. The SCC Framework is freely available for any market participant in Europe, and it enables the use of one clearing infrastructure for all relevant payment instruments in the SEPA, direct debits, credit transfers and cards. Lastly, SCC also supports innovation. The special payment message container in SCC could also be used for the processing of any other type of payments (ie payments via mobile phone or biometric data).

Taking the SEPA journey: From fragmentation to EU-wide payments

The 1st of August marked the first step of the implementation of the Single Euro Payments Area (SEPA) in the EU. This paper discusses how SEPA benefits European banks, corporates and consumers and considers what the next steps are.