The Commission has published today a consultation paper on options for regulating and supervising providers of payment services, with the aim of meeting criteria that have been set for non-European Economic Area (“EEA”) jurisdictions – such as Jersey – to join the Single Euro Payments Area (the “SEPA”).


The SEPA is an EEA-wide initiative that is designed to enable individuals and businesses to make and receive payments in euro – within national boundaries and cross-border (within the SEPA) – under the same basic conditions, rights and obligations. Currently, the geographical scope of the SEPA encompasses 32 countries: the 27 European Union (“EU”) Member States (which includes the United Kingdom), Iceland, Liechtenstein, Norway, Switzerland and Monaco.

Membership of the SEPA is not to be confused with membership of the euro area, which is an economic and monetary union of 16 EU Member States that have adopted the euro currency as their sole legal tender.

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-standardised credit transfers or direct debits).

The SEPA initiative includes the development of common standards, procedures and infrastructure to enable economies of scale. This is expected to 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 decision-making and coordination body for the development of the SEPA is the European Payments Council (“EPC”). The EPC Plenary consists of 74 members representing banks and banking associations across the EEA and Switzerland. The EPC has published criteria which non-EEA jurisdictions – so called ‘third countries’ – seeking to be admitted to the SEPA would be required to meet.

Jersey and the SEPA

The Chief Minister’s Department (the “CMD”), has considered the pros and cons of Jersey seeking admittance, as a third country, to the SEPA following discussions with the Commission and the Jersey Bankers’ Association (“JBA”).

After consideration, in particular of industry input through the JBA, the conclusion that the CMD has reached is that Jersey is likely to be placed at a competitive disadvantage if it does not obtain admittance to the SEPA and should therefore make preparations to support a future application. Guernsey and the Isle of Man are also considering whether or not to make similar preparations.

The consultation paper issued today by the Commission supports the work of the CMD on the SEPA by consulting on options to meet those aspects of the EPC’s third-country admittance criteria that cover the regulation and supervision of providers of payment services.

The consultation paper considers what the scope of the regulation and supervision of providers of payment services should be and the methods that could be used for the implementation of requirements. Fundamentally, the scoping issues 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 20 August 2010. Further discussions will follow in the coming months on meeting other aspects of the EPC’s third country admittance criteria.