Serbia is on the verge of officially joining the SEPA (Single Euro Payments Area) system, a move expected to bring significant savings to both citizens and the economy. This follows the pre-application submission to the European Commission and the European Payments Council, with an official application soon to be made. The implementation of SEPA will allow for more efficient and cost-effective euro payments between Serbia and EU countries.
Economist Ivan Nikolić, speaking in the latest Macroeconomic Analysis and Trends (MAT) newsletter published by the Economic Institute in Belgrade and the Serbian Chamber of Commerce, explained that the next phase after Serbia’s accession decision will involve connecting Serbian banks to SEPA payment schemes and aligning with EU payment systems. The National Bank of Serbia (NBS), in collaboration with the European Central Bank (ECB), is already working on the technical preparations for integrating Serbian banks into the ECB-TIPS instant payment system.
What is SEPA?
SEPA is an EU initiative designed to streamline non-cash payments in euros across 36 participating countries, making cross-border payments as simple and fast as domestic ones. Since its official launch in January 2008, SEPA has standardized payment rules and procedures, benefiting both businesses and consumers by reducing transaction costs and enhancing payment efficiency.
For Serbia, joining SEPA is a crucial step in financial integration with the EU and the adaptation to European financial standards. Nikolić pointed out that Serbian regulations governing payment services, banking, and anti-money laundering have already been harmonized with SEPA standards for years.
The economic benefits of SEPA membership are significant, including reduced transaction costs, faster processing times, and greater transparency. Before SEPA, cross-border transactions could take up to five days, but now payments are typically completed in one business day. SEPA’s Instant Credit Transfer allows for real-time payments within seconds.
Potential savings
The European Commission has estimated that SEPA generates over 20 billion euros in annual savings across the EU, with the banking sector saving around 5.8 billion euros. For businesses and individuals, savings are primarily from lower transaction fees, consolidating bank accounts, and automating previously complex payment processes.
Nikolić also noted that for the Western Balkans, Montenegro and Albania gained official access to SEPA in late November 2023, and will become full members starting January 1, 2024. Other countries, including Serbia, will join in the coming years, with implementation for banks and commercial payment systems expected to take additional time.
Technical adjustments
For Serbia to fully realize the benefits of SEPA, technical adjustments must be made across the banking sector. While the process may initially be slower in some countries, it is important that all nations effectively implement the system. Serbia has an advantage in that its banking sector already adopted the ISO20022 standard for instant payments six years ago, ahead of many regional counterparts.
Thanks to Serbia’s established instant payment system, the National Bank is working on connecting it to the ECB’s TIPS system, ensuring faster and more cost-efficient transactions. This central connection will reduce costs for banks, enabling near-instant transactions with EU countries, without the need for individual connections to EU systems.
In conclusion, Nikolić emphasized that despite the potential challenges, Serbia stands to benefit significantly from joining SEPA, with guaranteed millions in savings for businesses and citizens.
