Since the introduction of bank notes and coins in 2002, consumers have been able to make cash payments throughout the euro area using a single currency. And now the time has come to allow consumers to make cashless payments throughout the euro area from a single account. In this backdrop, the article focuses on the advantages of SEPA for a cross-section of users, the architecture of SEPA and implementation challenges.

After the Maastricht Treaty of July 2, 1992 and the subsequent adoption of single currency euro by 13 European Union (EU) countries (Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Slovenia, and Spain) in 1999 another milestone is going to be reached by EU in January 2008 by the adoption of Single Euro Payments Area (SEPA). Incidently, Cyprus and Malta will be two more countries adopting euro in January 2008 taking to the number of European countries adopting euro to 15. There are 27 EU members.

SEPA will be a zone in which all payments denominated in euro will be considered as domestic. Countries which have adopted SEPA will not differentiate a payment in national or international payment if it is in euro currency. SEPA is essentially a payment infrastructure. Adoption of SEPA means single euro payment area across 27 countries of EU, three countries (Liechtenstein, Iceland and Norway) of European Economic Area and Switzerland. Hence, SEPA will be in 31 countries in Europe. Making both the domestic and cross-border payments in euro benefits in the same way both businessmen and banks conducting a large number of cross-border transactions. After the successful launch of euro notes and coins in January 2002, SEPA implementation starting January 2008 will bring Europe closer towards the completion of European internal market. SEPA is expected to create further conditions allowing the European Community for free movement of the goods, persons and capital without any internal frontiers.

SEPA will help all the 15 euro countries to reap the complete synergy and benefits of adopting a single currency euro. In euro countries even after the adoption of a single currency, immigrating people (for study, etc.) need to have two bank accounts - one in their home country and another in the migrating country. Transfer of euro from one EU country to another was treated as international wire transfer leading to high cost of such transfers.

Treasury Management Magazine, Payment Processing, Single Euro Payments Area, SEPA, Cross Border Transactions, European Commission, EC, Liquidity Management, European Economy, E-Invoicing, Mobile Internet Payment, E--Reconciliation, International Bank Account Number, IBAN.