The European Union has floated a significant overture to Turkey by proposing its inclusion in the Single Euro Payments Area (SEPA), a pan-European payments framework designed to streamline euro-denominated transactions and reduce costs for businesses and consumers. This move, pitched last month during high-level talks in Ankara, represents a rare bright spot in the often-fractious EU-Turkey relationship, potentially unlocking savings while reinforcing Turkey's economic alignment with the continent despite its long-stalled bid for full membership.
SEPA encompasses 41 countries including all EU member states, the UK, Switzerland, and others, facilitating low-cost, efficient transfers in euros. Participation allows for standardized payments processed quickly, with fees much lower than traditional international wires. A Turkey-Europe transfer of 1,000 to 5,000 euros can cost around 40 euros. For Turkey, whose economy relies heavily on trade with Europe—Europe is Turkey's largest trading partner with more than 200 billion euros in volume—joining SEPA could eliminate hefty intermediary bank charges.
KEY TALKS UNVEIL PROPOSAL
The proposal emerged from a meeting last month between European Commissioner for Enlargement Marta Kos and Turkish Foreign Minister Hakan Fidan, as confirmed by Jurgis Vilcinskas, the EU's chargé d'affaires in Ankara. Vilcinskas highlighted the discussion as a practical step toward integration, stating SEPA could present a valuable opportunity to strengthen Türkiye’s economic integration as a candidate country and a key trade and economic partner of the EU. It could generate significant savings annually for Turkish businesses, consumers and diaspora by making cross-border transfers in Euros as fast and as cheap as domestic ones.
A Turkish diplomatic source confirmed that during Kos' February 6 visit an offer had been conveyed to Ankara, adding the SEPA issue was under the jurisdiction and coordination of the Finance Ministry. This aligns with efforts to boost economic ties amid Turkey's candidacy status, which dates back to 1999 but has languished over democratic backsliding and geopolitical tensions. With bloc membership talks effectively stalled for years, both sides say they want to modernize their customs union.
From Ankara's perspective, the timing is propitious. Turkey's lira has weakened significantly against the euro, with the exchange rate around 50 lira per euro. SEPA entry could accelerate remittances—vital for the large Turkish diaspora across Europe—and ease e-commerce.
ECONOMIC IMPACTS FORECAST
Analysts project substantial benefits. SEPA could bring significant savings, especially for the large Turkish diaspora across Europe. Users in far smaller Balkan candidates Albania, Moldova, Montenegro and North Macedonia, which adopted the scheme last year, could save up to 500 million euros. In an interview this month, Odile Renaud-Basso, president of the European Bank for Reconstruction and Development, said SEPA would basically make transactions cost-free. For EU banks, Turkey's consumers open a market ripe for fintech expansion.
Yet hurdles remain. SEPA demands adherence to stringent standards, including the EU's Payment Services Directive with anti-money laundering and data protection rules. The Commission was ready to support Turkey in any SEPA endeavour. Technical alignment would require political buy-in. Turkish officials have not yet signaled a clear stance.
GEOPOLITICAL CONTEXT
This proposal unfolds against a turbulent backdrop. Turkey's NATO role and mediation in Ukraine grain deals have thawed some EU frostiness, but disputes over Cyprus, migration, and human rights persist. Enlargement Commissioner Kos framed the talks as steps to bolster economic ties.
Broader data underscores urgency. Eurostat reports substantial annual Turkey-EU trade, with payments friction exacerbating Turkey's current account deficit. SEPA could help trim this while enhancing Turkey's appeal amid global shifts—Europe remains paramount.
IMPLEMENTATION ROADMAP
Next steps would involve Turkey complying with EU payment standards. Success here might pave for deeper ties.
For global banking, this signals pragmatism over purism. As EU-Turkey talks resume, SEPA stands as a litmus test: can economic incentives bridge divides? With implementation potentially in the future, the stakes are high for a partnership that could redefine Euro-Turkish finance.