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PSD and SEPA research results 2010

The FSClub released the outcome of this year's survey on the Payment Services Directive (PSD) and Single Euro Payments Area (SEPA) this morning, sponsored by Logica, Dovetail and Earthport.

This is the second year of the survey, and builds on last year's results.  

Download the full survey report (2MB PDF): Download Report 2010

Here's a summary of the news:

A year after the transposition of the PSD and implementation of SEPA, European payments professionals are overwhelmingly disappointed with the progress in harmonising and regulating an integrated European payments market. Meanwhile, new competitors are registering rapidly as new payments institutions and are creating major challenges for traditional banks.

  • 322 people took the survey representing 42 nations globally
  • 52 percent thought the European Union (EU) would stay together whilst 24 percent thought it would fail.
  • 30 percent believe the euro is critical to keeping the EU together, compared to just 18 percent a year earlier.
  • 78 percent state that the Eurozone will continue to expand across more countries and become a successful reserve currency alongside the US dollar
  • Most people (57%) say the PSD transposition process has been unsuccessful, with 51 percent of bank respondents and 36 percent of non-banks believe that derogations actively hindered the transposition.
  • 68 percent believe there will be a PSD Mark II to replace the deficiencies of the first.
  • 54 percent say that SEPA is not succeeding compared to only 24 percent who think it is.
  • Most innovation in payments is created either by non-bank payment institutions (35 percent of vote) or regulators (27 percent of vote).

For the second year, the Financial Services Club ran a survey of payments professionals worldwide to see how successful the implementation of the Payment Services Directive (PSD) and Single Euro Payments Area (SEPA) have been since the PSD transposition in November 2009 and implementation of SEPA’s full program of Credit Transfers (SCTs) and Direct Debits (SDDs) at that time.

This year’s survey is sponsored by Dovetail, Earthport and Logica, and was completed by over 320 people covering all of the Eurozone and more. Representatives of 42 nations took part during the summer of 2010.

European Union

With the backdrop of the EU’s member states of Portugal, Ireland, Greece and Spain, collectively nicknamed the PIGS, it is not surprising that many people thought the EU was having problems. Over half of respondents (52 percent) thought the EU would stay together, whilst almost a quarter (24 percent) thought it would fail. Interestingly, a third (30 percent) of the respondents believe that the euro is critical to keeping the EU together, compared to just 18 percent a year earlier. This is also a reflection of the importance of the Economic & Monetary Union in maintaining a stable Europe, with 78 percent of respondents stating that the Eurozone will continue to expand across more countries and become a successful reserve currency alongside the US dollar.


The responses were unsupportive of the PSD process, with 57 percent of respondents saying that the process had not been successful, with just a few issues related to the use of derogations in some countries. Unfortunately, these issues were significant with 51 percent of the 112 bank respondents and 36 percent of the rest (non-banks) stating that derogations had actively hindered the PSD transposition.

Other comments were made that, “The 'enshrining' of BIC & IBAN in the recitals of the PSD has been a huge mistake.” Another respondent noted: “There are many uncertainties around the PSD such as the interpretation of the PSD in Swiss banks, the PSD implementation in CEE, the speed of PSD implementation in Southern Europe, and lots of legal documents with conflicting contents.”

For these reasons, over two-thirds of respondents (68 percent) believe there will be a new PSD to replace the deficiencies of the first. However, many would rather have a continually adjusted Directive rather than new Directives drafted every few years.

Meanwhile, 66 percent of bank respondents had seen major change as a result of the PSD, compared to only 31 percent of the non-bank respondents. This is a reflection of the major change initiated by the PSD on banks internal systems and processes, and the launch of new competitors. For example, over 70 payments institutions (PIs) were cited by the survey’s respondents as being created since the introduction of the PSD. These included regular suspects such as PayPal and Western Union, to a few new entrants including Earthport and Voice Commerce.


Respondents are less confident about their knowledge of SEPA this year. Only 55 percent felt that they understood SEPA well, compared to 62 percent last year. Maybe this is because they do not believe SEPA is working, with an average 54 percent saying that it is not succeeding compared to only 24 percent who think it is. Of the bankers who responded to this question, the percentages rise to 57 percent who think it is working whilst 27 percent think it is not.

The problem relates to a lack of benefits (17 percent), bank (18 percent) and corporate (16 percent) resistance to SEPA, limitation by countries through the use of derogations (17 percent) and, most importantly, the lack of an end-date (24 percent) meaning that there is no motivation to implement SEPA instruments.

This is why the majority of this year’s respondents think that the SEPA vision for “all Eurozone payments transactions to be processed as though they were domestic” will be achieved between 2014 and 2017 (43 percent of the vote). This is less optimistic than a year earlier, when 49 percent of respondents thought it would be achieved before 2014. Interestingly, only 11 percent of respondents a year ago thought that SEPA’s vision would be realised after 2017, compared to 34 percent this year.

Nick Ford, Global Consulting Payments lead at Logica, added that: “The survey results show that a majority of executives think that an integrated payments market is very important or even critical to Europe’s future. However, many are still unsure of the benefits of SEPA/PSD and think that the banks could do more to improve this position. I am convinced that with the right focus and an effective payments strategy, banks can welcome SEPA and other regulations. There is a huge opportunity here for banks to improve and further tailor their services to clients obviously keeping in mind the significant challenges and changes that it brings. Smart players in the industry will proactively address these challenges head on to create business opportunities that will help them differentiate and lead in the payments market.”


Finally, the survey reviewed the views of respondents on innovation, with most innovation in payments created by either non-bank PIs (35 percent of vote) or regulators and policymakers (27 percent of vote). Less than nine percent of the respondents believe that banks create innovation, although this is disproportionately viewed between bankers, where 17 percent believe they are innovators, and non-banks where only 6 percent believe banks innovate.

This may be because banks are limited by issues of budget, with 41 percent of bankers surveyed stating that this is what stops them innovating.

In terms of innovation, the most innovative things our survey audience noted are real-time payments, mobile and contactless payments, and the convergence of payments processing into payments hubs. The least innovative things were felt to be anti-fraud measures using new biometrics, such as voice. This intrigues as one of the major new PIs cited in the survey was Voice Commerce, which uses voice biometrics for customer authentication and identification.

Chris Skinner, Chairman of the Financial Services Club and leader of the research project, comments: “Last year’s survey identified major cynicism about the implementation of the PSD, with many saying that derogations and optional services would cause confusion and a lack of parity. Unfortunately this has proven to be the case, as borne out by this year’s survey, but what concerns me more this year is that the cynicism has spread to SEPA. Banks and corporates just don’t get where it’s heading, and this lack of direction is caused by the absence of an end-date. Even with the SEPA Council and the Commission’s consultation on an end-date, we still don’t have one and, until we do, this headless chicken will remain just that.”


The core community of survey respondents are members and associates of the Financial Services Club in the UK, which is why this community is the strongest with over a third of the participants. Of the 16 Eurozone nations, 13 member states participated and represent a major contingent in the survey, with 38% of the vote. Meanwhile, there are also many non-European nations also participating, including strong input from America, India and Hong Kong, as well as views as diverse as Kazakhstan to Malaysia, and Uruguay to the UAE.

In terms of who participated, the largest group is from the banks with over a third of the respondents from this constituency. Consultants and technology providers are the next largest group, and represent just under a third of the votes.

Three out of ten participants described themselves as “middle management”, whilst 38% were senior management or C-level and one in five were “consultants”.

Download the full survey report (2MB PDF): Download Report 2010



About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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