This Document is all about some details about SEPA the single euro payments area.

1. SEPA (Single Euro Payments Area): A major step in European Payment Landscape
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SEPA (Single Euro Payments Area): A major step in European
Payment Landscape
Applies to:
Business Process Experts
Summary
In present scenario, there is an immense regulatory pressure on various payment service providers (e.g.
banks) all over the world. With the introduction of Sarbanes Oxley Act, Basel II and many other compliance
acts, these providers are severely scrutinized by various regulatory authorities. SEPA is one of such
compliance initiatives in the European payments landscape. This article gives an insight into SEPA and
possible transformation into payments landscape with the help of IT.
Author : Abhijeet Sakargayan
Company: HCL Technologies Ltd
Created on: 10 September 2007
Author Bio
Abhijeet Sakargayan is working with HCL Technologies Ltd. as a GRC Business Process expert.

2. SEPA (Single Euro Payments Area): A major step in European Payment Landscape
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Table of Contents
Applies to: ........................................................................................................................................ 1
Summary.......................................................................................................................................... 1
Author Bio ........................................................................................................................................ 1
SEPA story....................................................................................................................................... 2
About European Payments Council (EPC)...................................................................................... 3
Objectives of SEPA ......................................................................................................................... 3
Milestones........................................................................................................................................ 3
Role of IT ......................................................................................................................................... 3
SEPA @ SAP .................................................................................................................................. 4
Need of the hour.............................................................................................................................. 5
Related Content............................................................................................................................... 5
Disclaimer and Liability Notice......................................................................................................... 6
SEPA story
It all started in the year 2002 as an initiative to transform European banking Infrastructure by creation of a
European Payments Council (EPC). The purpose of such initiative was to define new rules and frameworks
and simplify cross border complex payments process across Europe. This project aimed at achieving
harmony between national and international payments in non-cash mode. European banking industry used
to face severe losses in the process of cross border transactions. This led the banks to create the EPC.
SEPA aims at providing a common platform for all the associated members to make and receive payments in
a single currency (i.e. euro) within Europe irrespective of their base location. SEPA project involves key
members like European Commission (EC) and European Central Bank (ECB) supported by the European
Payment Council (EPC).

3. SEPA (Single Euro Payments Area): A major step in European Payment Landscape
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About European Payments Council (EPC)
It is a European governing body which consists of more than 50 banking institutions formed to standardize
the payments mechanisms in Europe. It is the decision making and coordinating body which is responsible
for issues related to payment systems in the European Banking industry.
Objectives of SEPA
• It aims to provide a single area for all payments across Europe.
• Single Account, single card mechanisms irrespective of country
Milestones
SEPA project aims at achieving several milestones in next few years. These milestones are the major driving
factor for involvement of various big companies in this area. The major ones are:
• Availability of banking instruments in the form of plastic money across Europe irrespective of
geography. (Pan- European Credit/Debit Facility)
• Increase the efficiency of payment processes in current financial infrastructure through consolidation
of processes.
Role of IT
Information technology can play a major role in this transformation process. The main area of focus is the
Standardization of fragmented payment market. This transformation process is being led by various big IT
players in the market. The transformation process can be depicted as:

4. SEPA (Single Euro Payments Area): A major step in European Payment Landscape
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© 2007 SAP AG 4
Transformation (As-Is To-Be)
• Localized payment
environment
• Multiple standards,
frameworks and experiences
• Lack of interoperability
among different schemes
• Fragmented implementation
• High complexity in cross
border transactions
• High Risk
• Uniformity in the solutions
with other services also
• Consistency in payment
standards, frameworks and
instruments
• High level of interoperability
among different schemes
• Consolidated
implementation
• Reduction in complexity
• Improved Risk Management
& High efficiency
SEPA @ SAP
According to industry specialists, the level of preparedness for SEPA in the corporate world is yet to be
improved. In fact companies are putting SEPA adopted implementation on the back burner for some time till
the banks become mature enough on their part. In corporate world, SEPA has major impact on the electronic
connectivity of various companies with banks and other financial institutions, the ways in which their ERP
data is handled, payments mechanisms and much other functionality.
As an early step to establish itself in the market, SAP has provided various applications to help companies
comply with the SEPA regulations. SAP Payment Engine application is one of them. This application acts as
a standard interface which streamlines all the payment processes and allows multiple applications to interact
through single payment point. SAP also provides an integrated package called SWIFT (Society for
Worldwide Interbank Financial Telecommunication) which is useful for achieving lower Total Cost of
Ownership (TCO) in bank communications. This package helps in efficient payment processing. SWIFTNet
provides a direct access to SWIFT and other financial institutions across the globe. Moreover SAP is

5. SEPA (Single Euro Payments Area): A major step in European Payment Landscape
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banking on SAP NetWeaver as a technology of its future and building all major applications and integrated
packages around it.
Need of the hour
The introduction of SEPA compliant payment schemes is still in the pipeline. The expected official launch is
January 2008. The positives and negatives are still to be realized. Few IT majors are already in the process
of developing solutions for their prospective customers under this initiative. But it is suggested by various
industry experts to take some other pro- active measures in this area of compliance so as to catch the train
at the right time.
Related Content
• Addressing SEPA with SAP Payment Engine
• http://www.sap.com/usa/industries/banking/pdf/BWP_SAP_Payment_Engine.pdf
• SEPA vision

6. SEPA (Single Euro Payments Area): A major step in European Payment Landscape
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© 2007 SAP AG 6
Disclaimer and Liability Notice
This document may discuss sample coding or other information that does not include SAP official interfaces
and therefore is not supported by SAP. Changes made based on this information are not supported and can
be overwritten during an upgrade.
SAP will not be held liable for any damages caused by using or misusing the information, code or methods
suggested in this document, and anyone using these methods does so at his/her own risk.
SAP offers no guarantees and assumes no responsibility or liability of any type with respect to the content of
this technical article or code sample, including any liability resulting from incompatibility between the content
within this document and the materials and services offered by SAP. You agree that you will not hold, or
seek to hold, SAP responsible or liable with respect to the content of this document.