SEPA (Single Euro Payments Area) is a European initiative whose goal is to simplify payment methods denominated in euros for all European countries. The “SEPA zone” includes the 28 countries of the European Union, Norway, Iceland, Liechtenstein, Switzerland and Monaco, for a total of 33 countries.
Origins of SEPA: aiming to integrate payments in Europe
The euro first appeared more than fifteen years ago. The bills and coins of the shared currency replaced the domestic currencies in each of the Eurozone countries. However, in order to integrate all payment methods in Europe, the single currency was not enough bank transfers and direct debits also needed to undergo standardization. The European Parliament and Council decided, in 2012, to create SEPA so that European consumers and businesses could carry out all of their payments with ease within the Eurozone.
A gradual transition
French banks began offering SEPA bank transfers in 2008, and SEPA direct debits in 2010: well before the “obligatory and definitive” transition to SEPA, on August 1, 2014, across the entire Eurozone.
In fact, since August 1, 2014, SEPA bank transfers and direct debits are now the only authorized payment methods, as the “domestic” equivalents have disappeared.
That means the change applies to everyone. Even companies that do no international business have had to transition to SEPA: any company failing to migrate to the new system risks seeing its payment transactions declined, including transfers to employees or payments from suppliers in France.
Other countries in the SEPA zone (outside the Eurozone) will have to complete the transition by October 31, 2016.
How has SEPA changed bank transfers?
SEPA bank transfers offer:
- an area that covers all of Europe (and not just each country),
- identical characteristics for all transactions within SEPA zone, in particular for bank identification credentials: BIC and IBAN.
- a maximum execution time of 1 day for all bankers, including cross-border transactions.
On February 1, 2016, the second phase of the transition began in France: interbank payment orders (TIP) and remote payments were also aligned with SEPA standards.
The two payment methods represent some 35 million remote payments and 62 million interbank payment orders every year. Now they are replaced by SEPA Direct Debit and SEPA TIP.
The primary users of these new instruments are the General Management offices of public finance organizations, administrations and social protection bodies, which use TIP and remote payments to collect taxes and contributions!
Of course, SEPA has made it possible to streamline bank transfers and direct debits across all 33 countries, thereby simplifying trade across a massive area.
But SEPA is also a system oriented towards the future: it constitutes a standard basis for developing innovative new solutions for payment and money transfer within each of the 33 countries. For example: mobile payments or instant payments.
My transfers: the BNP Paribas app for simple and free money transfers to friends and family
BNP Paribas already boasts several “innovative new solutions for payment and money transfer.” For example: the “My Transfers” mobile app, which enables BNP Paribas account holders to transfer money to friends and family, simply with their mobile phone number – with transfers available to any other bank.
Transfers are simple and immediate. No need to know the recipient’s account number: they just have to register on My Transfers to receive the funds in their account.
When does it come in handy? To pay your share to a friend who picked up the check at a restaurant, open the My Transfers app, choose your friend’s number from your contacts, enter the amount and reason for the transfer, key in the identification code (which you pick when creating your account on the app), and you’re done.