The Single European Payments Area (Sepa), designed to make it cheaper to move money around the continent, was launched on 28 January 2008. But banks' progress in translating the framework into services for customers has been painfully slow.
The framework is already in place for banks to make credit transfers across the region as if they were domestic payments and by November this year, banks are expected to take credit and debit card payments without incurring a cross border payment charge. However, there is little will to actually bring Sepa services to customers.
So what's the hold up?
The slow pace has a lot to do with banks getting very little business benefit from the changes. About two per cent of payment transfers in the Sepa region are cross-border payments, so there is not much of a business case for banks to justify the investment they are going to have to make to adapt their payment systems.
They see this as a political agenda foisted on them from the European Commission and the European Central Bank, trying to push through an ideal of a united Europe without considering the difficulties of actually having to bring the system about.
While the EC is keen for Sepa to be taken up, because banking and payments are pivotal in making a harmonised European economy a reality, the banks feel that as Europe slides into recession, the case for making the required investment is being even further undermined.
The men from the ministry strike again. Is that the only problem?
Basic differences in the banking landscapes of countries have thrown up regional in-fighting. In November last year the French Banking Federation (FBF) recommended banks in the country down tools on Sepa adoption policies because of a row over interchange payments, the system whereby the transferring bank and the receiving bank share the burden of processing those payments.
The French banking environment is made up of a lot of small and co-operative banks, which make more payments than they receive. In other countries, such as the UK, banking is consolidated to a handful of massive organisations, and so the volume of payments made and received is roughly equal. As a result, many banks outside of France don't have interchange tariffs in place and don't see the need to start paying any now.
The FBF has asked for clarification from the European banking authorities on how interchange rules will work with Sepa. So far none has been forthcoming, so the FBF has urged members to say non to Sepa and discontinue any work on existing projects.
So does that mean Sepa is dead in the eau, so to speak?
Or even the wasser, agua or νερό? Some pundits think the FBF is just pushing the European banking authorities to define clear regulations on the implementation of Sepa and is seeing how far it can go before the authorities react.
The authorities, such as the European Central Bank, the European Payments Council and the European Commission, have so far avoided regulating Sepa, preferring the banks to regulate themselves. However, commentators have suggested these organisations are now moving closer to regulating the banks and setting a deadline for the completion of Sepa implementation work.
When are we likely to have widespread Sepa services?
Credit transfers are happening now, with the big international banks already setting up services. The launch of direct debit transfers happens in November, as does the launch of the Payment Services Directive (PSD), an important element of harmonising payment systems across Europe so that Sepa services can be set up. The directive focuses on the processes needed to settle payments in the space of a couple of days, rather than the couple of weeks it takes in some countries.
UK banks are already ahead of the PSD game, thanks to the Faster Payments system launched in May last year. As a result of Faster Payments, UK banks are now PSD-compliant.
So Sepa hasn't been sorted out much at all really, has it?
It's only now starting to emerge just how big the task of harmonising European banking is going to be and the trials and tribulations of setting it up are likely to continue for some years to come.
Commentators put a likely deadline for widespread adoption at 2012 at the earliest and 2014 on the outside.