Magazine article Global Finance

Sepa Answers

Magazine article Global Finance

Sepa Answers

Article excerpt

Deutsche Bank answers some commonly asked questions about SEPA.

What is meant by SEPA?

The single euro payments area (SEPA) initiative is about the creation of a zone for the euro (pertaining to bulk ACH payments and collections) in which all electronic payments are considered domestic, whereby there is no difference between national and international payments inside this area.

Who is driving this initiative?

The commercial framework for payment instruments has been developed by the European Payments Council (EPC), the decision-making and coordination body of the European banking industry in relation to payments. Established in June 2002, its purpose is to support and promote the creation a single, harmonized, open and interoperable European "domestic" payments market achieved through industry self-regulation. The EPC is committed to delivering three pan-European payment instruments: credit transfers (SCT-SEPA credit transfer), direct debits (SDD-SEPA direct debit) as well as a SEPA cards framework. The European Commission has established the legal foundation through the Payment Services Directive (PSD, ratified by the European Parliament in April 2007).

To provide straight-through processing (STP) for SEPA processing, the EPC has defined standard formats based on XML ISO 20022 PACS messages as mandatory for bank-to-bank messages. In addition, the EPC has stipulated that customer-to-bank message types (XML ISO 20022 PAIN-payment initiation) are highly recommended.

With regard to clearing, the Euro Banking Association (EBA) Clearing Company is introducing a Pan-European Automated Clearing House (PE-ACH), providing clearing and settlement mechanisms required for banks to exchange SEPA credit transfers and direct debits. …

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