Clients of Maltese banks will have their credit frontiers pushed wide open on Monday as the Maltese banking system joins the other 26 in the EU to create a Single European Payments Area, to be known as Sepa.
EU finance ministers meeting in Brussels yesterday gave the final go-ahead to the system, whereby EU-wide payments can start being made from a single account.
They also agreed to encourage their own authorities to begin using Sepa early in order to boost volumes and encourage full migration to the new system.
Sepa is the next step towards European financial integration, which aims to make all electronic cross-border payments in euro between the 31 participating countries (all EU member states plus Norway, Iceland, Switzerland and Liechtenstein) as easy, inexpensive and secure as national payments within one member state are today.
Through the new system, a customer can make electronic payments to any beneficiary located anywhere in the single payments area using a single bank account and a single set of payment instructions.
Parliamentary Secretary Tonio Fenech told The Times yesterday that the new system will enhance competition both between local banks and between Maltese banks and their European counterparts.
"Maltese banks have been preparing for the introduction of this system and the government is very confident that we are well prepared. Through our participation in this system, Malta's banks are not only competing between themselves in our small market but can capitalise on the new opportunities offered through this system to offer new products on the European market and attract new business and new clients to our shores," he said.
Asked whether the new system will also mean lower bank charges for Maltese clients, Mr Fenech said it is estimated that charges will drop substantially even through more aggressive competition.
Apart from this, Mr Fenech said the Malta Financial Services Authority (MFSA) is reviewing all bank charges and will ask banks for revisions if some of these charges are found to be unjustified.
"If the banks do not convince the regulator about certain charges they will have to lower or eliminate them altogether," Mr Fenech warned.
Sepa credit transfers will become available as from next Monday but the ability to authorise direct debits to anywhere in the EU will become possible in late 2009. The EU is targeting 2010 to achieve full migration to the Sepa system.