TIRANA, Nov. 22, 2024 – Albania’s application to join the Single Euro Payments Area (SEPA) has been approved, and the country will join on Jan. 1, 2025, alongside Montenegro, the central bank announced Thursday.
SEPA membership is particularly important because it is a rare tangible measure of EU integration at the micro level for Albanian citizens as businesses as it makes it easier and cheaper to do cross-border euro transactions — small and large — through the banks, something that is currently costly and slow.
SEPA, managed by the European Payments Council (EPC), approved Albania’s membership this week, a decision welcomed as a milestone in the country’s economic integration with the European Union. Bank of Albania (BoA), the country’s central bank, had formally submitted an application earlier this year, after implementing the needed reforms.
The move aligns with the EU’s broader Growth Plan to deepen the socio-economic ties between Western Balkan nations and the European market.
“Joining SEPA is a historic moment for Albania and a tangible step forward on our European path,” said BoA Governor Gent Sejko. “This integration will revolutionize payment systems, making them faster, more transparent, and more cost-efficient, while bringing us closer to EU standards.”
-Cutting costs, saving time-
Currently, Albanians face high fees and lengthy processing times for international euro transfers, often relying on intermediary banks to facilitate transactions. A World Bank analysis found that a payment from Albania to the SEPA zone can cost up to 10 times more than a similar transfer within SEPA. With Albania’s new membership, transfers are expected to clear within a single business day at significantly lower costs.
For Albania, where trade, remittances, and tourism heavily depend on the EU market, this integration could have wide-reaching impacts. Businesses will benefit from reduced transaction fees, boosting their competitiveness and simplifying cross-border operations. The tourism sector stands to gain as European travelers will experience seamless payment options akin to those in their home countries.
“Albanian companies can now access European markets on an equal footing, opening new opportunities for growth and innovation,” Sejko said.
-Driving economic growth-
The Bank of Albania projects that SEPA membership could inject hundreds of millions of euros into the national economy over the medium term. Sectors such as tourism and foreign direct investment (FDI) are poised for significant gains as financial transactions become more efficient.
Remittances, which play a vital role in the Albanian economy, are also expected to benefit. Lower transfer costs could lead to a greater share of remittances flowing through formal channels, contributing to economic stability and transparency.
“SEPA membership is not just about payments; it’s about creating the infrastructure for a modern, interconnected economy,” said a European Commission spokesperson. “It brings Albania closer to the European market while enhancing trust and efficiency in financial transactions.”
-Albania the new EU frontrunner?-
Albania and Montenegro are the first from the Western Balkans to join. Their membership sets a precedent for other Western Balkan countries seeking closer ties with the EU. North Macedonia and Kosovo have expressed interest in joining, but alignment with EU regulations remains a significant hurdle. Serbia and Bosnia-Herzegovina also remain outside SEPA. The only non-EU country in the program is the UK, which chose not to leave after Brexit.
By being the first in the region to join SEPA, Albania demonstrates the benefits of harmonizing domestic policies with EU standards. Analysts believe the move is a good sign on EU accession aspirations.
-The road ahead-
While the decision is a major milestone, Albania’s integration into SEPA will take time. Payment service providers (PSPs), including banks and financial institutions, must individually join SEPA schemes, a process that could take up to two years.
Furthermore, Albania must ensure its legislative and regulatory frameworks align with SEPA standards, particularly regarding compliance with EU payment directives. The European Commission, in collaboration with the World Bank, is assisting Albania in implementing necessary reforms.
Albania’s recent removal from the Financial Action Task Force’s (FATF) gray list for money laundering was a critical step toward meeting SEPA’s compliance criteria. However, continuous efforts will be required to maintain transparency and strengthen the financial sector’s stability.
As Albania integrates into SEPA, the government and BoA will need to address key challenges, including public awareness campaigns to educate businesses and individuals on SEPA benefits and operational changes. Investments in digital infrastructure and financial literacy will be essential to maximize the impact of this milestone.
Prime Minister Edi Rama, in a statement, praised the development as a win for Albania’s European journey. “This is a practical, transformative step that will make Albania more competitive, more connected, and more prepared for the future,” he said.
While SEPA membership does not equate to EU membership, it is a tangible demonstration of the EU’s willingness to support Albania’s integration process. For now, Albanians and their European partners can look forward to a future of faster, cheaper, and more secure payments, bolstering economic ties across borders.
