While the vast majority of businesses are now compliant with SEPA, the new crossborder money-transfer system, consumers are less familiar with it, if the reaction to a straw poll we posted on Twitter last week is anything to go by.
We asked what SEPA meant to people, and while most knew it had something to do with the banks, the intricacies of the changes had passed them by.
“I’ll have to learn a much longer bank account number/ branch code. Otherwise nothing so far,” came one response. Another could manage nothing more detailed than “something bank related”.
A third user came back with a telling response. He said SEPA would mean a “longer bank account number and sort code. I still don’t know what they are/will be, Bank haven’t informed me.”
He said this despite the fact the new BIC and IBAN codes have been on bank statements for more than five years.
This would indicate that more needs to be done to explain to people at the most basic level what SEPA is and how it can help them.
Unlike many changes that come our way, this is a message that people will want to hear, because things will not only be faster but cheaper, too.
So what is it? Assuming a European Commission propoal to extend the SEPA deadline is ratified, the Single Euro Payments Area (SEPA) will come into being across the eurozone countries on August 1st.
Over the following two years, until October 2016, it will be brought into force across the EU and five other countries – Norway, Liechtenstein, Iceland, Switzerland and Monaco – and will give consumers in all 33 states access to faster cross-border credit transfers and debit payments.
Transferring money will take one business day, irrespective of whether the cash is going to neighbouring banks in Ireland or from Galway to Geneva.
What changes will I notice? The days of banks charging a fee for transferring money from one European account to another are numbered.
As well as that anyone who moves to one of the 33 countries which will eventually make up the SEPA-area – for work or study purposes – will no longer have to set up an in-country bank account and will be able to pay their bills from, or have their wages lodged to, their Irish bank account.
The first, and probably the most noticeable, change will see the eight-digit bank account number and six-digit sort code most consumers are familiar with replaced by BIC and IBAN numbers, which are up to 22 characters long. These numbers will be all that matters to anyone who wants to make an electronic payment or sign up for a direct debit.
I have loads of direct debits and transfers – what do I need to do? Nothing. All existing electronic payments will be automatically switched to the new system so consumers will not have to do anything to any transactions that have already been set up.
BIC and IBAN numbers are already attached to all accounts and processes have been automated for those who struggle to remember the new numbers. If a person is given an account number and sort code and asked to make a one-off payment to another individual or company, a conversion option will pop up as part of the payment process to allow payments to go through.
How will I benefit? This is the biggest change in how banking is done across the EU since the introduction of computers.
It will make electronic transfers across all SEPA states cheaper and faster. It will also give consumers greater control over their finances, and certain financial transactions in particular, than they have ever had.
As well as faster transactions, a more streamlined fee structure will become a reality and the cost of sending and receiving money from overseas will fall. As banks will not be able to charge more to transfer money within the SEPA area than they do for a domestic transfer, this will see charges fall in the Republic.
Not only that but banks will no longer be able to deduct a fee for collecting a money transfer for you on the grounds that it is a foreign payment.
And if you have overseas property and have a bank account in that country that you used to pay electricity or property management fees, that will no longer be necessary.
People studying overseas or those working in the 33-country area will no longer have to set up an in-country bank account and will be able to pay their bills from, or have their wages lodged to, their Irish bank account.
Tell me more about this greater control . . . You will be able to set limits on direct debits, and if a provider increases a charge beyond that limit, or tries to double charge you, it automatically gets stopped.
You may still owe the money but at least you will be in control. You will also be able to revoke a transaction for up to eight weeks after a direct debit.
So, if your electricity bill lands on July 1st, you will be able to go back to your bank at any point up until the end of August to ask for the money back, and it will have to be returned.
Some businesses have expressed concern over this, but power in the hands of consumers is to be welcomed.
