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In your view, which of the following initiatives will have the greatest impact on the European payments market?

European Commission proposal for revised Payment Services Directive (PSD2)
European Commission proposal for new Regulation on interchange fees for card-based payment transactions
Work programme of Euro Retail Payments Board, chaired by European Central Bank
SecuRe Pay Forum recommendations for security of internet payments; for payment account access services; for security of mobile payments
Guidelines and technical standards issued by European Banking Authority pursuant to mandate provided by proposed PSD2 (Articles 86, 87)
or show results

 

EPC Newsletter
Issue 2 - April 2009

Focus: SEPA Readiness in the Public Sector

ECOFIN Council Conclusions: Annual Progress Report on the State of SEPA MigrationEuropean Commission reports on migration by public authorities

24.04.09 By Zuzana Kalivodova

INTRODUCTION AND SUMMARY

The ECOFIN Council Conclusions of 10 February 2009 welcomed the first Annual Progress Report on SEPA migration prepared by DG Internal Market and Services. The report has been prepared in response to the mandate provided to the Commission by the ECOFIN Council Conclusions of 22 January 2008. The progress report provides a snapshot of the migration status of SEPA one year after its launch and aims at identifying key developments and challenges for each SEPA payment instruments, namely SEPA Credit Transfer (SCT), SEPA Direct Debit (SDD) and payment cards. Furthermore, the report briefly discusses aspects of pricing, competition and other SEPA related developments, such as the state of play of PSD transposition. Zuzana Kalivodova highlights the major findings of the report. The bottom line is: since its launch, the actual take-up of SCT in the public sector has been very limited.

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Public administrations: need for greater urgency to move to SEPA

In the first Annual Progress Report on SEPA migration prepared by DG Internal Market and Services, particular attention has been paid to migration by public administrations because of the crucial role they can play in achieving a critical mass of SEPA payments that is needed to accelerate migration to SEPA. This part of the report is based on the first Commission services' survey on SEPA preparedness and migration by public administrations launched in June 2008. As a key 'user group' of electronic payments, public administrations initiate and receive millions of transactions every day. In the euro area, the public sector represents around 45 per cent of the GDP and around 20 per cent of all payment transactions, primarily credit transfers and direct debits.

The analysis of the first survey results is based on data received from individual public administrations and covers the period from 28 January to end of August 2008. Results of the survey refer only to SEPA Credit Transfer uptake, as the SEPA Direct Debit will be launched in November 2009. Overall, 88 public administrations accounting for more than one billion credit transfers and representing around 5 per cent of all credit transfers executed in the EU payments market annually replied to the survey.

The results of the survey show that there seems to be no general sense of urgency to move to SEPA . Only 11 of 27 Member States (Austria, Belgium, Cyprus, Ireland, Spain, Finland, France, Italy, Malta, Poland and Slovenia) have developed a national SEPA migration plan for public administrations. 10 out of 16 euro area Member States are covered by a national migration plan for public administrations, while 6 euro area Member States (Germany, Greece, Luxembourg, Netherlands, Portugal and Slovakia) have not reported any coordination of SEPA migration by public administrations.

Euro area public administrations already taking steps to implement SEPA standards

The survey shows that 42 per cent of the responding public administrations have so far not received any SEPA credit transfer offer from their bank. 54 per cent of the administrations participating in the survey indicated that they use IBAN and BIC domestically for their credit transfers, a key prerequisite for migration to SEPA. In the vast majority of Member States, public administrations still submit payment instructions to their bank using a national file format for credit transfers. However, many public administrations, covering a large set of Member States, mainly in the euro area, do have a transition plan to fully switch from national format to ISO 20022 XML over the course of the next two years.

Public administrations in 11 Member States (euro area: Austria, Belgium, Cyprus, Germany, Finland, France, Malta, Netherlands and Slovenia; non-euro area: Romania and United Kingdom) have defined a starting date for migrating to SEPA. Public administrations in 11 Member States replied that they have not yet fixed a SEPA credit transfer starting date (euro area: Greece, Spain, Ireland and Slovakia; non-euro area: Czech Republic, Bulgaria, Estonia, Latvia, Lithuania, Poland and Sweden). Public administrations in the remaining Member States did not disclose this information in their survey responses.

Public administrations in only four Members States have set an end-date for legacy credit transfers

Administrations in only 4 Member States have defined an end date after which legacy credit transfers will become obsolete. Public administrations in 15 Member States replied that they have not yet fixed a cut-off date for legacy credit transfers (euro area: Austria, Cyprus, Germany, Greece, Spain, Ireland, Malta, Portugal, Slovenia and Slovakia; non-euro area: Czech Republic, Latvia, Lithuania, Sweden and United Kingdom). Public administrations in the remaining Member States have not provided this information in their survey responses.

To secure early SEPA adoption by public authorities, the Commission plans to repeat the survey on public administrations' migration in the future and aims to publish a regular scoreboard measuring progress achieved by public administrations in order to encourage best practice by public authorities.

Zuzana Kalivodova serves as Seconded National Expert with the European Commission, DG Internal Market & Services.

 

The report can be found at the following Commission website: click to follow link.

Related articles in this Newsletter:

Missing in Action, mostly. Public sector lags behind in SEPA implementation

On Bananas and the Integration of Euro Payments. The SEPA commitment of governments

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