Home / Payments / As my SEPA gently weeps …

As my SEPA gently weeps …

I hosted a dinner last night with a focus upon developments with SEPA and innovation.

What innovations has SEPA introduced?

Long silence.

To be honest, there are some – the ability to cash concentrate direct debits into the most efficient countries using SDDs (SEPA Direct Debits) for example –but the list is real short.

We found the reasons why are multiple.

First, there’s innovation and change in wholesale versus retail, with the former taking much longer than the latter.

Second, there’s cooperative innovation where countries and operators need to work together to agree change and standards, which is why it takes the time.

Third, there’s delivery of a wholesale change across a wide economic area, which is not just eating an elephant but a humongous great Blue Whale.

Nothing is simple in the SEPA game, or end-game.

And is there an end-game?

Sure, we’re talking about end-dates, with a single end-date now mooted for end of 2014.

If 2014 is achieved, then twelve years after the creation of the European Payments Council we might get something implemented … but it’s still ‘early days’ as someone said.

Twelve years and it’s still early days?


Another banker said that “just as we’ve started to deliver innovation with SEPA, it may never happen”.

Hmmm … life is what happens to you whilst you’re busy making other plans, and twelve years after inception, SEPA might be delivering a stillborn infrastructure if the Eurozone implodes, as many appear to be predicting.

If you don’t think they are, then talk to a few banks around the City here and they’ll tell you that they’re seriously planning for a euro breakup, and modelling what that means to their systems, structures and processes.

No wonder when most respected media are now saying we’ve reached crunch time.  From this morning’s Washington Post:

“After two years of failed efforts that world markets have swept aside as inadequate, Europe’s politicians face an increasingly sharp divide in combating their financial crisis: either take the sort of politically difficult steps that would tie their economies more closely together, or prepare for the breakup of the euro currency zone.”

So where are we in reality with SEPA?

The EPC’s latest numbers show that, “as of August 2011, the share of SEPA Credit Transfers (SCTs), as a percentage of the total volume of credit transfers generated by bank customers, amounts to 20.12 percent in the euro area”, whilst “the share of SEPA Direct Debit (SDD), as a percentage of the total volume of direct debits generated by bank customers, amounts to 0.13 percent (ECB SEPA Indicators)”.

SCTs have been around since January 2008 (that’s four years near enough) and SDDs since November 2009 (two years).

The reason for the slow take-up of SDDs is down to incompatibilities between country implementations of SDD, and specifically repudiation and revocation rights which have been compromised due to country opt-outs allowed under the rules (derogations).

So we don’t really have any innovation here yet.

Just a slow-burn.

Oh, one thing that was viewed as innovation in this wholesale space however is ISO20022.

“The ISO 20022 standard provides the financial industry with a common platform for the development of messages using:

  • a modelling methodology (based on UML) to capture in a syntax-independent way financial business areas, business transactions and associated message flows;
  • a central dictionary of business items used in financial communications;
  • a set of XML design rules to convert the messages described in UML into XML schemas, whenever the use of the ISO 20022 XML-based syntax is preferred.”



The Nirvana of financial messaging.

And yes, if SEPA delivers a compliance and move to ISO20022 across the Eurozone’s corporations and banks, then yes, that’s good.

According to those around the room, this has to happen as part of SEPA delivery.


But I’m not going to place any bets on this happening.

And, as if to prove the point, put “ISO20022 SEPA” into Google and what you get back is a whole bunch of articles … from 2008.

Finally, about 30 entries down the list, you get a link to the EPC’s website where an article from October 2011 states: “the existence already of multiple interpretations of the ISO 20022 message standards; i.e. multiple domestic SEPA formats, threaten to undermine key objectives of the SEPA initiative.”

Maybe it’s just me but I’m thinking that, after ten years of evolution and little revolution, this thing ain’t working.

Anyone want to argue the toss?



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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  • neil burton

    Well, hey, someone better.
    When I last checked, there were 159 newly authorised PIs, and 770 newly registered PIs, in the UK alone. Which is about 90% of all new PIs in Europe. Some of them have brought new business models to the market. OK, that was driven by the PSD, but would we have had the PSD had there not been SEPA? And if the debate was about innovation, there is much more to be proud of. Some credit is due to DFID and Vodafone for the startup stage of the much-vaunted M-Pesa.
    The way to look at SEPA is the job’s now half done (and deserves credit for achieving that). The last thing we should be doing just now is declaring it ended. Having fixed the plumbing, let’s get to work on e-invoicing and reconciling receivables with invoices and providing corporate treasurers with accurate realtime information on balances held across multiple banks and enabling our SMEs to export more effectively ….a myriad of well known business problems. Anyone interested in renaming it the ‘start-date?’

  • Chris SkInner

    Sorry Neil but just to be clear, PIs have nothing to do with SEPA but are a reflection of the changes introduced by the PSD,

  • neil burton

    Chris – Entirely agree – indeed said so. Any support out there for the glass half full side of the house?

  • Harri Rantanen

    Hello Chris,
    Being (still) an EUR-optimist I can recognize the pressure on the market towards EUR-community and SEPA too. I’ve though always said that what ever currency we use in Europe per country or as a community the ideology of common payment processing infrastructure and use of common ISO20022 standard still is the key thing. We loose by default against other large economic areas if we’ll continue using approximately 250 payment types within European countries for such a simple thing as credit transfer and direct debits are. SEPA development main achievement has been the platform (clearing and settlement mechanism) based on same standard that also corporate end-users are using for payment and direct debit initiations and soon also completing the chain with similar standard reporting. We are close to full STP in transaction detail delivery from one Payment Service User to another in SEPA. We need now more community initiatives where infrastructure development will be more harmonised in the future.
    And I hope that the common EUR-currency will survive (but not willing here to discuss too much on the political aspects).

  • Lorenzo

    The article underlines the need for Sepa migration end-dates. The imposition of (an) end-date(s) will be the beginning of the second and most important phase of the Sepa project. Without end-dates, the legacy domestic payment schemes will remain dominant.
    With respect to the Euro itself, that will not implode. The current crisis is less chaotic and more orchestrated than people might think. Maybe there will be one or two Euro exits (Greece, Portugal,…), but the Euro itself will not cease to exist.