In March 2013 the European Central Bank (ECB) published the first report on the migration towards the Single Euro Payments Area () (see link below). With regard to progress among small and medium-sized enterprises (SMEs), the report states: “Recent surveys conducted at the national level have revealed that there is only a modest level of awareness of and a rather poor level of preparedness.” According to the European Commission’s Directorate General Enterprise and Industry, SMEs represent 99 percent of all European businesses. The focus, therefore, should now be on joining forces to assist SMEs, in particular, to achieve compliance with the European Union (EU) ‘Regulation (EU) No 260/2012 establishing technical and business requirements for credit transfers and direct debits in euro’ (the Regulation), which effectively mandates migration to Credit Transfer () and Direct Debit (SDD) in the euro area by 1 February 2014. This requires coordinated efforts by national public authorities, and trade associations representing businesses and banks.
The first Migration Report points out that – compared to corporates – migration to and SDD 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 by SMEs: “Business impediments, if caused by bottlenecks at the end of the migration period, may substantially challenge the everyday finances of SMEs.” The ECB, therefore, strongly advocates migrating at a relatively early stage, “preferably by the third quarter of 2013, at the latest.”
Since April 2011, the Newsletter has featured case studies highlighting the lessons learnt by payment service users such as businesses, public administrations, and government agencies, which have successfully completed migration to and SDD (see link below). These pioneers unanimously commented that migration to the harmonised payment schemes and technical standards is manageable, feasible and beneficial. The migration project of Mazet Group, a medium-sized business based in France, confirms this experience.
The Mazet Group migration project: a case study
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 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 volume of 80 million euros per year. The Mazet Group initiated migration to both and SDD 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 Newsletter articles published in the section ‘ Standards’ included with the links 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 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 SDD 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 SDD 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 SDD 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 SDD 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.”
migration by SMEs: think local, act now
According to the ECB’s first Migration Report, the Mazet Group represents an exception rather than the rule as regards preparedness of SMEs at this stage in the process. With less than eight 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 to get ready for . In May 2013, the Council of the EU therefore called on all EU 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 EU included with the links below). The fully supports this recommendation.
- EPC Newsletter Article by Wiebe Ruttenberg (April 2013): ‘SEPA Migration - Don't Count on a Plan B. European Central Bank Publishes First SEPA Migration Report and Warns Against Risks of Late Migration’
- Regulation (EU) No 260/2012 establishing technical and business requirements for credit transfers and direct debits in euro’ (March 2012)
- EPC Blog (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
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