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SEPA - Are Corporates Ready to Make the Move? Viewed 2935 times
Although the Single Euro Payments Area (SEPA) is still a long way from being ‘front-of-mind' for corporate treasurers, some progress has been made this year. Looking back at the gtnews Payments Survey 2010, conducted in October and November 2010 with 336 corporate-level respondents globally, the picture was still quite gloomy in terms of SEPA take-up by corporates. The survey found that in Western Europe, 60 percent of respondents had not yet implemented the SEPA instruments. Of the respondents who had not yet invested in SEPA products, 46 percent said that they did not plan to invest in SEPA products in the future. At the time, Western European respondents cited the following reasons for their reluctance to engage:
• ‘SEPA does not apply to my company' (67 percent).
• ‘Not convinced of the opportunities and benefits for me / my company' (33 percent).
• ‘Need more insight on the impact of implementing SEPA in my company' (19 percent).
The results clearly showed that at the end of 2010 most corporates did not understand how SEPA would impact their business and migration to SEPA products was far down their list of priorities when trying to improve core business processes.
In September 2011, I conducted a straw poll among the members of the gtnews European Treasurers Council in preparation for a Sibos 2011 session, organised by the EPC. The gtnews Corporate Treasurers Council has over 150 members at deputy treasurer level and above from the top European corporates. Although not statistically significant, because of the small pool of respondents, I believe that it gives an indication of developing trends - and also a slightly more positive outlook to the corporate adoption of SEPA. For example, 100 percent of the respondents had heard of SEPA, which is quite encouraging. The main findings of the straw poll included:
• Almost 80 percent believe that SEPA is relevant to their company.
• 71 percent are in the process of implementing SEPA.
• 83 percent say that they can see the business benefit of moving to SEPA instruments.
When asked what could be done to increase uptake of SEPA instruments, many corporates cited the need for European Union (EU) Regulation to set an end date(s) for the phasing out of domestic payment instruments. Many treasurers indicated that establishing deadlines for migration to SEPA instruments by law is an indispensable precondition to get board approval for the budget required to implement SEPA. One corporate treasurer responding to the straw poll emphasised that clarity on end dates is also required with a view to ensure that all banks offer SEPA services. This treasurer stated: "Today we have problems with SEPA Business to Business Direct Debit. Payments bounce due to banks not participating in the scheme".
Respondents who participated in the straw poll also identified the need for more information on the SEPA project and wanted payment service providers to provide them with this information. Only 63 percent said that their bank had talked to them about migrating to SEPA Credit Transfer (SCT) and SEPA Direct Debit (SDD), which leaves a gap that the corporates are looking to their banks to fill.
The actions required to facilitate the transition of corporates to SEPA are therefore clear: the EU legislator should define mandatory deadlines for transition to SEPA payment instruments and banks should proactively seek dialogue with businesses on the SEPA change programme. It is essential that corporates take action now to prepare for migration to SEPA. The forthcoming SEPA Regulation expected to be adopted by the EU legislator in 2011 will establish deadline(s) for the replacement of national euro credit transfer and direct debit schemes by harmonised SEPA payment schemes. These deadlines could apply as early as 2013 for SCT and 2014 for SDD. SEPA impacts any business making euro payments.
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21.05.131 February 2014 SEPA Migration Deadline – Council of the European Union (EU) Representing EU Member States Confirms: Provisions of Regulation (EU) 260/2012 “Have to Be Fully Respected by All Market Participants in Euro Area Member States”
30.11.12SEPA Credit Transfer Rulebook Version 7.0, SEPA Direct Debit (SDD) Core Rulebook Version 7.0, SDD Business to Business Rulebook Version 5.0 and Associated Implementation Guidelines to Take Effect on 1 February 2014 Published