My job entails frequent travel across the euro area, during which I make it a habit to engage in conversation on the Single Euro Payments Area () with the owners of local shops when purchasing a newspaper or a pastry (my weakness, I admit). I also like to introduce the subject with fellow travellers who happen to manage small or medium-sized enterprises (SMEs) active exclusively within national borders. Quite frequently however, they are only vaguely familiar with the concept and occasionally, have never heard of it. Once I mention the legal obligation to comply with ‘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) by 1 February 2014 in the euro area, the conversation becomes decidedly more animated. By the time I have detailed the impact of the Regulation on the operational models of payment service users (), I normally have my counterpart's full attention.
Admittedly, these isolated conversations do not count for valid market research as regards progress among SMEs towards achieving compliance with the Regulation. No representative data on the matter is available at European level. The open question therefore, is whether SMEs which, according to the European Commission's Directorate General Enterprise and Industry, represent 99 percent of firms in the European Union are well aware of the need to adapt their operations in line with the requirements and by the deadlines established with the Regulation. Considering the fact that the business activities of many SMEs are carried out within national borders or local communities, it seems unlikely that English language sources offering information specifically for , such as international trade media targeting treasurers of multi-national corporates, for example, will reach SMEs active locally. It therefore appears to be more effective to implement awareness building campaigns at national level supporting this important stakeholder group to get ready for .
The October 2012 edition of the Newsletter features the article: ‘Belgium: A Success Story' (see links below), which reports on the Belgian approach to coordinate migration at national level. This model is based on the following principles:
- Engagement of and leadership by public authorities.
- Coordination among all impacted stakeholders cooperating in the Belgian Steering Committee on the Future Means of Payment (the Steering Committee).
- Timely action based on a step-by-step national implementation plan initially rolled out in 2008.
- Multi-targeted communication creating awareness and educating the general public on the new payment schemes and technical standards to ensure a positive reception.
In September 2012, the Steering Committee published the fourth progress report towards in Belgium (the progress report) (see links below). Chaired by the National Bank of Belgium (NBB), the Steering Committee brings together all stakeholders impacted by the process: public administrations and government agencies, businesses including SMEs, consumer associations and banks. This latest progress report showcases - again - impressive results. In July 2012, the share of SCTs in Belgium reached more than 58 percent of total credit transfers; the share of SDDs exceeded 15 percent. By comparison, according to the Indicators (see links below) compiled by the European Central Bank, in July 2012 the share of SCTs in the euro area was 29.6 percent; the share of SDDs remained marginal at 1 percent.
Following successful migration by most public authorities and ‘big billers', supporting SMEs in the migration process is now the priority of the coordinated efforts to achieve compliance in Belgium. At the end of 2011, the NBB together with Isabel, the main provider of e-banking services based in Belgium, carried out a survey among 231 SMEs to find out just how prepared they were to start using and SDD. 42 percent of the companies surveyed stated that they were ready to introduce , and 30 percent of the respondents had concluded the planning stage with regard to migration. Only 14 percent of the Belgian SMEs surveyed at the end of 2011 were aware of SDD. The companies that were aware of SDD at that time were also aware that both an Scheme and an SDD Business to Business (B2B) Scheme are available. Not surprisingly, at the end of 2011 only four percent of Belgian SMEs had started the process of migrating to and three percent had entered the planning stage. These figures were slightly higher with regard to the Scheme: at the time, five percent of the companies surveyed had started migration to and four percent had entered the planning stage. This survey carried out at the end of 2011 also found that many SMEs did not yet have all the information about which they needed.
The survey confirmed the determination of the Steering Committee to focus its efforts to support the transition of SMEs. According to the progress report, the communication policy in Belgium targeting SMEs relies on the established "top-down approach: those steering the project inform the main users and user groups, who in turn pass on the information among SMEs. (...) Since Belgium has opted for a gradual approach for its migration towards , the communication activities have also evolved on a step-by-step basis, according to specific target groups. The communication strategy always revolves around a diversified approach per target group, each time with a different emphasis in terms of content."
The progress report states that many SMEs "have not yet begun or are only in the process of converting to the European credit transfer. Consequently, a very large proportion of transfers, especially those sent electronically in bulk to the issuing bank, are still in the domestic format. The main challenge at the moment consists of informing the thousands of SMEs and encouraging them to go ahead with the conversion. For a good many firms, the Isabel platform, very widely used in the market, is vital, because this is the channel enabling credit transfers and direct debits (as well as other financial information) to be transmitted to a number of banks." Migration of Belgian firms to the latest Isabel platform, which is compatible, should therefore drive forward readiness also of Belgian SMEs. The deadline for migration to the latest Isabel platform was end July 2012.
Taking into consideration that the requirement to focus efforts on supporting SMEs has been identified in Belgium more than two years prior to 1 February 2014, which is the point in time when market participants in the euro area must comply with the core provisions of the Regulation, the expectation is that migration to and SDD by smaller Belgian businesses will be completed in due time.
I commit to continue raising awareness among local newspaper sellers, pastry makers and fellow travellers representing SMEs when I get a chance. The recommendation is to support these efforts with timely campaigns reaching all SMEs at national level. This task requires coordinated efforts by all relevant stakeholders; i.e. public authorities, trade associations representing businesses and banks. The Belgian approach to migration in general and the measures implemented to support SMEs in particular perhaps offer some valuable lessons to other euro area countries on how to achieve progress.
The time to act is now.
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