e-Payments

Electronic payments are automated requests for banks to send or collect payments on behalf of their customers.  These transactions may be carried out by companies uploading information in specified formats to banks either through the internet or by transmitting data files directly to banks or their intermediaries through secured or closed networks.

Common electronic payment instruments such as credit transfers, card payments, and direct debits are more cost effective as they save the cost of time, paper, and manual work.  They also reduce errors and speed up turnaround time to improve customer relations.  The electronic payment data can also be used to automate the reconciliation process which improves the integrity of financial reporting.

The standard initiation tools for these electronic payments are the internet, mobile networks and various third party network technologies.  Data standards and formats may vary according to country and financial institutions but most European banks support transmissions of EDI or XML files.  Settlement of these payment instruments varies by payment type and country but is moving towards same day and even real time processing.

The Single Euro Payments Area (SEPA)

SEPA is an objective set by the European Union for the purpose of creating a single payment market, within which everyone can make payments simply and safely, at the same cost and as efficiently as those presently being made at the national level. SEPA will make it possible for individuals, companies, government agencies and others, no matter where they are located in Europe, to make and receive Euro payments, to engage in direct debits and to use credit and debit cards with standardised basic conditions, rights and obligations in every country.

SEPA will affect all players in the supply chain. It will enable faster clearing and settlement systems for Euro payments whether in-country or cross-border within the EU.  By use of common schemes and data standards, electronic settlement and simplified processing will reduce transaction costs for businesses, enhance competition, improve cash flow and provide easier access to a wide range of markets.

The Payment Service Directive (PSD) provides the legal foundation for the creation of an EU-wide single market for payments.