EuroFinance has kindly invited me to moderate a session entitled “Open Spaces: Beyond SEPA” at their conference next week.
Yesterday, in preparation, I was on a conference call with six treasury experts from businesses across Europe which highlighted issues and opportunities and so promises to make our discussion in Budapest very lively.
So what is the roadmap for SEPA and what can we do now?
The experiences shared could be summarised as “SEPA 2.0..? In some cases we’ve not got to SEPA 1.0, but where it works it works well”.
I believe that, as in the software industry, no one trusts version 1.0 and many wait for the release of 1.1, which in this case is the February 2016 deadline. So what are the issues currently affecting European businesses?
1) Niche/legacy payment mechanisms – the extended life for some payment mechanisms has meant that some consumers believe they have a choice as to whether they will accept a SEPA transaction or not. There are also reports of some banks charging more for SEPA transactions than niche products. I foresee that this could cause migration problems and delays in those countries.
2) Return/rejection information – both banks and businesses which used the euro payments mechanisms replaced by SEPA had built up considerable experience interpreting payment failures and what was necessary to remedy them. With the advent of SEPA the quality of information in these “R-messages” is lower, resulting in more confusion as to why a payment has failed, and hence a lack of understanding of what to do to prevent future failure.
3) SEPA direct debit – lack of consumer understanding of the new direct debit scheme has hampered uptake and issues of return information have been enough for some organisations to drop direct debit completely and move back to invoicing and, in some cases, accepting cheques.
4) Lack of consistency – different legacy options by country, variation in implementations of ISO20022 XML by banks and lack of consumer education hampers harmonisation.
I think that these teething problems became apparent as the volumes ramped up; if the SEPA migration had been undertaken more gradually they might have been addressed along the way. I do believe these transitional issues will disappear in time but currently impede corporates from achieving some of the promised benefits.
So, if you’re at the EuroFinance conference, do come along to our session on SEPA to add your knowledge and opinions to the discussion and come visit Experian on stand S24.