Posts tagged ‘European Payments Council’

I read this Financial Times article yesterday on SEPA (sign in required). The primary focus of the article was the slow uptake of SEPA Credit Transfers and potential ‘end dates’ for migration of existing domestic payment schemes to the SEPA schemes.

We have been encouraged by our customers that have already adopted the SEPA Credit Transfer instrument. They have done so because it is a facilitator to centralize their cash and treasury management operations in Shared Service Centers across Europe. It helps them to decrease the number of EUR bank accounts and build standard processes around payments and collections backed by central IT platforms. The business case for them is not SEPA; it is best finance practices: centralize and standardize what you can.

Last week I was joined by a customer at the BNP Cash Management University event in Paris to present on how payment factories and corporate SWIFT access can help improve cash management practices. The customer stated that one of his better decisions was to implement the SEPA Credit Transfer format in Europe instead of a variety of domestic formats, and that all of the banks he is dealing with are fully capable of processing it.

In general, companies are not concerned with an end date if there is a clear business case. That is why a “communications campaign” must focus on these benefits as opposed to merely stating a deadline date. Obviously, there is an investment needed to become SEPA ‘compliant’ but modern payment factory platforms have relevant functionality in this space: support for the SEPA formats, validation logic for all SEPA attributes like BIC and IBAN, enrichment functionality to add missing BICs based on IBAN, and conversion functionality to convert cross border payments to cheaper SEPA payments.

This brings up another point: there is also a case for smaller companies. A typical cross border payment costs more than 5 EUR whereas a SEPA payment costs only cents. If you convert cross border payments to SEPA payments, you save money. In the near future, I believe that companies of all sizes will be using services that convert certain payment formats containing cross border payments to compliant SEPA formats.

Finally, I want to comment on the SEPA Direct Debits scheme. The EPC announced the launch date to be November 2, 2009. A great deal of criticism has been expressed by end users of the scheme resulting in a report from the ‘End User Committee’ a few months ago. The main point that was raised was the lack of participation in the design of the SEPA schemes with a shortage of functions compared to their requirements. This contrasts with a presentation that was delivered at the same BNP Cash Management University by a Pan-European Leasing Group acting as a Creditor to collect money from their customers through domestic Direct Debits. The main message that was presented was that there is a good business case for them to be an early adopter because they can centralize and standardize their collections across various markets. They plan to be collecting using SEPA Direct Debit instruments by mid 2010 and are in the midst of their implementation

More on posts on SEPA:

Luc Belpaire’s posts around SEPA and payments

Video: SunGard talks to David Wright, one of the senior most officials in Brussels on SEPA.