Analysis/ We joined SEPA. What now?-From immigrants' money to foreign investments. What exactly do we gain?
As of November 21, Albania is officially part of the geographic area of the Single Euro Payments Market (SEPA) schemes. However, we will have the direct benefits only after April 2025, when the Albanian financial institutions join and the European Payments Council gives a second date for their operational readiness.
But what exactly does Albania gain from this membership?
First, remittances. With the Single Euro Payment System (SEPA), an Albanian immigrant in Europe has it cheaper and easier to send money to his family in Albania, because:
1) Money transfers are made within 1 day;
2) Albanian immigrants living in Europe can transfer money directly from the account they have in European banks to their parents' account in Albanian banks;
3) SEPA eliminates the need to make money transfers through financial transfer institutions, a process that was expensive and much slower;
4) SEPA transactions can also be carried out through banking applications, directly from the phone;
5) Transfer fees are 5 times lower compared to transfers made through traditional financial institutions, specialized in money transfer services;
6) From this, it is expected to save around 20 million euros in the first year alone.
Participation in SEPA is estimated to have a significant contribution to the strategic tourism sector, giving European tourists the opportunity to make payments in Albania faster and at a lower cost. Tourists from countries that are part of SEPA can use their bank accounts in euros to make payments in Albania without having to convert them into lek. This simplifies transactions in hotels, restaurants, etc., within a day. SEPA enables the use of debit and credit cards for payments in euros, eliminating the problems with additional fees often associated with cross-border transactions.
On the other hand, SEPA membership creates a more attractive environment for foreign investors. SEPA standardizes transactions in euros, significantly reducing the costs of transferring funds between European investors and Albania. The Single Euro Payments Market enables funds to be transferred within one working day, facilitating faster launch of projects. Also, investors can make direct payments in euro without converting to lek, avoiding exchange rate risks and related costs.
Considering that the EU is Albania's main trading partner and in the conditions where about 60% of trade is carried out with EU countries, the benefits from the creation of financial facilities are significant for the expansion of trade exchanges. Participation in SEPA offers Albanian businesses access to the European market of 350 million inhabitants, enabling them to expand their activity, increase competition and profits. The Single Euro Payment System eliminates high cross-border payment fees, enabling exporters and importers to trade in euros without incurring significant costs.
Without SEPA, banks have high fees for processing international payments. With the Single Euro Payments Area, online purchases from European sellers are not accompanied by additional costs. Also, for Albanians who work as freelancers online, the payment of the salary from a European company is no longer accompanied by fees.
On June 12, the Bank of Albania sent to the European Payments Council (EPC), the official application of the Republic of Albania for inclusion in the geographical area of the SEPA schemes. The Single Euro Payments Market (SEPA) is an initiative of the European Union to harmonize Euro payments in EU countries. However, over the years, this market has also expanded outside the EU, currently counting 36 member states. The purpose of SEPA's operation is to make Euro payments between member countries as simple and cheap as domestic ones, creating a single market for them. Albania's SEPA membership is an opportunity to integrate euro payment and e-commerce platforms with the European market, before our EU membership.
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