Virtual Accounts Go Global

The Single Euro Payments Area (SEPA) is changing the global banking landscape. After years of talk, the transition to a new era of payments in Europe is at last upon us. On February 1, companies that do business in the SEPA zone transitioned to SEPA credit transfer (SCT) and SEPA direct debit (SDD) schemes for making and receiving payments in Europe. The abolition of some legacy payment types was postponed until August, but others such as Abbuchungsauftrag in Germany had already been unacceptable for months.

As the last stragglers finally made the transition, it became clear that Europe’s newly harmonized payment system will provide companies with a wealth of opportunities to generate big efficiencies. Even businesses that don’t have European interests are finding these changes enlightening.

By prompting the end of historical division in Europe—division that resulted from the various laws and regulations within national boundaries across the continent—SEPA allows payment processes to be centralized to a degree that wasn’t previously possible or, at the very least, was previously much more complex. For instance, the rationalization of payment types serves as the foundation for corporates to create payment and collections factories. These centralized units send or receive payments for multiple subsidiaries.