What happened to SEPA (Direct Debits) lately?

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29 March 2010
The whole reason why SEPA was so slow to move on, according to banks, was that everyone was expecting the PSD end-date (November 2009) to arrive. After which, everything would have run swift and smooth. “Give us an end date” banks said, “and things will happen”. The PSD end-date has come and passed, and I still see almost nothing happening in SEPA-land, besides hearing the very many reasons from banks why SEPA is still at the starting blocks. Especially regarding direct debit payments (SDD). Ironically enough, the end date conundrum risks to become another nail in the SEPA coffin. Just some of the most recent statements help (regretfully) clarify my assumption. From the PSD official document: Mandatory reachability obligation of SDD (only for ‘Core’ DD, not ‘B2B’): • Transition period until November 2010 for payment service providers (PSPs) in national euro direct debit schemes. • PSPs outside the Eurozone: November 2014. This one from the “European Parliament resolution on the implementation of SEPA” (March 2009): • [SDD shall start] not later than 31 December 2012. This other one is from the EC "Feedback on the public consultation on possible end-date(s) for SEPA migration“, (September 2009): • There will be same (italics by me) migration date to SCT (credit transfer) and SDD. • The date will be the end-2012 or end-2013. An April 2009 EPC newsletter reads, instead: • One migration end date for both SCT and SDD. • Consideration should be given to the normal investment cycle of 3 to 5 years (my comment: that is, not before 2013-14). • When a new country joins the euro zone, it should implement SEPA rulebooks by the latest 5 years after the adoption of the euro. Finally, the “coup de theatre” from the June 2009 Payment system End-users committee’s (EUC) position paper on SEPA DD: • No legislation on SEPA end dates without the resolution of all outstanding issues. • The setting of arbitrary end-dates by legislation would result in a failure (again, my italics) of SEPA. • End dates for the three SEPA products should be considered separately (ditto). Bottom line: An end date is not the most important thing for corporate users to get SEPA up and running. It is apparently for banks. So, if banks are supposed to listen to their clients, shouldn’t it be about time to put aside the end date debate and start doing something REALLY serious about SEPA? Like, for instance, listen?


  • Apart from the lack of an end date, many corporate users may also be confused about the practical implications of SEPA migration. In particular, the need to convert all payment instructions into a compliant format brings migration challenges for all companies across the 31 countries covered by SEPA. BIC and IBAN information needs to be collected and recorded for every supplier, employee and other payee paid in Euro. Internal systems used for payments origination, or in which payment instructions are stored, need to be modified to hold and transmit this information to other systems, and interfaces need to be amended. If either the BIC or IBAN is absent, erroneous or incorrectly formatted on a payment, it is likely to be delayed, rejected or penalised.

    While many treasurers have put off the decision to migrate to SEPA, particularly during the crisis when there were other priorities and investment requirements, this is not a situation that can continue indefinitely. With a probable migration deadline of 2013, many companies with more complex Euro payments and cash management requirements will need to start planning their migration projects now. An end date may not be the most important thing for corporate users to get SEPA up and running, but it should certainly provide an impetus for companies to start talking to banks about how to maximise the potential advantages of SEPA – harmonisation, efficiency and reduced cost.

  • As banks wait anxiously for a SEPA end-date to be announced, it’s true that a move to SEPA is not top of corporates’ agenda. According to a recent panel discussion at the International Payments Summit, corporates are keen to receive more information from their banks around SEPA and migration to the new payment instruments. While banks often struggle to provide the payment services that corporates are looking for, they could do a lot more to ensure that corporates fully understand the business case for SEPA and how they’ll benefit from the move.

    SEPA is finally here and it has the power to change not only the European payments landscape but also Europe’s commercial environment. SEPA will enhance transparency and improve interoperability between banks as well as the reachability of payments services across Europe, but only if it’s widely implemented. As such, now is the right time for banks to take a step back, draw a deep breath and tackle SEPA with renewed energy so that they and their customers can take full advantage of the new payment systems.

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