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SEPA changeover: advantages of the uniform payment method

Summary

The SEPA changeover on February 1, 2014 is intended to simplify European payment transactions and make them more secure. With the introduction of the euro in 2002, the cashless payment method will also be standardized in all EU member states. […]

SEPA changeover: advantages of the uniform payment method.  From February 1, 2014, the SEPA changeover will take place for all euro countries (source: imago images / Rüdiger Wölk)

The SEPA changeover on February 1, 2014 is intended to simplify European payment transactions and make them more secure. With the introduction of the euro in 2002, the cashless payment method will also be standardized in all EU member states. Find out here which advantages are hidden behind the extensive financial project.

SEPA-Umstellung 2014: Single Euro Payments Area

The SEPA changeover will take place for all euro countries on February 1, 2014. EU member states with their own currencies and members of the European Economic Community – including Switzerland and Norway – will also be introducing the uniform payment method by November 1, 2016 at the latest, according to the Deutsche Bundesbank on their information pages “sepadeutschland.de”. A key advantage of the SEPA changeover is to be the greatly simplified payment transactions within Europe, which should benefit both consumers and companies.

SEPA transfer: IBAN for everyone

In future, transfers within the SEPA zone will follow the same principle as within national borders. For this purpose, the national account IDs are canceled and replaced by the 22-digit IBAN (International Bank Account Number). The combination of account number and bank code that is common in Germany is no longer applicable – at least almost. Because the IBAN consists of a country code, a check digit as well as a bank code and account number.

During a two-year transition period until February 1, 2016, the new payment method can still be used with the familiar national IDs. The banks are obliged to convert this into the correct IBAN. However, for transfers to other European countries within the same transition period, you must initially also provide the recipient’s international bank code (BIC). From 2016, IBAN alone will be sufficient for transfers within Europe.

One account benefits for all of Europe

Then consumers and companies can fully benefit from the advantages of the SEPA conversion for transfers: The new payment procedure guarantees that transferred amounts reach the recipient within one banking day – regardless of whether they are in another European country or within Germany. Particularly advantageous for companies operating across Europe: You only need a single account for the payment process. Accounts in other countries are no longer required, which saves administrative effort and costs.

The SEPA changeover also affects the payment method by direct debit, which should be beneficial for both companies and consumers: For example, if you live temporarily in Spain, you do not have to have an account with a Spanish bank for direct debits there, such as for the telephone bill open. Instead, the SEPA direct debit enables the amount due to be debited directly from your domestic account in Germany.

SEPA direct debit: disadvantages for online trading?

According to a report by the “Frankfurter Allgemeine Zeitung” (FAZ), it is still questionable whether the SEPA direct debit also has a beneficial effect on online trading. This is because direct debit authorizations can no longer be issued online or by telephone, as was previously the case, but must only be authorized in writing with a personal signature. Experts therefore expect an increase in mostly fee-based credit card payments.

SEPA cards: cashless payments throughout Europe?

According to the Bundesbank, the payment process with giro cards is to be standardized as part of the SEPA changeover. Cashless payments thanks to SEPA cards should be possible in all participating countries without any difference to use in the home country being ascertained. However, it is still open whether and to what extent fees will be incurred (as of May 2013). At least one thing is certain that in future the electronic direct debit procedure will no longer apply to the payment procedure with the giro card. Card payment with signature will be finally obsolete from February 1, 2016 and is only possible in connection with a PIN number.