28 February 2019

ECB: SEPA migration - Impact assessment

This report is an assessment by the Eurosystem of SEPA migration with regard to euro credit transfers and direct debits and reflects its views on the fulfilment of the SEPA vision. This vision is of an area in which consumers, companies and other economic players are able to make and receive payments in euro, whether across or within national boundaries, under the same basic conditions, rights and obligations, regardless of their location.

The development of the Single Euro Payments Area (SEPA) and the migration to the SEPA credit transfer and direct debit schemes (SEPA migration) were decisive steps for the integration of electronic retail payments in Europe. SEPA was fully promoted and supported by the European System of Central Banks (ESCB). The European Commission provided the cornerstone by establishing a European legislative framework that set the ground for common rules on retail payment services and instruments.

The execution of credit transfers and direct debits in euro is now harmonised. Crossborder use of both the SEPA credit transfer and SEPA direct debit schemes is growing year on year and showing no sign of slowing. SEPA migration has provided the foundations for facilitating an interoperable, efficient and competitive payment network in the European Union.

The migration to the SEPA schemes was a long and challenging process, requiring the active involvement of all stakeholders, namely consumers, payment services providers (PSPs), companies, public administrations and market infrastructures.

Now that SEPA is a reality for credit transfers and direct debits, it is time to evaluate the SEPA migration process and its impact from the different stakeholders’ perspectives. The ESCB therefore prepared qualitative questionnaires to gather the views of the relevant stakeholders in each national market. The objective was to gain an understanding of the market assessment of the SEPA migration process and its current view on the European retail payments landscape.

In general, stakeholders have a positive overall assessment of the outcome of SEPA migration, owing to faster and cheaper cross-border credit transfers, particularly for euro area counterparties. Increases in competition and efficiency were also identified as benefits of SEPA. However, despite such benefits, the implementation of the SEPA schemes proved to be a considerable challenge for stakeholders. Some considered SEPA migration to be expensive, requiring significant changes to IT systems and business processes.

Although SEPA migration was successful overall, post-migration challenges identified by stakeholders have been addressed by the Euro Retail Payments Board (ERPB) (for a brief description, see Section 4). 

Overall, the migration to SEPA has led to innovation in payment services in the European Union and the creation of pan-European PSPs offering competitive services. It has facilitated the move towards global standards (ISO 20022) for payment processing, with Europe now leading the way on global payment interoperability. 

SEPA migration can thus be considered a success in terms both of completion, with all euro credit transfers and direct debits in the European Union now harmonised under a globally recognised standard, and of the quantitative and qualitative impact the migration has had on European payments users.

However, SEPA is not yet finalised; it is a work in progress. PSPs, businesses and consumers will continue to build on SEPA standards and schemes so as to further benefit from the integration this project has brought. The SEPA instant payments scheme can be seen as a prime example of this, with a substantial impact on the euro payments landscape. It is important that SEPA’s achievements are maintained and enhanced, and that the ESCB keeps up the momentum to achieve full integration of European payments. This is especially important in the area of card payments. SEPA has not been achieved for cards: national card schemes attain panEuropean reach only by making use of international card schemes. The vision of being able to pay with a domestic European card at any payment terminal across Europe needs to be brought to fruition.

Full publication

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