The Mazet Group: “Migration to SEPA Credit Transfer and SEPA Direct De...

The Mazet Group: “Migration to SEPA Credit Transfer and SEPA Direct Debit Has Generated Tangible Benefits for Us”

This medium-sized business will conclude the SEPA migration exercise before the end of 2013

30 July 13

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The Mazet Group: taking transport by road and storage to the next level

The Mazet Group, a family business created in 1923, offers its customers transport of goods by road and storage. The company operates a fleet of 1,350 company-owned vehicles carrying goods to destinations in France as well as in eleven other European Union ( ) countries. Customers are able to track the movement of their goods in real time online. In addition, the Mazet Group makes available five sites across France providing more than 50,000 square meters of storage space, which are managed based on the most advanced logistic systems available. As a result, customers can rely on expedient and safe distribution of their wares from the production site to the destination point. The company generates a turnover of 127 million euros annually. It processes more than 20,000 credit transfers and direct debits with an approximate value of 80 million euros per year.

The Mazet Group Single Euro Payments Area project

The Mazet Group initiated migration to both Credit Transfer ( ) and Direct Debit ( ) at the end of 2011. The timing of the project launch was motivated by the migration to the ‘Electronic Banking Internet Communication Standard’ (EBICS), an open, IP-based communication protocol between customers and banks. In 2008, the French and German banking sectors signed a cross-border cooperation agreement on the joint adoption of EBICS. Work was undertaken by both parties to ensure complete alignment and saw the migration from the French Echanges TElématiques BAnques Client (ETEBAC 3 and 5) standard to EBICS, and the release of EBICS 2.4 – the first German-French version. French banks were given a one-year timeline to implement the specification, which concluded in September 2011. (For more information, refer to the Newsletter articles included with the ‘related articles in previous issues’ below on EBICS as well as the competing standards developed by the Italian CBI (Customer to Business Interaction) Consortium and the Belgian Interbank Standards Association (Isabel).)

Denis Hilaire, Financial Director of the Mazet Group, comments: “It was only reasonable to align our treasury processes with the Single Euro Payments Area ( ) requirements immediately following the adaptation of our customer-to-bank communication channels to EBICS.” The decision of the Mazet Group to address migration in 2011 was also motivated by requests from suppliers across Europe, who customarily received payment from the Group by cheque, but had articulated the wish to switch to payment by credit transfer. “We have a European footprint and, consequently, we had to migrate to ,” says Denis Hilaire. The group coordinated migration to both and at the same time. In a first step, the Mazet Group set up a project team including members of its IT, sales and finance departments. In parallel, the company analysed dependencies with regard to its interfaces with both suppliers and clients. The group also regarded the migration project as an opportunity to review – and invest in the upgrade of – both the software used for treasury management and the existing enterprise resource planning system.

The migration project of the Mazet Group has been rolling out smoothly. The company opted for a phased approach: it first completed the transition to . Direct debit payments from customers are being migrated to in successive steps, and this process will be finalised before the end of 2013. In particular, the company was able to manage the conversion of customer account data to the International Bank Account Number (IBAN) and the Business Identifier Code (BIC) without any difficulties. Denis Hilaire points out: “We asked our banking partners to support us with regard to the migration to IBAN and BIC. This was a simple operation which could be concluded rapidly.” He did not identify any particular challenges during the migration process, but stresses that sufficient time must be allowed to adapt the systems used to communicate with banking partners and implement mandate management solutions. In line with the experience of other payment service users that have already completed the exercise, the Mazet Group migration project demonstrated the importance of communication with customers and suppliers to ensure a coordinated approach. Denis Hilaire concludes: “Migration to and has generated tangible benefits for us: our payment processes today are faster and we were able to reduce the costs required to manage our payment business. Implementation of and also allows us to gradually replace the cheque, which risks becoming obsolete, as a means of payment in the business to business space. In essence, migration to results in optimised financial operations.”

The European ‘Regulation ( ) No 260/2012 establishing technical and business requirements for credit transfers and direct debits in euro’ (the Regulation) effectively mandates migration to and in the euro area by 1 February 2014. Denis Hilaire shares this advice with other medium-sized businesses now working towards achieving compliance by this deadline: “SEPA migration must be the focus of general management and the finance department. It is critical for every business to prepare the transition in a timely fashion. This allows an enterprise to fully reap the benefits resulting from the harmonisation of payment flows in . Failure to act however, risks that enterprises will find themselves in a difficult position with regard to their payment business by February 2014.”

migration by small and medium-sized enterprises: think local, act now

In March 2013 the European Central Bank (ECB) published the first Migration Report (see ‘related links’ below). According to the report, the Mazet Group represents an exception rather than the rule as regards preparedness of small and medium-sized enterprises (SMEs) at this stage in the process. With less than six months left, organisations of any size in the euro area that have yet to achieve compliance must act immediately to ensure that they meet the February 2014 deadline. Considering the fact that the business activities of many SMEs are carried out within national borders or local communities, it appears to be most effective to implement awareness-building campaigns at national level, which in turn support SMEs getting ready for . In May 2013, the Council of the therefore called on all Member States to “significantly intensify communication measures primarily at national level to eliminate existing public awareness gaps” and invited SMEs and other stakeholders on the demand side to “immediately take the necessary concrete internal steps” to get ready for . (For more information, refer to the conclusions of the Council of the included with the ‘related links’ below). The European Payments Council ( ) fully supports this recommendation.

SMEs represent 99 percent of all European businesses1. The focus, therefore, should now be on joining forces to assist SMEs, in particular, to achieve compliance with the Regulation in the euro area by 1 February 2014. This requires coordinated efforts by national public authorities, and trade associations representing businesses and banks.

Avoid the risks of late migration: authorities confirm that there will be no extension

With its conclusions on reached on 14 May 2013, the Council of the underlined that the provisions of the Regulation “have to be fully respected by all market participants” in the euro area and emphasised that “competent authorities should cooperate intensively, on a national and international level, to ensure effective and harmonised compliance with the Regulation.” The Council of the also stressed that all payment orders not submitted in the format requested by the Regulation after 1 February 2014 “may not be processed by all payment service providers [ ] in euro area member states, which otherwise would be sanctioned.”

The ECB’s first Migration Report points out that – compared to corporates – migration to and by SMEs “should be easier to accommodate in terms of in-house preparations and resources owing to the lower number of internal applications generally maintained by SMEs.” The ECB however warns against the risks of late migration: “Business impediments, if caused by bottlenecks at the end of the migration period, may substantially challenge the everyday finances of SMEs.” In the April 2013 edition of the Newsletter (see ‘related articles in previous issues’ below), Wiebe Ruttenberg of the ECB wrote: “End-users, such as public administrations and businesses, big and small, have to get ready for the payment instruments, otherwise they risk refusal of transfers by payment service providers from 1 February 2014.” As he pointed out:

  • There is no Plan B: migration to and is required by law, not only for , but also for big billers, SMEs, public administrations and consumers.
  • Operating outside the law is not an option, either in terms of reputation or from the business perspective. The ability to initiate payments would come at a higher cost, and reconciliation would become more problematic.
  • will be obliged to refuse further processing of payments that are not delivered to them in the right technical format after the 1 February 2014 deadline applicable in the euro area.
  • Ignoring the risks of non-compliance, including the hope of a slow response on the part of the responsible authorities, would be a mistake.

The ECB’s first migration report also states: “In a post-migration environment (...) could still offer conversion services, provided that these services are, operationally, fully independent from all subsequent payment services offered by that . The conversion would take place prior to the ‘receipt’ of the payment instruction by the .” Bank customers such as businesses considering the use of conversion services will have to provide the information that enables a service provider to create a -compliant payment order. Some of this information is specific to the new payment schemes and technical standards. To give just one example: billers collecting payments under the Schemes are obliged to obtain a so called creditor identifier. The creditor identifier, in connection with the mandate reference, allows the payer and the payer’s bank to verify each payment and to process or reject the direct debit according to the payer’s instructions. Billers have to request this identifier according to local practice. This applies also to billers planning to use conversion services to collect payments as of 1 February 2014. (For more information on the creditor identifier, refer to the ‘related articles in previous issues’ below.) The bottom line is this: also businesses considering using such services must take the necessary actions. Any business which anticipates being unable to align its operations and processes with the requirements established with the Regulation by 1 February 2014 and, therefore, wishes to make use of conversion services, would have to coordinate the necessary steps with their banking partners.

Call your banking partner(s) now

As outlined above, there are many practical risks associated with non-compliance should businesses and other payment service users fail to meet the 1 February 2014 migration deadline applicable in the euro area. Potentially the most damaging is that payments could be disrupted if compliance is not achieved, with operational and business risks caused by late migration affecting the handling of payment orders. The Regulation impacts not only , but all payment service users making credit transfer and direct debit payments in the euro area, so failure to comply by 1 February 2014 could cause widespread issues with potentially large numbers of transactions. The fully supports the recommendation of both the ECB and the Council of the that payment service users should aim to complete migration at the earliest stage possible, taking into consideration that the availability of external resources offered by banks and other service providers – including testing facilities – will be stretched to the limit towards the end of 2013. Whether the plan is to achieve full compliance or use conversion services to avoid disruption of payment operations, action must be taken. Banks and other service providers stand ready to support market participants during the transition. Relevant information is also made available with ‘The Migration Tool Kit’ (see ‘related links’ below).

Denis Hilaire is the Financial Director of the Mazet Group. Javier Santamaría is the Chair of the .


Related links:

Mazet Group Website

European Central Bank: First SEPA Migration Report (March 2013)

Council of the European Union: Council Conclusions on SEPA (May 2013)

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

EPC Blog (19 November 2012): Is Your Local Corner Shop Ready for SEPA? Belgian Best Practice Shows How to Engage Small and Medium-Sized Enterprises in the Migration Process

The EPC Migration Tool Kit: Get Ready for SEPA by 1.2.2014. Act Now!


Related articles in this issue:

"Talking about SEPA Migration to Small Businesses: Keep it Simple!" Says the Owner of Dance and Gymnastics School Girlfriends (45 Direct Debit Collections per Month). This small business plans to complete migration to SEPA in the fall of 2013

SEPA 2014: Avoid the Bottleneck, Get Ready Now. Facts and figures on SEPA Migration. The state-of-play in July 2013


Related articles in previous issues:

SEPA Migration - Don't Count on a Plan B. European Central Bank publishes first SEPA Migration Report and warns against risks of late migration ( Newsletter, Issue 18, April 2013)

If You Have Not Migrated to SEPA Yet – Get Ready and Get Inspired: SEPA Pioneers on the Demand Side Share Best Practice. The SEPA deadline will not move from 1 February 2014 so act today to ensure your compliance ( Newsletter, Issue 18, April 2013)

EPC Newsletter: Case Studies Highlighting Successful SEPA Migration Projects of Bank Customers

SEPA Direct Debit for Billers: the Creditor Identifier (Go Get It!). EPC Newsletter series provides support for billers preparing migration to the SDD Schemes ( Newsletter, Issue 11, July 2011)

The History and Vision of Isabel, the Belgian Interbank Standards Association This EPC Newsletter series provides an overview of banking communication standards in Europe ( Newsletter, Issue 16, October 2012)

The History and Vision of CBI. The EPC Newsletter series provides an overview of banking communication standards in Europe ( Newsletter, Issue 14, April 2012)

The History and Vision of EBICS. The EPC Newsletter series provides an overview of banking communication standards in Europe ( Newsletter, Issue 13, January 2012)

1 European Commission Directorate General Enterprise and Industry:

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