The individual payment transaction markets in the European area have been characterized by a multitude of different conventions, payment systems and legal regulations. Not only are the technical regulations or the formats for payment transaction data different from country to country. In addition, the various payment instruments, such as credit transfers and direct debits, were handled differently. There was only limited interoperability between these individual country-specific payment systems. However, consistent implementation of the principle of the single European market presupposes that there are no hurdles in cross-border payments either. For this reason, it was decided to switch to a single European payment traffic area, or SEPA (Single Euro Payments Area). Thanks to SEPA migration, EU citizens, companies and public institutions can initiate cashless transactions from any account within the SEPA area to the same or another SEPA country.
Timeframe for SEPA migration
The SEPA migration to the uniform Europe-wide payment procedures will also bring about some far-reaching changes in cashless payment transactions in Germany. For example, the national payment procedures for direct debits and credit transfers will be phased out in favor of the SEPA procedures. For companies in particular, this means considerable technical and organizational effort. Originally, the SEPA migration was to be fully completed by February 1, 2014. However, as some companies in Europe were not sufficiently prepared for the SEPA rollout, the phase-out date for the national procedures was postponed to August 1, 2014.
SEPA changeover: IBAN and BIC replace previous account data
Probably one of the most significant aspects of SEPA migration is the replacement of the previous account data with the IBAN and BIC, which must be specified for SEPA credit transfers and SEPA direct debits. The IBAN (International Bank Account Number) is an international account number with a maximum of 34 digits that is used for transactions in domestic and cross-border payments. The BIC, the Business Identifier Code, is the international bank code of the relevant credit institution, which is sometimes also referred to as the SWIFT code. The maximum number of digits in the BIC is eleven, whereby the first four digits are alphanumeric and represent the bank name. For national SEPA credit transfers the BIC is optional, the IBAN is sufficient for account identification (IBAN only). For cross-border SEPA credit transfers, however, the BIC must still be indicated in addition to the IBAN until February 1, 2016. From February 1, 2016, the BIC will not be mandatory for either domestic or cross-border euro transfers.
The SEPA changeover and its advantages
Thanks to SEPA migration, bank customers will benefit from the fact that there will no longer be any difference between cross-border and domestic payments. This means that cross-border payments can be processed from the same bank account and are just as fast, secure and inexpensive as domestic payments. In this way, the steadily growing mobility of people in Europe is significantly supported. Another plus point is that demand for financial services is strengthened. This in turn leads to long-term economies of scale.
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