Don't blame the customer: integration is not a grassroots movement
The vision will not be realised via the existence of high-quality SEPA schemes as developed by the alone. The EU monetary union did not materialise either simply by throwing euro notes and coins at people in the hopes they would enthusiastically abandon beloved national currencies in the event. European integration is rarely carried forward on a wave of popular support. (We kindly refrain from listing EU projects effectively killed at the ballot box here.). SEPA is no exception to this rule. The vast majority of bank customers in the European Union never asked for SEPA payment instruments with a view to replacing national ones.
SEPA was not started as a dem and-driven process, but as a policy-maker-driven EU integration initiative. The political SEPA vision aims to generate macro-economic benefits, to improve government services by accelerating technological innovation and to strengthen the euro currency while achieving the completion of the internal market. In other words, SEPA is supposed to promote the public interest of the European citizenry at large. In principle - naturally - we all support this noble intention.
However, the public good is not the exclusive criterion determining investment decisions of bank customers such as businesses striving to succeed in a very competitive market. As such, SEPA implementation is not a priority for most companies. Public administrations - if given the choice - will allocate scarce resources for other projects just as meaningful to society as SEPA. We can also safely assume that the individual consumer is perfectly detached from the question whether his or her bill payments are processed via a SEPA Credit Transfer or via a legacy payment system. Taking into consideration that existing payment solutions are generally viewed to work well, it simply has to be recognised that bank customers have other priorities than upgrading payment processes.
The current rate of SEPA market uptake, therefore, is perfectly in line with the progress of any other major EU integration initiative promoting a good that is not assumed to produce immediate benefits and requires initial investment to be realised.
Mind the lessons learned from the euro introduction
Banks will continue to enhance SEPA products and market them to customers who at this point are not exactly lining up to acquire them. Selling the benefits of the EU internal market and monetary union, however, remains the responsibility of the relevant European institutions and EU governments. The question is whether the political drivers of the SEPA initiative will demonstrate the guts occasionally required to realise the public interest and will render likewise the support they proclaim the SEPA project deserves.
For the euro introduction in 2001, the relevant authorities carried out an implementation project that covered all aspects of the transitional period during which both the national currencies and the euro were accepted. In addition, the replacement of existing cash for euro notes and coins in the entire euro area was coordinated. Creative incentives including support for the conversion of prices were put in place. The European Central Bank and the Eurosystem alone spend impressive resources on communication measures designed to create awareness and acceptance of the common currency. Once a similar master plan for the roll-out of SEPA will be put in place, a smooth transition to SEPA will happen.
For specific proposals regarding the necessary steps to be taken by the European Commission, the European Central Bank and EU governments please see the article "Bring the Prophet to the Mountain" by the EPC Chair Gerard Hartsink in this newsletter.
The measures contemplated by the European authorities at this stage to promote SEPA are welcome. However, appealing to general good-will, maintaining statistics on SEPA implementation and organising yet another SEPA conference, I am afraid, won't do the job.
Take a look behind the scenes: SEPA preparations are in full swing
A very positive indicator regarding future SEPA market readiness is the ever increasing engagement of customer representatives and service providers in the process of developing SEPA schemes and standards. The change management process for the evolution of the SEPA schemes established by the EPC avails all parties the opportunity to come forward with related suggestions. User communities are increasingly taking part: customer respresentatives clearly articulate there expectations regarding the SEPA Schemes. Public consultations on EPC deliverables prove that service providers delivering payment solutions to banks and their customers are aware of and engaged in the SEPA process. Clearing and settlement systems responsible for the processing of payments between banks are becoming SEPA compliant across the board. Responding to customer requests and anticipating changing payment habits, the EPC is continuously working to further enhance the SEPA schemes and frameworks. To learn more about ongoing EPC projects, please refer to the sections covering SEPA Direct Debit, SEPA Credit Transfer, SEPA for Cards and SEPA Standards in this newsletter.
So: your utility company or your tax authority or your aunt Sally might not have boarded the SEPA train just yet - once they do, they will travel along a state-of-the-art euro payments landscape. This journey will be fast, secure and convenient. Industry is right now polishing the platforms: SEPA is on track and open for business.
Herman Segers is the Secretary General of the EPC.
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