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The SEPA end-date is not the end

I had a fun day in Brussels this week. Well, it was fun for me anyway, although I’m not so sure about the conference folks attending as we were discussing the PSD and SEPA … again … as usual.

After seven years of gestation, full SEPA was finally born last year when SEPA Direct Debits (SDD) landed in Planet EU. Eighteen months later, the whole thing appears to be coagulating.

There is frustration over lack of usage now that the instruments are in play. Hence an end-date is due to be announced, and it looks like it could be next week.

That’s fine but an end-date in and of itself does not solve SEPA’s woes.

First, the end-date is being driven by policymakers who don’t see the reality of what the banking industry is demanding.

This is why, when I hear Gertrude Tumpell-Gugerell of the European Central Bank (ECB) regularly making the statement that it will be the end of 2012 for SEPA Credit Transfers (SCT) and 2013 for SDD, I can always hear an inaudible groan in the room.


Because the banks are the ones asking for a mandatory end-date and they know that the thousands of banks across Europe yet to migrate to SCT and SDD instruments will just laugh off the end-date if it’s set too early.

That’s why the banks are lobbying for end of 2014 for SCT and 2015 for SDD.

Even then, it doesn’t solve the issue, with some arguing that a single end-date for both at the end of 2015 would be far better than a staggered approach.

But then, as the inebriated banker would say, a staggering approach is often how the industry works.

Even if the end-date if put into play according to the bankers’ requirements, it still does not solve the conundrum as the real issue is not the lethargy of banks to move towards SEPA instruments, but the lackadaisical view of the banks’ users, particularly the corporates and public authorities across the member states.

In the case of the former, they are still frustrated by the fact that the EPC created the SEPA rulebooks as a closed banking shop, and wished they had had more inclusion.

Although many of their concerns have been addressed over time, the frustration was articulated quite well by one of the large European telecom operators who said that it took three drafts of the rulebooks before the “Ultimate” field they had requested to be included in all transactions was incorporated correctly.

This is the field that shows who ultimately pays the bill, as many subsidiaries of European companies order the goods and services, but it may be their parent in another EU state who pays, and corporates need to know this as part of the information of ordering, processing, delivering and invoicing.

Three workarounds before the banks understood this correctly and incorporated it is not great, and it made me wonder how many other fields and nuances the EPC had possibly missed in the corporate view of the development of SDDs and SCTs.

I’m sure the corporates will let them know as, until the structures meet their needs, they aren’t going to move.

Unless of course, the local authorities, public utilities and member state government’s tell them that they have to.

And that’s the other piece missing as of today: a burning platform that will create the movement to away from domestic instruments to pan-European SEPA instruments.

After all, if there’s no need to move, why would you?

The EU policymakers think the mandatory end-date will be that burning platform, but the bankers know that it isn’t.

If this was the case, all banks, corporates and authorities in the EU would know their IBANs and BICs by now, as this has been in the lawbook for almost a decade … but I suspect most do not and many still quote such identifiers incorrectly if at all.

Finally, the core message to takeaway from all of this doom and gloom is that SEPA is enabling change in banks and corporates.

The change is that, for those who see opportunities, there are things you can do to take advantage of the new rulebooks.

Deutsche Bank get this as they absorb and insource SEPA processing from smaller banks.

Some small banks get this, as they get rid of old and inefficient infrastructure and use outsourcers and integrators to refresh their systems in order to deliver better client servicing.

And consulting firms and technologists get this as they focus upon delivering new innovations in mobile and online payments to clients, such as the planned implementation of Online Bank ePayments (OBeP) by Vocalink next year.

So there is light at the end of this dim tunnel, albeit it is still a dim light and very long tunnel.


About Chris M Skinner

Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.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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  • Hi Chris,
    I fully agree with you. I joined the conference two years ago in London. It still was the same debate with nearly the same folks. One thing I noticed: There were almost no Corporates there!
    No wonder! If you follow the debate it sounds verry strange. The EPC pushes to the Banks: They have to make more advertising for SEPA – and! They should kindly support their customers. The banks lust for the end-date because they made heavy investment. And! The good circuit: Several user-groups which have now limited access to the panel, some which are not at all agree with the regulations.
    And the end? There was a good slogan from Olivier Brissaud …
    Q: SEPA? Where is the business case?
    A: There is no business case, it´s a regulation!
    Nevertheless our company made also heavy investment in our IT-infrastructure and so far gained no profit from it. Europe, it could be so easy …
    By the way … I would like to avoid the tunnel. 😉
    Best regards,
    P.S. SDD, I will push until the last day because is indeed not so easy to implement … looks like a lot of work in the ERP-System 🙁

  • Fritz Thomas Klein

    When, in the SEPA debate, the word ‘corporate’ is used, it always refers to the large coporate customers operating cross-border in the larger EU. The SMEs get completely left out. What’s in SEPA for us SMEs? Our payments are 99.xx percent domestic. We are subjected to change and a lot of work to enable this change, but their is no tangible benefit. When will the SMEs wake up to tell Europe’s bureaucrats that they must change their approach if they do not want to further increase the anti-EU mood that is spreading in a number of countries?

  • We frequently hear that SEPA will not be a success unless/until there is an end-date. But is an end-date the only thing needed to ensure its success? How will we know when we’ve got there? Is at as simple as, when most payments transactions are going thru’ the SEPA schemes? Or is there more to it?
    And is it right that the industry focus should continue to be on intra-Eurozone business? When do we move onto international trade?