Payment Systems in EU

Payment Systems in EU

DOI: 10.4018/978-1-61520-645-2.ch010


The reforms of retail payment systems were also sought in response to the introduction of the euro. However, the retail payment systems in the EU are still fragmented, which means that each country has its own retail payment system. In order to overcome such a situation, the European Central Bank (ECB) and European Commission have promoted the project of “Single Euro Payments Area” (SEPA). The aim and situation of the SEPA project is described in detail. The cross-border retail payment systems, i.e. the “STEP1” and “STEP2,” are also discussed in this chapter.
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In January 1999, the Economic and Monetary Union (EMU) started and the single currency “euro” was introduced. And the “euro area,” the single currency area, was born with the introduction of the European single currency.

Before the EMU, the payments in German Mark were settled through the German payment system, and the payments in French Franc were settled in the French payment system. In this way, there had been a “one to one relationship” between the currency and the payment system.

However, the legacy currencies (Mark, Franc, Lira, and the rest) were integrated into the euro, and the payment systems for each national currency were converted to the payment systems for euro. That brought about the co-existence situation of the multiple euro payment systems in a single currency zone.

It is rather common that different kind of payment systems co-exist with different purposes in a country, for instance, the RTGS system and DTNS system, and the large-value payment system and retail payment system. But it is quite exceptional that the multiple payment systems with the same nature co-exist in a single currency area.

Just after the introduction of the euro, there were fifteen RTGS systems and four DTNS systems as large-value payment systems. In addition to that, there were more than twenty retail payment systems in the euro area. The European Central Bank (ECB) has been trying to improve such a decentralized and distributed situation.

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