The internal market for payments: Unfulfilled promise or key to a truly efficient European payments market?

Abstract

The European payments industry is undergoing unprecedented change. Nowhere else in the world are there so many drivers at work at the very same time, resulting in the creation of new foundations on which a new pan-European market environment is being built. The term that comes nearest to capturing what is happening is ‘the creation of an Internal Market for Payments’, combining new EU legislation (the Payments Services Directive), self-regulatory initiatives (Single Euro Payments Area (SEPA)) and increasing requirements for pan-European approaches from large banks, corpor­ates and retailers, for whom the historic national fragmentation of the market is becoming a bigger issue by the day. This paper focuses primarily on the SEPA, its drivers, its current status, what is left to be done and the conditions that will have to be met to achieve a more efficient European retail payments market.