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Current news Updated: 18 Feb 2016

SEPA regulation revolutionizes payments in Europe

On February 1st it became mandatory to provide an IBAN when ordering a money transfer between private customers, in addition to the destination account’s 20-digit code - or XML* bank account code, for companies - that was exclusively required up until now.

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This is one of the consequences of the rollout of the Single European Payments Area initiative, or SEPA, in 2014. The SEPA consists of the 28 member states of the European Union, plus Iceland, Liechtenstein, Norway, San Marino, Switzerland and Monaco. Also, the so-called niche products – such as credit transfers or direct debits in Spain – have been forced to migrate to comply with this new operating standard. SEPA has created a truly domestic market where there is only one way to make and receive payments in euros.

After the adoption of the euro as single currency, the SEPA regulation represents the next step in Europe’s economic and monetary integration. However, the implementation of this initiative - devised under the tutelage of the European Commission and the European Central Bank System with the aim of building a Single Financial Space - has been progressive.

Although first launched in 2008, it wasn’t until 1 February 2014 that the use of SEPA payment instruments became mandatory, replacing transfers and direct debiting operations. This mandatory nature has required both companies and financial institutions to adjust their systems and processes in order to complete the migration of the operations within the deadlines set by the regulation.

Europe has its own market for payments thanks to the SEPA initiative

As private users, what we have probably perceived is a change in the processes, and that may have led us to wonder what’s the benefit of this new way of operating. First, the SEPA regulation will guarantee that payments within the European Union can be made as easily, efficiently and securely as any internal domestic payment within each member state. This increased level of harmonization and standardization tears down the boundaries between national and transnational payments, bringing considerable benefits to the economy and society as a whole. The SEPA increases the levels of competitiveness and transparency within the payment services sector and the market, respectively, generating the optimal climate for the development of new methods of payment, ultimately benefitting users, consumers, companies and Public Administrations.

Without a doubt, the SEPA regulation is also raising many questions. However, financial institutions, the first ones that were required to adapt and therefore the more experienced agents in this new scenario, are paving the way for individuals and companies, putting out the information required to help them dispel all their doubts. BBVA published this brochure for its customers coinciding with the arrival of the February 2016 deadline. The bank will continue offering support as the pending regulatory issues – such as the Payments Directive (PSD2) – that will play a relevant role in coming years in the development of the European payments market are clarified.