SEPA: Single European Payments Area

SEPA: Single European Payments Area

The goals of SEPA are clear to all. It aims to remove the differences between the domestic payment and direct debit instruments that currently exist within the SEPA region. As a result, all EUR denominated payments and direct debits within the SEPA zone will be treated equally in terms of costs and execution time.

Even though SEPA was announced already a number of years ago, the deadline was not known until February 28th 2012, when it was set for February 1st of 2014. All of a sudden corporates, public sector entities and banks had less than two years to become SEPA compliant.

Today, the SEPA adoption rates are dangerously low. The latest ECB indicators show that 38.1% of all credit transfers are now executed as SEPA credit transfers. When looking at the percentages per country major differences become clear. Countries such as Belgium, Greece, Luxemburg and Finland are all well beyond the 60% mark, while other countries such as Germany, Ireland and the Netherlands still have to cross the 10% mark. The SEPA direct debit indicators show an even more alarming picture. To this date, only 2.27% of all direct debits within the SEPA countries are executed as SEPA direct debits.

So why are these numbers so low? This can have multiple reasons. In some cases corporates or public sector entities are in the middle of the migration but are not yet live. In other cases, the migration might already be finished but the go-live was postponed due to the impact of the SEPA instruments (especially the direct debits) for the payment/collection process. However, there are also cases where the SEPA regulation was simply underestimated. More often than not, IT systems need to be upgraded, customer or vendor data needs to be enriched and internal processes need to be changed in order to become SEPA compliant.

While the SEPA deadline is getting near, corporates and public sector entities are scrambling to adopt the SEPA regulation to ensure the payment and collection processes will not be interrupted after February 1st 2014. However, this also puts a strain on the external resources needed to complete a SEPA migration. As banks, consultants and IT vendors already have many resources involved in SEPA projects, finding the appropriate resources to execute a SEPA project becomes exceedingly difficult. Zanders has executed a number of SEPA projects at both corporate and public sector clients.