Albanian businesses and individuals have for years complained that bank transfers — both domestic and international — are costly and slow. SEPA membership would help solve the problem.
TIRANA, Apr. 30, 2024 – Albania has started procedures to join the Single Euro Payments Area (SEPA) — a move experts say would significantly lower costs and make it easier and faster to make online payments for Albanian businesses and individual bank customers.
Bank of Albania — the country’s central bank — is expected to file a membership application after its supervisory council clears the way for the needed regulations.
The intent to apply was first made public in late February at a regional conference, and other EU candidate countries, such as North Macedonia, are looking to join as well.
While SEPA is an EU initiative, full EU membership is not a requirement for SEPA, but membership means the countries would be treated much like EU members for bank transfers and online payments done in Euros.
BoA Governor Gent Sejko said back in February that economic integration is the fundamental principle of the creation and functioning of the European Union, and economic integration within the region and with the European Union begins with payment systems and services.
“Thanks to our participation in the Single Euro Payments Area (SEPA), we are laying secure foundations for accelerating exchanges on the economic front, both with regional countries and those of the European Union. The European Union has offered us a historic opportunity to enter the European market long before the final moment of full membership, so we must make the most of this opportunity,” Sejko said.
As part of this process, the Supervisory Council of the Bank of Albania approved in March the regulation “On defining the requirements for direct credit and debit transfers in euros.”
This regulation is drawn up within the framework of the application process for Albania. Membership in SEPA is an objective of the Bank of Albania to encourage the modernization of payment system markets and their integration with European markets, as well as with Western Balkan countries. The regulation fully transposes the provisions of the EU regulation on technical and business requirements for direct credit and debit transfers in euros.
-A boost for the Albanian economy-
Albanian businesses and individuals have for years complained that bank transfers — both domestic and international — are costly and slow in Albania, hampering trade and other elements of doing business.
While SEPA membership won’t affect trade with non-members, for transactions with the EU, EFTA, the UK (which stayed in SEPA after Brexit) and domestically, it will make a big difference, experts say.
With a high level of economic interaction with European Union countries — in areas such as trade exchanges in goods, income from labor and remittances and tourism — SEPA membership would make it much easier for Albanians and Europeans to do business as it simplifies cross-border payments between member countries as well as domestic payments.
Participation in SEPA enables the application of equal tariff principles, both for domestic and electronically processed cross-border payments in euros.
Currently, transfers and payments with EU countries and vice versa are conducted through correspondent banks, representing a costly and inefficient channel regarding transaction execution time, monitoring of completion, transparency of working conditions, and consumer protection, experts say.
For tourism development, SEPA membership facilitates European tourists to pay quickly and at low cost, as if they were in Europe or their home country. For investments, the movement of funds and payments between Albania and EU countries becomes easier and less costly. Also, such facilitation will increase the formalized sending of remittances from EU countries.
The criteria for expanding the geographical scope of the Single Euro Payments Area are determined by the European Council of Payments, which also assesses compliance with SEPA participation criteria.
The criteria regarding ensuring equal conditions between the applicant and other participants of the SEPA scheme focus on compliance with EU legislation on payments.
These criteria do not require strict enforcement of relevant EU legislation, but the relevant provisions in national legislation should be considered substantially or functionally equivalent to EU legislation.
-BoA looks to make necessary reforms-
The Bank of Albania is being assisted by the World Bank in this process and has already conducted a preliminary assessment of the legislative changes needed to meet the compliance criteria with EU legislation, according to Monitor magazine.
The assessment has shown that Albania has made significant progress in harmonizing legislation, BoA notes.
A very significant development in this direction was Albania’s removal from the gray list of money laundering, a fundamental criterion for SEPA participation.
After the submission by the Bank of Albania and its approval by the European Payments Council and the European Commission, banks and non-bank financial institutions will need to individually join the SEPA systems.
