The eighth World
Payments Report (WPR) was released last week, and so far we have summarised in Part One, the
Non-Cash Trends, and in Part Two, the Regulatory Trends. Today, we have extracted a summary of the
section that updates on SEPA.
Mandated deadline of February 2014 is set for SEPA Credit Transfers and Direct Debits
A deadline for migrating to SEPA Credit
Transfers (SCT) and SEPA Direct Debits (SDD) has been set at February 1, 2014.
The certainty of a firm deadline should trigger a major increase in adoption
rates for these instruments, though the potential for inconsistent
interpretation of the standards could still be an issue.
As of April 2012, 4,559 banks representing
more than 95% of payments volumes in Europe were reachable for SCT
transactions, but the SCT indicator (SCT transactions as a percentage of total
Eurozone credit transfers) was just 27.2% at the end of March 2012. Still,
usage is expected to pick up in the remainder of 2012, ahead of the 2014 deadline.
The SDD adoption rate has been very low
(0.4%), but is also likely to increase significantly given the legal certainty
brought about by the mandated deadline. As of February 2012, 3,928 PSPs
representing more than 80% of SEPA payments volume were reachable for SDD core
(for consumers) and 3,447 PSPs for SDD B2B. Corporations have been slow to
embrace SDD in the absence of a firm deadline, and because they were unsure
whether their own customers would be reachable or whether banks could support
them in the migration process. Banks, for their part, have been tentative about
committing to SDD capabilities without proof there will be corporate uptake.
The SEPA Cards Framework (SCF) remains in
the early implementation phase, with high-level principles developed by the EPC
to govern issuers, acquirers, card schemes, and operators. Adoption of the
associated EMV standards (chip technology to combat fraud) has risen steadily
since they were introduced in 2008, and by December 2011, 79.7% of all
transactions at point-of-sale (POS) terminals were EMV-compliant. Of total
transactions, compliance was 90.43% for cards, 92.96% for POS terminals, and
96.28% for ATMs (automated teller machines) in the Eurozone.
While the SCT/SDD migration deadline has
added some certainty to SEPA, stakeholders are still grappling with various
elements of implementation, including the following:
interpretations. A common understanding of the detailed requirements of the
SEPA regulation is critical, but it is not a given. The work being led by the
European Banking Federation to develop guidance on these key points of
potential ambiguity has been important, helping to enable a set of common
implementation planning assumptions.
uncertainty. Members do not have to finalize the exemptions they are
requesting under the various Member State transition period options until
February 2013, making it problematic for PSPs and corporates to plan with
complete certainty until then. Multinationals, for instance, cannot make firm plans
for their entire organization until they know exactly what regime will prevail
in each country.
readiness. While there are guiding principles on technical standards, there
are currently many variants of the technical messaging, raising the possibility
that interoperability may not be assured.
The main focus of SEPA implementation for
now will be to raise awareness to help drive migration, and have a detailed
plan ready by the end of 2012. Beyond that, the payments industry can start to
look toward the Digital Agenda in Europe, and see how SCT and SDD can be
leveraged to drive innovation in the financial supply chain.
You can order a copy of the full report from EFMA, and the summary of each section is below: