Article

European council pushes prep for more SEPA directives

The European Payments Council says new SEPA schemes are making direct debits possible in 32 European countries, collectively known as the Single Euro Payments Area.

December 2, 2009 by

EPC, which represents payments for the European banking industry, has called on businesses and public administrations to assess their current payment architecture and consider taking full advantage of the new payment and collection method to achieve significant efficiency gains, resulting in cost reductions.

By 1 November 2010, there will be full reach for the SEPA Core Direct Debit in the euro area, as mandated by EU regulation. This presents European businesses with a prime opportunity to benefit from harmonized standards and streamlined processes when making and receiving payments across 32 countries — consisting of the 27 EU member states, Iceland, Liechtenstein, Norway, Switzerland and Monaco.

 

The SDD schemes offer businesses significant efficiency gains through the automation of payment processing and the ability of businesses to optimize the cash management process. The latter can be achieved by businesses consolidating accounts currently maintained in different European countries to handle local payments into one single account, and subsequently centralizing liquidity.   As a key milestone in the creation of an integrated euro payments market across SEPA, the SDD schemes are expected to also facilitate the expansion of businesses across national borders through the introduction of a standardized payment infrastructure. Innovative end-to-end SEPA solutions based on global ISO standards are expected to lead to decreased IT costs, streamlined back-office functions and simplified reconciliation.

 

EPC has published recommendations about how to map SEPA transactions to payments reporting between banks and customers. As a result, payment-related information can now be moved along the entire process chain (customer-to-bank, bank-to-bank, bank-to-customer) in a manner compliant with the SEPA schemes and global ISO standards — enabling businesses to further automate payments processing.

As a first step, the EPC would recommend the formation of a dedicated SEPA team. A subsequent impact assessment would reveal the true value that SEPA might have on the business. To engage further in supporting SEPA and to stay up-to-date on developments, companies are welcome to liaise with SEPA Stakeholder Forums on a national level.

The SEPA schemes defined by EPC are instruction manuals for payment processing. In this context, it is important to note that the development of payment services and products based on the SEPA schemes, including all product-related features such as pricing, is outside the scope of the EPC. The real deal for businesses is the competitive and custom-tailored SEPA service offered by individual banks. Companies are therefore encouraged to shop for the SEPA bank products that best fit their needs. It is expected that the rollout of SEPA will increase competition among payments service providers to the benefit of bank customers.

 

While SEPA payment tools, such as the SEPA Direct Debit schemes, offer businesses many tangible benefits, SEPA as a whole offers companies the opportunity to reassess the way they currently operate.