Infrastructure

Originally, SEPA foresaw the creation of a small number of competing hubs for processing all transaction in Europe, and the closedown of all national clearings. There are close to 10,000 separate banks in that area.

A Pan-European ACH (PEACH) is a hub with connections throughout Europe, such that it has the capability to reach through to every bank in the SEPA countries.  One such PEACH, known as STEP2, based near Milan and operated by EBA is currently processing an increasing number of cross-border transactions.  The domestic transactions of an increasing number of countries are processed at the same facility.

The European Payments Council has set out a set of policy principles under which a PEACH should operate.

  • Country neutral in terms of access, governance, rules
  • Guaranteed open and transparent access criteria for all SEPA banks in SEPA
  • SEPA-wide reachability to all SEPA banks, either directly or indirectly
  • Full interoperability and clearing and settlement services for both SCT and SDD
  • Clear statement of services, no barriers to entry
  • Open governance structure
  • Pricing fair, transparent, non discriminatory, scaled - national and SEPA payments the same
  • Robust operational rules for risk management, clearing, settlement, execution, security

While the EPC expresses a clear preference for a small number of competing PEACHes, national interests in various countries appear to be resistant to the concept. Accordingly, it appears that some compromise clearing arrangements may continue, at least in the short-term.

  • An ACH for a defined area of Europe but with the capability of processing SEPA scheme transactions
  • A multilateral Clearing/Settlement for a defined area of Europe but with the capability of processing SEPA scheme transactions (Note:- The current Irish national clearing is a multilateral Clearing/Settlement for a defined area)
  • A Bilateral clearing/settlement (Note:- many cross-border transactions originating in Ireland are processed through bilateral clearing/settlement arrangements between Irish banks and partner banks in Europe. This is popularly known as "correspondent banking")

IBAN & BIC

For users of payment systems, the most visible element of infrastructure is the use of IBAN and BIC as the identifiers of the account and the bank.  As SEPA develops, IBAN & BIC will increasingly be required for domestic transactions

  • Expecting incoming payments from abroad, including Europe: You should supply your IBAN & BIC to the payer. If you are an exporter, you are expected to have your IBAN & BIC on your documentation (Invoices, statements) - ref: Regulation 2560/2001/eu.
  • Outgoing payments: If you are making outgoing payments, you should obtain the IBAN & BIC of the payee to enable you to pay by credit transfer.
  • Future use of IBAN & BIC: Progressively, it is likely that IBAN & BIC will become the standard for all bank transactions