On a general note: it has been clear for more than a decade that the European Union (EU) authorities expect national legacy euro credit transfer and direct debit schemes to be replaced by harmonised Single Euro Payments Area () Schemes, with a view to promoting the further integration of the internal market and completing the monetary union. The legislative process leading to the adoption of a Regulation at EU level, which effectively establishes mandatory deadlines for migration to , started in December 2010 and has been extensively covered in the public debate. When the EU legislator, in February 2012, adopted the Regulation (EU) No 260/2012 establishing technical and business requirements for credit transfers and direct debits in euro and amending Regulation (EC) No 924/2009 (the Regulation), this did not come as a surprise. The Regulation (see ‘The Migration Tool Kit' under ‘related links' below), defines 1 February 2014 as the deadline in the euro area for compliance with its core provisions. Effectively, this means that as of this date, existing national euro credit transfer and direct debit schemes will be replaced by Credit Transfer () and Direct Debit (SDD).
Consequently, market participants in the euro area need to ensure compliance with the 1 February 2014 deadline for migration to harmonised payment schemes established with the Regulation. This legislative act affects not only payment service providers (), but also payment service users () such as corporates, small and medium sized enterprises, public administrations and government agencies. Implementation of the Schemes and technical standards has its challenges, however these are comparable to the challenges inherent to the implementation of other major change programmes. The market - on both the demand and supply sides - has ample experience in managing such projects.
Early movers on the demand side confirm that migration to the Schemes and technical standards generates tangible benefits (see ‘ Case Studies' included with the ‘ Migration Tool Kit' below). According to the Indicators compiled by the European Central Bank (see ‘related links' below), close to 30 percent of all credit transfers generated by bank customers in the euro area in August 2012 were SCTs.
The supply side of the euro area payments market rolled out and SDD services early, not only as a result of political expectations, but as mandated with previous EU regulatory action. Since 1 November 2010, all payment service providers in the euro area reachable for national direct debits must be reachable for cross-border direct debits; e.g. the Scheme, as mandated by Regulation (EC) No 924/2009 (Article 8). is kicking in and it is working.
Early movers on the demand side who reported on their migration experience in the Newsletter confirm that implementation of the harmonised payment schemes and technical standards is beneficial, but requires careful planning. have to implement significant changes to their operational models. They have to invest in system upgrades, testing and staff training. The scope of the changes is extensive. On 29 February 2012, the launched a five part blog series which highlights the lessons learnt by handling major payment volumes who have already successfully concluded migration to and SDD (see ‘The Migration Tool Kit' below). In February 2012, these pioneers - who started migration planning as early as 2007 or 2008 - unanimously recommended that organisations, which have yet to adapt systems and operations to the payment instruments, become active immediately. At the time of publication of this blog in October 2012, this is no longer a recommendation but an imperative: any organisation which has not yet initiated the migration process must act now; there is no time to procrastinate further.
Organisations now working towards achieving compliance with the Regulation by 1 February 2014 in the euro area are invited to take advantage of the numerous resources offered by the banking industry and other service providers to support market participants during the transition. Relevant information is also made available with the ‘ Migration Tool Kit' (see below), which can be downloaded from the Website.
The next edition of the Newsletter to be published end October 2012 again includes a series of articles which meet, in particular, the information needs of preparing for . Links to these articles will be added to the ‘ Migration Tool Kit' with go live of the October 2012 Newsletter edition.
The time to act is now.
If you would like to comment on this article, please identify yourself with your first and last name. Your name will appear next to your comment. Email addresses will not be published. Please note that by accessing or contributing to the discussion you agree to abide by the EPC website conditions of use.