The objective of SEPA is to create a zone for the euro where mass payments can be processed regardless of country borders. This will be followed by the migration of the domestic Euro legacy schemes to the new SEPA instruments.

Following the initial roll-out of SEPA Credit Transfers (SCT) in January 2008 and SEPA Direct Debits (SDD), by 2009, local domestic SEPA volumes will ramp-up with domestic mass payments migrating to SEPA standards. At the beginning of SEPA interbank clearing, the focus will remain on the Pan-European Automated Clearing House (PE-ACH), of which banks will either be a direct or indirect member. In view of an expected increase in market adoption, those financial institutions processing mass volumes of payments are seeking to exploit the efficiencies of direct file exchange between themselves for SCT and SDD in addition to the PE-ACH infrastructure.

The banks point out that for a successful SEPA migration highly cost efficient interbank processes are key. Bilateral clearing comes into play as soon as volumes increase. "Bilateral clearing should be seen as working like freeware. It is openly available in the market with no provider model involved and a direct exchange is set up between two given banks" says Robert Heisterborg, Global Head of Payments and Cash Management, ING.

To allow for an easy introduction of a bilateral channel, some of the leading payments banks - Deutsche Bank, Deutsche Postbank and ING - will apply principles and standards that are in line with PE-ACH clearing regarding file formats and communication means. A direct bilateral file exchange will be organized so that it will take place at least once a day and can be easily enhanced with higher frequencies according to the bank's needs. The settlement is effected with a single payment for each file exchange. Mario Daberkow, Member of the Management Board, Deutsche Postbank highlights that "it will therefore not be necessary to integrate bilateral clearing into a clearing house as banks will process the settlement via the existing high-value mechanisms."

As soon as SEPA clearing volume takes up, the banks will implement this alternative clearing channel and other like-minded banks are welcome to leverage the opportunities of these direct file exchanges. Werner Steinmüller, Head of Global Transaction Banking, Deutsche Bank, concludes that "it is now the right time to put in place similar principles for bilateral clearing so that banks can utilize the economic benefits when roll-out becomes viable through mass SEPA volumes. These efforts right now will result in future benefits for the entire market."