SEPA - Are Corporates Ready to Make the Move?

SEPA - Are Corporates Ready to Make the Move?

25 October 13

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Although the Single Euro Payments Area ( ) is still a long way from being ‘front-of-mind' for corporate treasurers, some progress has been made this year. Looking back at the gtnews Payments Survey 2010, conducted in October and November 2010 with 336 corporate-level respondents globally, the picture was still quite gloomy in terms of take-up by corporates. The survey found that in Western Europe, 60 percent of respondents had not yet implemented the instruments. Of the respondents who had not yet invested in products, 46 percent said that they did not plan to invest in products in the future. At the time, Western European respondents cited the following reasons for their reluctance to engage:

• ‘ does not apply to my company' (67 percent).
• ‘Not convinced of the opportunities and benefits for me / my company' (33 percent).
• ‘Need more insight on the impact of implementing in my company' (19 percent).

The results clearly showed that at the end of 2010 most corporates did not understand how would impact their business and migration to products was far down their list of priorities when trying to improve core business processes.

In September 2011, I conducted a straw poll among the members of the gtnews European Treasurers Council in preparation for a Sibos 2011 session, organised by the . The gtnews Corporate Treasurers Council has over 150 members at deputy treasurer level and above from the top European corporates. Although not statistically significant, because of the small pool of respondents, I believe that it gives an indication of developing trends - and also a slightly more positive outlook to the corporate adoption of . For example, 100 percent of the respondents had heard of , which is quite encouraging. The main findings of the straw poll included:

• Almost 80 percent believe that is relevant to their company.
• 71 percent are in the process of implementing .
• 83 percent say that they can see the business benefit of moving to instruments.

When asked what could be done to increase uptake of instruments, many corporates cited the need for European Union ( ) Regulation to set an end date(s) for the phasing out of domestic payment instruments. Many treasurers indicated that establishing deadlines for migration to instruments by law is an indispensable precondition to get board approval for the budget required to implement . One corporate treasurer responding to the straw poll emphasised that clarity on end dates is also required with a view to ensure that all banks offer services. This treasurer stated: "Today we have problems with Business to Business Direct Debit. Payments bounce due to banks not participating in the scheme".

Respondents who participated in the straw poll also identified the need for more information on the project and wanted payment service providers to provide them with this information. Only 63 percent said that their bank had talked to them about migrating to Credit Transfer ( ) and Direct Debit ( ), which leaves a gap that the corporates are looking to their banks to fill.

The actions required to facilitate the transition of corporates to are therefore clear: the legislator should define mandatory deadlines for transition to payment instruments and banks should proactively seek dialogue with businesses on the change programme. It is essential that corporates take action now to prepare for migration to . The forthcoming Regulation expected to be adopted by the  legislator in 2011 will establish deadline(s) for the replacement of national euro credit transfer and direct debit schemes by harmonised payment schemes. These deadlines could apply as early as 2013 for and 2014 for . impacts any business making euro payments.

For more information, please refer to the following links:

EPC Newsletter: case studies highlighting successful SEPA migration by bank customers

EPC Website: SEPA Customers

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