SEPA membership is expected to save more than Euro 71 million per year in international transfers made to and from Albania.
According to a study by experts from the German Economic Team, GET (a consultancy funded by the German Ministry for Economics and Energy), the reduction in international transfer costs will amount to Euro 62 million for payments related to foreign trade and more than Euro 9 million for remittances.
The GET experts’ study calculates the savings in bilateral transfer costs, that is, not only those of senders or recipients in Albania, but also of the other party, outside Albania.
The study showed that for 2024, the volume of all foreign trade transactions of Albania with SEPA countries (including the Western Balkan countries, which are expected to join together with Albania), reached Euro 15.2 billion. The estimated cost of transfer commissions was 0.44% of their total, or Euro 67.1 million.
With entry into the SEPA area, this cost is expected to decrease to 0.03% of transaction volume or about Euro 5 million.
According to GET’s assessment, out of the potential difference of Euro 62.1 million, the savings of the Albanian party in the transaction are Euro 29.2 million, while the savings of the party outside Albania are estimated at Euro 32.9 million.
In the remittances segment, the study estimates that the volume of remittances from SEPA countries in 2024 was Euro 574.4 million. The estimated transaction cost was about 2.27% of their volume or Euro 13 million. In the SEPA entry scenario, the cost of remittances is expected to decrease to Euro 3.8 million. The expected savings estimated by the study are about Euro 9.2 million.
The study is based on an estimate of 2024 figures, without taking into account the expected increase in foreign trade or remittance volumes, which makes the potential savings from SEPA even greater.
In addition to the direct effect, the study notes that the full long-term economic implications of SEPA inclusion are likely to go beyond a reduction in cross-border payment costs.
Joining SEPA will positively impact the receipt of funds from the new EU Growth Plan in the medium term, as well as positively impact Albania’s EU accession process in the long term.
Joining SEPA could lead to increased competition in the domestic payments market, while also reducing the costs of domestic bank transfers. A reduction in the costs of domestic bank transfers could lead to increased acceptance of non-cash payment methods, which in turn would significantly reduce the costs of low-value payments.
An increase in the use of payments in banking channels, especially digital ones, would lead to more transparency and a reduction in the informal economy.
Also, reducing the costs of sending remittances through banking channels would lead to an increase in the use of formal channels.