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SEPA to Save €22 Billion Annually

March 28, 2014 by Andreas Schmitz 0

Since extending the transition period for SEPA by six months, the European Commission has been hard at work winning over the initiative’s last remaining naysayers. Part of this effort has involved commissioning auditors at PwC to take another close look at the effects of instituting the new Single Euro Payments Area for money transfers and direct debits. The results are now in, and they are positive: in addition to saving an annual €21 billion, Europe can look forward to ridding itself of nine million unnecessary accounts and gaining €227 billion in loans and liquidity.

The study projects that companies alone will save over €16 billion each year. The reason for all this good financial news lies in the significantly lower process and operating costs expected under SEPA. Separate bank accounts will no longer be necessary, and with a standardized payment area making it easier to mobilize financial reserves, companies will be able to take advantage of improved liquidity. According to the study, SEPA also promises lower operating costs and invoicing expenses.

Blacklist possible under SEPA

PwC financial expert Bas Rebel believes a number of camps have work to do with regard to Europe’s new payment system. “Whether or not SEPA fulfills its promises depends mainly on banks and companies, as well as on politicians who have a voice in how standardized the corresponding processes are going to be,” Rebel states. The PwC study also indicates that the corporate sphere stands to profit more from SEPA than private individuals do. Consumers, meanwhile, are expected to benefit mainly from an increased level of security. They will have the option of using collection orders and having creditors placed on white- and blacklists as recommendations or warnings for others.

PwC adds that competition within Europe should accelerate the propagation of e-billing, mobile payment systems, and the use of the XML ISO 20022 financial standard, as well.

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