| The Single Euro Payments Area Explained |
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| Written by James Erwin | |||||||
| Thursday, 09 April 2009 16:35 | |||||||
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Europe's adoption of euro notes and coins in 2002 has definitely made economic life easier in this part of the world. This advantage unfortunately has been limited to actual cash payments. Other ways of paying for goods and services such as credit or fund transfers and direct debits -- all convenient electronic forms of payment, continue to suffer from Europe's fragmented economic markets.
Europe's adoption of euro notes and coins in 2002 has definitely made economic life easier in this part of the world. This advantage unfortunately has been limited to actual cash payments. Other ways of paying for goods and services such as credit or fund transfers and direct debits -- all convenient electronic forms of payment, continue to suffer from Europe's fragmented economic markets. Hope is presented though by a project spearheaded by the European Commission, the executive branch of the European Union. The project, known as the Single Euro Payments Area or SEPA, aims to unify electronic payments across Europe into an integrated system that cuts across economic differences within the member countries of the European Union. At present, electronic payments, many of which are done on the internet, suffer from many banking and legal barriers in Europe. With SEPA, cashless transactions will become a breeze as it were actually intended to be. Delays in the processing of transactions will be reduced to a minimum along with confusions and mistakes in the settlements of payments. These bottlenecks are common occurences in many countries in the euro zone with their use of varying electronic payment schemes. When SEPA is finally realized, it is hoped that a person somewhere in Milan who buys online from a retailer located in Berlin will have an easy time in the same way that it would be if he did his shopping in a local bookstore and paid for his purchase in cash. SEPA, in short, promises a seamless payment system that spells convenience for the millions of electronic retail transactions that take place in Europe each and everyday. When fully operational SEPA will be implemented in all countries in the euro zone. These are Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal and Spain. Non-euro countries belonging to the European Union have likewise opted to be a part of SEPA including Iceland, Liechtenstein, Norway and Switzerland. Aside from the promise of convenience and efficiency, SEPA hopes to further boost Europe's competitiveness and contribute in large part to an enhanced local and across-the-border economy. In effect, the unified system will bring down many barriers and open up new opportunities for chain stores, retailers of products and services, as well as for large corporations and government institutions. The banking sector, for instance, will have to step up its operations for it to fully serve the new requirements and innovations presented by SEPA. Computer systems and technical infrastructures will have to be overhauled to adopt to the new system. Customer services and procedures are likewise expected to do a revamp. Experts believe strongly that new types of companies and services will eventually evolve with the implementation of SEPA. A whole new way of doing business electronically is expected to emerge in 2010 when a critical mass of payment transactions is finally achieved within SEPA's framework. The shift to euro has, without doubt, strengthened Europe's economy. When fully realized, SEPA will further enhance this newly gained market confidence and promote a more fruitful business relations within Europe and beyond.
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