Magazine article American Banker

Sepa Framework Approved, but Many Steps Left

Magazine article American Banker

Sepa Framework Approved, but Many Steps Left

Article excerpt

The Single Euro Payment Area project has cleared an important hurdle but still has many more in its path.

An initial regulatory framework for the project, aimed at creating a unified payments system for the entire European Union, was officially approved last month by the E.U.'s finance ministers, and the banks developing the needed systems say they expect to be ready Jan. 1, when the first Sepa-compliant payment systems are expected to go live.

However, Harold A. Young, a managing director in New York forDeutsche Bank AG and the global head of payments products for the Frankfurt company, said that the Payments Services Directive that the finance ministers approved must now go to national legislatures.

He described the directive as the "rules of engagement" that each country will use to harmonize the regulation of cross-border transactions across the continent. The legislative process could take some time, he said.

Deutsche Bank plans to begin testing its Sepa-compliant payments systems next quarter and expects to be ready to offer electronic transactions across Europe by January, Mr. Young said. By then the company "plans to offer a full array of payments instruments, including credit transfers and direct debits."

The system is designed to enable payments to cross national boundaries in Europe without encountering economic barriers, he said. "What were formerly cross-border transactions will be treated in the same manner as domestic payments."

Ann C. Givens, a senior vice president at Wachovia Corp. and the Charlotte company's head of product management for international corporate and correspondent clients, said that even though credit transfers likely will be available by Jan. 1, it will be late 2009 or 2010 before national laws are sufficiently synchronized to make banks feel comfortable about allowing companies to debit customers' accounts. …

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