We welcome the European Commission introduction of an additional six-month transition period to help migrate euro payments to the Single Euro Payments Area (SEPA). While it is regrettable that all payment service users in the Eurozone will not be ready by the original deadline of 1st February 2014, the lack of migration to the new standards has been proven for a long while and specifically the percentage of direct debits has lagged far behind what was expected.
The figures being used by the commission and the European Central Bank are far more up-to-date than those published for November transactions, which revealed 64.1% of credit transfers and only 26.0% of direct debits were processed using the new schemes. It is therefore unsurprising that the authorities have taken this decision, although we have before suggested that a moratorium on penalties for non-compliance was likely.
This still leaves some key questions unanswered:
• Who will legislate to waive the provisions of the SEPA Regulation and when can this be done?
• Can payment service providers process old euro transactions using new SEPA schemes and, if so, will they be forced to?
• Who will bear the cost of running the old systems for six months longer, if that is necessary?
• What will happen if a payment fails because it does not comply with the SEPA technical requirements? Who bears the cost and effort in repairing and re-processing it?
Organisations which remain behind schedule have been given a six-month reprieve to get their house in order. For businesses in this situation, this is their last chance to get compliant by working with a payment service provider to upgrade the necessary software and processes, as well as verifying data where necessary.
As non-compliant businesses have effectively been issued a reprieve with this extension to 1st August 2014, it may be that the European Commission will interpret rules more strictly and penalties may be levied. For businesses still to make the transition, the risk of being made an example of and fined heavily is too high to chance. To find out more about SEPA, please click here.