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 The Single Euro Payment Area

The payment services relating to euro show a fragmented picture even within the euro area. Considerable differences appear in the payment habits of the individual member states and the related payment methods, in the standards and procedures used and, not least, in the prices of such services. In respect of the prices, particularly evident differences can be experienced. It occurs that the domestic fee of a euro transfer in a certain member states costs several times more than the fee of orders executed in another member state.

The demand was formulated on the side of regulators that the basic payment services relating to the euro be standardized in the single internal market. For this purpose, the elaboration of the Payment Service Directive (called earlier: New Legal Framework for Payments (NLF)) providing single legal framework has been started.

The pan-European payment and settlement methods, their standards will be developed and the related infrastructures will be built up in the circle of small value but large volume payments under the umbrella of the European Payment Council (EPC) brought into being by collaboration of the associations of credit institutions as well as credit and saving cooperatives within the framework of wide professional, interbank co-operation.

The EPC outlined and published the future prospects on the SEPA in the year of its establishment in the so-called White Book edited in 2002. The essence of it is that, in terms of payments, it considers the European Union as one single area and accordingly, it handles its payments as an integral whole, i.e. as domestic payments. This means that it does not make any difference between the cross-border and within the member states domestic payments.

SEPA services include such pan-European payment instruments (credit transfer, direct debit, card, e-payments) that are, as a result of the standardization, single technically (account number, message format, etc.) and, in respect of the rules of procedure (certain service criteria, method of fee settlement) within the euro area, and which will replace the specific national payment methods and standards over the time.

Under the aegis of this approach, the EPC working groups complete the finalization of the single (so-called) schemes of the SEPA Credit Transfer (SCT), the SEPA Direct Debit (SDD), the single framework of card operations (SCF: SEPA card framework) as well as the related standards and settlement rules in March 2006.

The banks in the member states of the euro area have to offer the new pan-European credit transfer and collection according to the Roadmap and to provide the usability of the single card already as from 2008.  The banks in the euro area, participating in the EPC have committed themselves in the respect that they take part not only in the elaboration but also the introduction of these instruments in the hope that, by their example, the critical mass can be reached as soon as possible, which make the use of these payment methods irreversible but also efficient. On the road to the implementation of SEPA 28th January 2008 marks an important milestone in the migration process with the official launch of the SEPA payment instrument for credit transfers (SCT). For technical and legal reasons, the launch of the SEPA payment instrument for direct debits (SDD) will take place subsequently, but should occur no later than 1 November 2009. For card payments the SEPA Cards Framework (SCF) has been in force since 1 January 2008.

Adherence to the SEPA payment schemes and infrastructures is not compulsory for banks of countries outside the euro area but is possible on a voluntary basis. The domestic banking system – as a first step within framework of the Payment System Forum – has already started preparation for the SEPA. Since the autumn of 2005 an intensive work has been under way in the committees and task forces of the PSF by giving comments and opinions to the Rules Books, implementation plans and documents describing data models as well as clearing and settlement mechanisms submitted by the EPC for national consultation.

In addition, in accordance with the call by the EPC, the Council as decision-making board of the PSF made a decision on the establishment of the so-called National SEPA Committee, which since the October 2007 has the mission to create the conditions of introduction of the SEPA payment methods in Hungary and then introduce them into the practice.
As of 28th January 2008 there are eleven Hungarian banks which adhered to the SCT Scheme from starting its operation. The National Adherence Support Group (NASO) with the participation of Hungarian EPC representative, the Hungarian Banking Association, National Bank of Hungary and the Hungarian Financial Supervisory Authority gave an effective support to these banks in the adherence processes.