CCR World Magazine

Jonathan Williams, Director of Strategic Development for Experian Payments, comments on the second anniversary of SEPA Credit Transfers.

The two year anniversary of SEPA Credit Transfers (SCTs) is today. And in the last year, we have reached several payments milestones, including the launch of SEPA Direct Debit (SDD), and the transposition of the Payment Services Directive (PSD) into national law in most of the EU. so the time is right to reflect on SEPA migration to date and the challenges the banking industry still has to overcome.

While both SEPA Credit Transfers and SEPA Direct Debits are now available, implementation and adoption has not necessarily followed. In fact, most banks, for example, still do not comply with SEPA Direct Debit regulations and the latest figures from the European Commission show that only around 2,600 of Europe's 8,000 banks were ready for the launch of SEPA's Direct Debit scheme on 2nd November 2009. However, there are six key steps that corporates can take in order to harness the benefits of SEPA whilst maintaining current levels of efficiency and avoiding costly bank charges.

1)     First of all, corporates now need to ensure that they have a good understanding of SEPA to fully assess existing operations against the new regulatory requirements

2)    Secondly, corporates in particular need to investigate in which countries they plan to operate and consequently consider which countries they will want to make payments into and within to create the scope of their planning since the use of IBAN (International Bank Account Number) and BIC (Bank Identifier Code) is mandatory for all SEPA Credit Transfers and SEPA Direct Debits  both domestic and cross-border

3)      Then, organisations should contact their bank to find out about the changes that the PSD makes to the agreement between them and their payment services provider

4)     Furthermore, corporates need to be clear about what the charges are likely to be for invalid payment details or instructions in the wrong format

5)     In addition, to minimise the costs, organisations will need to complete migration to SEPA in a timely and efficient manner by assessing how much data needs to be converted to the IBAN and BIC format and the resources required to avoid errors in converting the data

6)     Finally, corporates need to investigate whether their current payments systems can capture and handle the IBAN and BIC formats required for Eurozone payments to help quantify the amount of system change required to be SEPA-compliant.

Despite the associated challenges, we must not forget that the move to SEPA does create opportunities that corporates as well as the banks have been slow to take advantage of. It might be that by following these steps, organisations are able to smoothly migrate to the SEPA payment systems and avoid costly errors as a result of failed cross-border payments.

(Source - Experian Payments Comment)