Jersey likely to join single Euro payments scheme that will make transactions cheaper and more efficient

News - Banking

Written by Ray Clancy

Monday, 07 June 2010 08:20

Jersey is likely to be placed at a competitive disadvantage if it does not obtain admittance to the Single Euro Payments Area, it is claimed.

Following discussions with the Jersey Financial Services Commission and the Jersey Bankers’ Association, the island’s government believes that the move would be beneficial and preparations to support a future application should get underway.

Guernsey and the Isle of Man are also considering whether or not to make similar preparations. There are strict admission requirements but the scheme improves the efficiency and reduces the cost of Euro transactions.

As a result the Jersey Financial Services Commission has published a consultation paper outlining measures for regulating and supervising providers of payment services to pave the way for the island to join SEPA as a non-European Economic Area (EEA) jurisdiction.

The SEPA is an EEA-wide initiative that is designed to enable individuals and businesses to make and receive payments in Euros within national boundaries and cross border within the SEPA under the same basic conditions, rights and obligations.

Currently, the geographical scope of the SEPA covers the 27 European Union member states, which includes the UK and Iceland, Liechtenstein, Norway, Switzerland and Monaco.

The key aim of the SEPA is to improve the efficiency of cross border payments and turn the fragmented national markets for Euro payments into a single domestic one. The SEPA will enable customers to make cashless Euro payments to anyone located in a SEPA country using only a single bank account and a single set of payment instruments, for example, by means of SEPA-standardized credit transfers or direct debits.

The SEPA initiative includes the development of common standards, procedures and infrastructure to enable economies of scale that reduce the cost of moving Euro funds across Europe.

In the long term, the uniform SEPA payment instruments that have been developed are expected to replace national Euro payment instruments currently being operated in Europe.

The consultation includes looking at issues that arise as a result of considering whether Jersey should seek to do just the minimum necessary to achieve jurisdictional admittance into the SEPA or go beyond that minimum, for example, for reasons of efficiency, fairness or consumer protection.

Comments on the proposals in the consultation paper are requested by August 20, 2010.