The SEPA initiative was launched back in January 2008 with the goal of improving the efficiency of European cross-border payments. Consumers and businesses were due to migrate to the SEPA payments format this past August, after a 6 month extension from the previous February 1st deadline. Now that August has come and gone, where do we stand vis a vis the broader goal of streamlining cross-border European payments?
Deadline Extensions Have Helped
The good news is that the extension has proven helpful. According to the European Central Bank’s updated SEPA statistics which were issued in June, only about 3% of firms were still not compliant with SEPA credit transfers and about 5% were not compliant for SEPA direct debits. So the dream of efficient European cross-border payments is indeed coming to fruition.
SEPA Progress and Prognosis
Michael Burtscher, Credorax’s VP Acquiring Risk, Fraud Management and Compliance wrote an article on this topic for the gtnews Weekly Bulletin, published by the Association for Financial Professionals. Entitled The SEPA Initiative: Time’s up! Or is this Just the Beginning?, the article gives an excellent overview of the challenges presented by SEPA migration, the progress that has been made and what the future holds.
Here are some key excerpts from Michael’s article that describe how SEPA will transform European cross-border payments. You can read the entire piece here:
Many PSPs and online merchants surveyed also see the increased potential of SEPA to increase market efficiency. This is because it will align such conditions under which payments are being made, by delivering a single set of rules and open access to the European market. It must also deliver a level of transparency never before achieved, and provide a more integrated playing field through newly-found interoperability. From the PSPs’ perspective, it will give them more negotiating power to obtain better conditions and terms with their own service providers.
Credorax operates as an acquiring bank in 28 European countries, with Japan and the US to be added shortly. What the firm has been seeing is that financial intermediaries are struggling with having to apply equal charges to comparable cross-border and domestic payments in euros within the European Union (EU), which is part of Regulation 924/2009.
By giving PSPs and online merchants a single point of entry it avoids any communication problems, which can occur when banks’ systems try to integrate but the interoperability isn’t there. Data analysis can also present a problem especially when the information comes from a variety of sources.
We will be watching the evolution of SEPA closely and continue to update our partners on key issues raised by the initiative.