The Single Euro Payments Area, known as SEPA, is an EU initiative encompassing 34 countries, where payments in euro are executed under harmonised terms.
Major requirements for credit transfers and direct debit operations executed in the SEPA area are defined in the SEPA Regulation. Its provisions apply to such payment services in euro when the payer’s payment service provider and the payee’s payment service provider are both located within the European Economic Area (EEA). It should be noted that payment service providers are also able to provide payment services in line with SEPA requirements in the Principality of Monaco, Switzerland and San Marino; however, in these territories, the SEPA Regulation does not apply. Institutions responsible for ensuring compliance with the SEPA Regulation should be appointed in each Member State. In Lithuania, the competent authority is the Bank of Lithuania. In order to execute payments under equal terms, payment schemes must be applied; they are designed by market participants. The following schemes are currently in operation: the SEPA Credit Transfer Scheme, SEPA Core Direct Debit Scheme and SEPA Business-to-Business Direct Debit Scheme. Moreover, on 21 November 2017, the SEPA Instant Credit Transfer Scheme, which is designed for executing instant payments in Europe, will enter into force; payment service providers are actively preparing for its application. All schemes are managed by the European Payments Council – an organisation uniting payment service providers in Europe.
SEPA impact in Lithuania
After Lithuania joined SEPA, its payments market became more open. Differences between domestic credit transfers and those to other SEPA countries ceased to exist in 2016 – consumers and enterprises use the same payment order form. Standardisation of the technical interface between banks and enterprises’ account systems allowed enterprises to optimise their internal payment processes; it became easier for enterprises to switch payment service providers. After the implementation of SEPA requirements, national limitations related to holding a payment account abroad were removed. Payment account owners in Lithuania gained the right to receive their salary, social benefits or other payments to any account opened in whichever member country, or receive funds from payers residing in other member countries (e.g. national institutions, employers, etc.) to their accounts opened with Lithuanian banks. Technical standardisation and removal of various limitations support greater competition among payment service providers on both national and international levels.
Implementation of SEPA led to the introduction of new payment services in Lithuania. In 2016, Lithuanian payment service providers, instead of the national direct debit service offered prior to the implementation of SEPA, created and made available to their customers a new e-invoice with automatic payment service, which is based on a one-stop-shop principle, hence making it technically possible for enterprises to accumulate funds on a single account, no matter with which bank their payer holds an account. SEPA requirements also had an impact on the collection of utility payments via specific payment forms in internet banking. In order to ensure efficiency of this service, the Lithuanian Standards Board’s technical specification, which can be used by all payment service providers and parties interested, was approved. The technical specification also enforced the one-stop-shop principle for the collection of utility payments using specialised internet banking forms. After the implementation of SEPA requirements, initially consumers were unable to use SEPA direct debit, yet now more and more payment service providers accept SEPA direct debit orders, i.e. let their customers pay using direct debits for SEPA direct debit orders received from abroad.