Questions

• What is SEPA?
• What is the aim of the SEPA project?
• How long it will take to implement the SEPA project?
• What is the legal framework for the SEPA project?
• How does SEPA relate to the payments in Latvia?
• How can Latvia's economy benefit from the SEPA project?
• Is the SEPA project legally binding to all stakeholders?
• Is the SEPA project one of the preconditions for Latvia's accession into the euro zone?
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What is SEPA?

SEPA (the Single Euro Payments Area) is an area in which consumers, companies and other economic actors will be able to make and receive payments in euro, whether between or within national boundaries under the same basic conditions, rights and obligations, regardless of their location.*

What is the aim of the SEPA project?

The SEPA project continues to implement the tasks defined for achieving the changeover to the single EU currency – the euro. The main objective of the SEPA project is to promote a single European customer payments market that would be as efficient and beneficial as the existing national payments market. SEPA intends to unify the provisions for execution of the following payments – SEPA credit transfers, SEPA card payments and SEPA direct debit, provided that cross-border euro payments are settled as quickly, safely and simply as domestic ones.**
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How long it will take to implement the SEPA project?

Implementation of the SEPA project in the euro area countries

The implementation of SEPA commenced in 2008 by adherence of the European banks to the SEPA credit transfer scheme and ensuring the issuance of SEPA compliant payment cards. The year 2009 is targeted as the year of the SEPA direct debit implementation. It is intended, along with a comprehensive daily use of SEPA payment products, to complete implementation of the main SEPA components by the end of 2010.**
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What is the legal framework for the SEPA project?

The basic component of the SEPA legal framework is the the Directive 2007/64/EC of the European Parliament and of the Council of 13 November 2007 on payment services in the internal market amending Directives 97/7/EC, 2002/65/EC, 2005/60/EC and 2006/48/EC and repealing Directive 97/5/EC (Text with EEA relevance), the so-called Payment Services Directive. It should be transposed into the national legislation by 1 November 2009.
The European Payments Council has approved a number of self-regulatory documents regarding the execution of payments and application of the legal framework in practice, e.g. the SEPA payment instruments business rulebooks and guidelines for implementation of technical standards.
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How does SEPA relate to the payments in Latvia?

Latvia as the EU country is obliged to fulfil the obligations in accordance with the Treaty on European Union, defining its movement towards the European Economic and Monetary Union and entry in the euro area resulting in the changeover of the lats to the single currency of the European Union – the euro. Meanwhile most of the customers' domestic payments will be executed in national currency. With the adherence to the SEPA schemes Latvia's banks undertake to send and receive the SEPA payments in an appropriate format.**
In Latvia, the SEPA requirements for payments will be applicable to the credit transfers in euro, direct debit in euro and card payments in lats and euro.
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How can Latvia's economy benefit from the SEPA project?

The SEPA project simplifies the provision of payment services in Europe. Upon implementation of the SEPA project, European citizens shall obtain modern, efficient and reliable payment services, which contribute to the realization of the aim defined in the Lisbon EU agenda – to create an innovation and knowledge based European market. Single euro payments – SEPA credit transfers, SEPA direct debits and SEPA card payments – eliminate borders also in cashless payments of European retail market. The SEPA inovative products will include e-invoicing and e-reconciliation, which enhance the standardisation and automation of all payment stages. SEPA supports e-government and e-procurement projects, thereby enhancing the reduction of costs related to handling of the manual processes and paper-based documents.
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Is the SEPA project legally binding to all stakeholders?

No. SEPA is a collaboration project that is based on the open market principles. The SEPA project has received a recurrent political support from the Economic and Financial Affairs Council (ECOFIN), in which the representatives of the governments of the EU Member States expressed the readiness to migrate to the single payments and designated the public authorities as the main users. Also the European Parliament has given its support to the SEPA project, inviting to complete the implementation of SEPA in Europe by the end of 2012.
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Is the SEPA project one of the preconditions for Latvia's entry into the euro zone?

No. The SEPA project is being carried out apart from Latvia's entry in the euro zone.
The implementation of the SEPA project is, however, enhancing and simplifying the transition of Latvia to the single European currency.
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* Information brochure "The Single Euro Payments Area (SEPA): an integrated retail payments market", European Central Bank, 2009.

** "SEPA Implementation Plan in the Banking Sector of Latvia" Version 1.0 of the Association of Latvian commercial banks, 29 May 2008.