MEPs and national ambassadors have reached a preliminary deal on bringing in the Single Euro Payments Area (SEPA), a project to even out the price of transferring money in euro across 32 participating countries, into force by 2016. The European Parliament’s Committee on Economic Affairs (ECON) voted in favour of a report on a Commission regulation on credit transfers and direct debits in euro (COM(2010)775), which amends a 2009 regulation on cross-border payments and sets a binding end date for banks to comply with the new rules. The deal was confirmed by ambassadors, meaning SEPA will now come into force by 2014 in the eurozone and 2016 in the rest of the EU. The decision is subject to a plenary vote in February and formal adoption by the Council.

ECON Chair Sharon Bowles (ALDE, UK) said the deal was a “vote of confidence in the euro”. Rapporteur Sari Essayah (EPP, Finland) commented that “the SEPA is a fundamental element of internal markets. The internal market cannot function well without SEPA”.

Once fully implemented, SEPA will mean EU-branded payments - bank transfers, direct debits (and eventually card payments) - will replace national alternatives. It will also eliminate direct debit fees from 2012. For account holders and businesses it means changing over to using international bank account numbers (IBAN and BIC) but for banks and large companies and public bodies, it means a substantial upgrade of IT systems to cope with the new-style transfers. As of last year, two years after the launch of SEPA credit transfers, only 10% of banks were offering them.

The Commission estimates the new-style transfers will save people €123 billion over the next six years. Essentially, payments between bank accounts in the participating countries - wherever they are - will be charged as if they were paid within the same country. Internal Market Commissioner Michel Barnier welcomed the agreement. “Today’s agreement by the European Parliament and the Council represents a significant step towards a truly integrated market for electronic retail payments in euro.”

MEPs had pushed for changes to the Commission’s regulation to make sure there was only one deadline for both debits and transfers, rather than the two proposed by the Commission.

Delays and disagreements have plagued the project since its launch in 2002, when it was run by banking groups through the European Payments Council (EPC). The European Central Bank repeatedly hit out at slow progress, while consumer groups complained of the risk of fraud with the new-style direct debits. But consumer group BEUC said it was happy with amendments introduced by MEPs, which allow consumers to limit the size and duration of direct debit payments and set up lists of approved companies. BEUC has also welcomed moves to review the way SEPA is run in 2012.

Separately, the Commission will publish a green paper on card, internet and mobile payments in early 2012.