SEPA (Single Euro Payment Area) which called life by European Central Bank (ECB) to eliminate financial borders among European zone countries. The cross border money transfer has been made by counties central clearing houses through ECB’s central clearing house.
So the country inside money transfer remains subject of national clearing houses. If a beneficiary of a remittance is beyond the borders of a country, the local clearing house passed the payment to the central clearing house, which transmits it to the beneficiary’s bank clearing house. The needed cover to the remittance is provided by the national bank of the departure’s country over Real Time Gross payment System (RTGS). As you can see from the above, the most fundamental requirement of SEPA is that customers not take any notice from the fact that receiving or sending payments at home county or any other countries in Europe. Be enough one account to corporate and retail clients to handle all financial issues in Europe is an important aim of SEPA.
Furthermore, because of a decision made by ECB, SEPA is based on ISO20022 standard XML type payment messages which differ greatly from the previously used ISO15022 standard MT type messages. The implementation of new message standard has been justified by straight trough processing an overall cheaper transfer cost for banks. After the release of SEPA at 2008 banks and clearing houses still operate with domestic formats and use SEPA only for cross border payments. The ECB, however, because of the obvious benefits expected that by 2014, the majority of payment messages will be compliant with the ISO20022 standard in the European financial world. In contrast of this the SEPA message ratio on domestic payment is only 30% in the most prepared country, according to a survey was conducted last years. In addition, by a fast survey was made at SIBOS conference which closed at Friday, banks don’t feel like to invest to a not vital development.
