Albania is moving toward membership in the Single Euro Payments Area (SEPA), following the official submission of its application in June 2023. With the backing of institutions like the European Commission and the World Bank, Albania anticipates receiving a decision on its application by the end of this year. Full implementation of SEPA is planned for 2024, a key step in modernizing the country’s financial infrastructure.

Why is it important

SEPA membership will streamline cross-border euro payments, making them as easy and affordable as domestic transactions. This alignment with EU financial regulations, particularly those related to the free movement of capital (Chapter 4 of the Acquis Communautaire), strengthens Albania’s position as it works toward full EU membership. The move will not only lower the cost of financial transactions but also embed Albania into the European financial and regulatory framework, marking significant progress in its EU integration journey.

Key benefits

• Lower transaction costs: Businesses and individuals currently face high fees and delays when transferring money to SEPA countries. Once Albania joins SEPA, these cross-border payments will be treated like domestic transfers, reducing costs significantly. This is particularly beneficial for small and medium enterprises (SMEs), which often suffer from high banking fees, making it difficult to compete in European markets.
• Boost to exports: The reduction in transaction costs will make Albania’s export sector more competitive, especially for SMEs. Lower barriers will encourage businesses to engage more freely in European markets, likely increasing export activity and promoting economic growth.
• Increased investment: SEPA will enhance Albania’s financial integration with the EU, making its financial system more attractive to foreign investors. With improved payment systems, Albania can expect stronger ties with EU economies, which will further drive investment and economic development.

Impact on remittances

One of the most significant benefits of SEPA for Albania lies in remittances. A large portion of the Albanian population resides abroad, particularly in Europe, and their remittances are a vital source of income for many families in the country. Currently, transferring funds from European countries to Albania can be expensive and slow. SEPA will allow for faster, cheaper, and more efficient transfers from the Albanian diaspora, directly increasing disposable incomes for recipient households.

This improved efficiency in remittances will not only boost the quality of life for many families but also stimulate domestic consumption. As remittances account for a significant portion of Albania’s GDP, the increase in remittance volume resulting from SEPA membership will contribute directly to further economic growth.