New bank cards for local customers
Within the next few months, as part of the Single Euro Payments Area (SEPA) project, Maltese banks will be issuing debit and credit cards with "chip and PIN" as requested by the SEPA card framework. This transition from the current magnetic strip cards...
Within the next few months, as part of the Single Euro Payments Area (SEPA) project, Maltese banks will be issuing debit and credit cards with "chip and PIN" as requested by the SEPA card framework. This transition from the current magnetic strip cards to chip and PIN is expected to be phased in over two and half years. Meanwhile, some local debit cards will be co-branded with leading international card operators Visa or MasterCard.
On January 28, the European banking industry commenced the roll-out of SEPA through the launch of credit transfers. During the first month of operation, there were 631 million SEPA credit transfers, equivalent to 0.44 per cent of total credit transfers processed in the eurozone. Within the next few months, the number of SEPA credit transfers is expected to increase exponentially as more and more European banks and corporates take advantage of this improved service.
The European Central Bank and the European Commission expect that the critical mass of euro credit transfers will be SEPA complaint by the end of 2010 with the phasing out of national payment systems.
The EU's DG Internal Market commissioned Capgemini to prepare a report entitled A Study on Benefits, Opportunities and Costs of SEPA. The main findings of this report concluded that, if all stakeholders (that is public authorities, corporates and payment institutions) were to take a big bang approach to SEPA, the net benefits would amount to €175 billion (€46 billion for consumers, €38 billion for SMEs, €14 billion for merchants, €51 billion for corporates and €28 billion for public administrations).
On May 4, 2006 in a joint statement the European Commission and the European Central Bank shared a common vision for SEPA and the process leading to its realisation. Both institutions are cooperating closely in this process, encouraging the European banking industry and the other relevant stakeholders to create the technical conditions to meet the 2010 deadline.
The SEPA project is not just about credit transfers but also involves cards, direct debit and eventually all other electronic and mobile payments. Some of the advantages that SEPA offers for the public sector, the business community and the personal customers include: (a) the streamlining of cash management; (b) the reduction of bank accounts as transnational organisations would be able to use one bank account for all payments in the SEPA area; (c) the standardisation of payment formats; (d) automatic payment reconciliation; (e) standardisation of payment software; (f) reduction in transaction costs; (g) increased in straight-through processing.
The rules and frameworks related to SEPA-compliant products and services are currently being churned out by the European banking industry through the European Payments Council in close coordination with the European Commission Directorate General for Competition and Internal Market, and the European Central Bank.
Recently, the European Union through ECOFIN agreed on the Payment Services Directive, expected to be transposed into European member states by November 2009. In fact on January 22, ECOFIN stated that "the Council acknowledges the important catalytic role that can be played by the public authorities in helping drive forward the migration process of SEPA.
"It encourages public authorities to be early adopters of SEPA payment instruments..."
Once the Payment Services Directive has been transposed across the EU, payment services providers will be able to launch pan-European direct debit schemes.
Henk-Guus Krekel, managing partner for financial services at Atos Consulting, and Hans Turkesteen, managing partner for financial advisory services at Deliotte, who carried a SEPA Survey 2007 for the European Central Bank, stated: "It is our firm belief that the success of SEPA highly depends on the uptake by corporates and public sector organisations".
• Mr Sant is a senior economics officer with the Bank of Valletta Group.
On January 28, the European banking industry commenced the roll-out of SEPA through the launch of credit transfers. During the first month of operation, there were 631 million SEPA credit transfers, equivalent to 0.44 per cent of total credit transfers processed in the eurozone. Within the next few months, the number of SEPA credit transfers is expected to increase exponentially as more and more European banks and corporates take advantage of this improved service.
The European Central Bank and the European Commission expect that the critical mass of euro credit transfers will be SEPA complaint by the end of 2010 with the phasing out of national payment systems.
The EU's DG Internal Market commissioned Capgemini to prepare a report entitled A Study on Benefits, Opportunities and Costs of SEPA. The main findings of this report concluded that, if all stakeholders (that is public authorities, corporates and payment institutions) were to take a big bang approach to SEPA, the net benefits would amount to €175 billion (€46 billion for consumers, €38 billion for SMEs, €14 billion for merchants, €51 billion for corporates and €28 billion for public administrations).
On May 4, 2006 in a joint statement the European Commission and the European Central Bank shared a common vision for SEPA and the process leading to its realisation. Both institutions are cooperating closely in this process, encouraging the European banking industry and the other relevant stakeholders to create the technical conditions to meet the 2010 deadline.
The SEPA project is not just about credit transfers but also involves cards, direct debit and eventually all other electronic and mobile payments. Some of the advantages that SEPA offers for the public sector, the business community and the personal customers include: (a) the streamlining of cash management; (b) the reduction of bank accounts as transnational organisations would be able to use one bank account for all payments in the SEPA area; (c) the standardisation of payment formats; (d) automatic payment reconciliation; (e) standardisation of payment software; (f) reduction in transaction costs; (g) increased in straight-through processing.
The rules and frameworks related to SEPA-compliant products and services are currently being churned out by the European banking industry through the European Payments Council in close coordination with the European Commission Directorate General for Competition and Internal Market, and the European Central Bank.
Recently, the European Union through ECOFIN agreed on the Payment Services Directive, expected to be transposed into European member states by November 2009. In fact on January 22, ECOFIN stated that "the Council acknowledges the important catalytic role that can be played by the public authorities in helping drive forward the migration process of SEPA.
"It encourages public authorities to be early adopters of SEPA payment instruments..."
Once the Payment Services Directive has been transposed across the EU, payment services providers will be able to launch pan-European direct debit schemes.
Henk-Guus Krekel, managing partner for financial services at Atos Consulting, and Hans Turkesteen, managing partner for financial advisory services at Deliotte, who carried a SEPA Survey 2007 for the European Central Bank, stated: "It is our firm belief that the success of SEPA highly depends on the uptake by corporates and public sector organisations".
• Mr Sant is a senior economics officer with the Bank of Valletta Group.