Lithuania joins SEPA

As Lithuania joins the Single Euro Payments Area (SEPA), payments will be more convenient across Europe

Today, 1 January, Lithuania joined the Single Euro Payments Area, also called SEPA, encompassing 34 countries. In executing domestic payments and payments to other SEPA countries, we will now complete the same payment instruction form as in other countries and will provide uniform information necessary to execute a payment. One account across the SEPA area will be enough for executing or receiving payments in any SEPA country.

‘SEPA provides conditions for more convenient payments, as Lithuanian residents will be able to use an account opened in Lithuania in order to receive their wages and salaries, social benefits or other euro payments from all European Union countries and other countries comprising the SEPA area.  Residents will also be able to indicate, without any limitations, an account opened abroad in order to receive their wages and salaries, pensions or other euro payments from Lithuania. Companies as well will be able to receive and execute payments from an account in a selected SEPA country,’ said Tomas Karpavičius, Head of the Market Infrastructure Policy Division of the Financial Stability Department at the Bank of Lithuania.

He noted that setting restrictions on residents or companies as to where to have an account for receiving and executing payments would be incompatible with European Union law.

On the first days of the new year, the changes will be felt by those companies and residents that use online banking or manually complete payment forms. Current payment instruction forms will be substituted by a payment instruction form adapted to SEPA payments. The same form will be completed in executing euro payments in Lithuania and to other SEPA countries. Currently, SEPA comprises all EU Member States, also Norway, Iceland, Lichtenstein, Switzerland, San Marino and Monaco.

‘Since the payment form is changing, we recommend revising periodic payments used in online banking and payment templates.  While transferring information to SEPA payments, part of the information can be lost. For example, if the payment code and texted payment purpose were indicated together, one of them would be deleted.   A very long texted payment purpose may be cut.  Therefore, there might be a need to supplement payment templates,’ said Tomas Karpavičius.

According to him, information received allows to assume that banks are duly prepared to accept SEPA payments from customers and execute them.  The final implementation stages took place at the end of the last day of 2015 and on the first day of the new year.  As a result, online banking will be inaccessible at some banks for some time.

These significant changes will affect residents who had used direct debit. The former direct debit payment service did not comply with SEPA requirements set by the EU Regulation and therefore its provision was terminated as of 1 January 2016. As an alternative for this service, banks have proposed the service of the provision and payment of an electronic account. Hence, instead of direct debit, residents will be able to further use the electronic account service, i.e. to settle electronic accounts received through online banking in an automated manner.

‘Basically, no preparations are necessary for that.  If any choices related to this service will have to be made, banks will inform customers individually. Nevertheless, not all companies will migrate from direct debit to the electronic account service; hence residents will have to sort out how to pay companies which have not migrated to the electronic account themselves. Banks inform customers about such companies; however, it is very important that such companies themselves would properly inform their customers on how payments to them should be made,’ said Tomas Karpavičius.

He advises, should any questions arise, to refer to the bank’s individually submitted information about changes related to SEPA, as well as information on the website of one’s own bank.  The information video prepared by the Bank of Lithuania, which is available online, also presents information on the changes in completing a payment form and SEPA.

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Companies and state institutions submitting many payments and using their accounting programme interfaces with banks’ information systems are basically already prepared as well.  For companies that will need more time to prepare, most banks will offer services of conversion of old format payments into SEPA payments.

Migration to SEPA is the second major payments-related step in Lithuania joining the single payments market in Europe. The first step in that direction was the adoption of the European Union’s single currency in Lithuania. Now we can pay in euro banknotes and coins, avoiding currency exchange services, in 19 euro area countries. However, there still had been some differences in executing domestic and cross-border payment instructions at bank branches or in using online banking. In executing SEPA payments, they will cease to exist.

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