Light at the End of the (Harmonisation) Tunnel

Light at the End of the (Harmonisation) Tunnel

'Third Progress Report on the State of SEPA Migration' prepared by the European Commission Services confirms: mandatory end dates for migration to pan-European payment instruments are required

15 July 11

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A period of important achievements

When reporting on the progress of the Single Euro Payments Area ( ) in 2010, it makes sense to start at the end of the year. On 16 December 2010, the European Commission (the Commission) adopted a proposal for a Regulation establishing technical requirements for credit transfers and direct debits in euros. End-dates referenced in the proposal will provide the certainty that the payments market has been seeking for a long time.

The 2010 migration data for Credit Transfers (SCTs) and Direct Debits (SDDs) continued to demonstrate that the market is in a 'wait and see' mode. Despite impressive scheme adherence by banks, actual usage rates in the euro area were marginal (below 0.1 percent in February 2011) and rates hovered at 15.7 percent. On the positive side, public administrations in a number of European Union ( ) Member States clearly increased their momentum of migration to in 2010 especially in Austria, Belgium, Finland, France and Spain. This is an important development, given that public administrations are among the highest-volume payment users. Overall however, migration figures clearly remained below expectations and confirmed the need for a regulatory approach. This will hopefully be brought to a conclusion in Autumn 2011 through adoption of the Commission's proposal by the European Parliament and the European Council representing Member States.

This was not the only important achievement in the reporting period. A new governance body, the Council, was established by the Commission and European Central Bank in March 2010. The Council ensures proper and high level stakeholder involvement from both payment users and payment providers and fosters consensus on the next steps towards the realisation of .

At a more technical level, EMV compliance for cards showed further progress. EMV is an industry standard to implement chip and personal identification number (PIN) security for point of sale (POS) card transactions, to combat fraud in the area of card payments. EMV migration stood at 81 percent for cards (up from 72 percent shown in the last progress report), 90 percent for POS terminals (up from 77 percent) and 96 percent for automatic teller machines (up from 93 percent).

Remaining gaps

While migration end-dates are crucial it is not sufficient to rely on them entirely to further the process. The progress report points out that general awareness across all stakeholder categories remains a challenge, especially for consumers and small to medium enterprises (SMEs). For the success of , it is crucial that all payment users are well informed on the new instruments. The primary responsibility for this remains with the payment service providers and the Member States. Many Member States however do not yet play a strong central coordinating role, such as developing a strategic communication plan at a national level.

Looking beyond credit transfers and direct debits, general achievements in the card area remain limited. For the emergence of pan-European cards it is crucial that the standardisation efforts by the industry gain more momentum.

Gerd Heinen is Policy Officer at the European Commission, Directorate General Internal Market and Services. This article represents the personal views of the author and do not necessary correspond to the views of the Commission.

Related links:

European Commission Services' Third Annual Progress Report on the State of SEPA Migration (May 2011)

The Website features a dedicated page ' Migration - Reports, Case Studies and Indicators'. This page includes Newsletter articles reporting on the migration experience in the different countries. To view this page click here

Related articles in this issue:

The Art of Integration. Finnish Government Shared Services Centre for Finance and HR simultaneously migrates to SEPA and new IT systems introduced at central government agencies

Facing the Facts in July 2011. The EPC Newsletter tracks the progress of SEPA migration

Relatd article in previous issues:

The Trailblazer. Kela, the Social Insurance Institution of Finland, completes migration to the SEPA Credit Transfer ( Newsletter, Issue 10,  April 2011)

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