Tuesday, 28 February 2012

Banking industry welcomes payments deadline

The European financial services industry has welcomed the migration deadline for the Single European Payments Area (SEPA). The European Parliament (EP) has adopted the Regulation Establishing Technical Requirements for Credit Transfers and Direct Debits in Euros (CTDD), which includes the legally binding deadline of 1 February 2014, as proposed by the European Council in 2011. For non-euro countries, such as the UK, this is 31 October 2016.  

The deadline “effectively means that by these respective dates existing national euro credit transfer and direct debit schemes will have to be replaced by SEPA schemes,” explains Michael McKee, a Partner at DLA Piper.
“The passing of the regulation delivers a necessary certainty to the industry. After a long marathon we hear the gun for the sprint to the finish,” said Sean Fitzgerald, Chief Executive Officer at Sentenial. “For the most part the debate can finish and the implementation phase commence in earnest.” 

EU Commissioner for the Internal Market Michel Barnier declared that “the move to a single pan-European payment system in Europe” had become “a reality”, while Gertrude Trumpel-Gugerell, of the European Central Bank, “very much welcomed” the EP’s vote.

Among other things, CTDD sets out details for a harmonised use of the account and bank identifiers IBAN and BIC, makes it mandatory for payment service providers to offer specific mandate checking features and contains detailed provisions with regard to direct debit transactions. 

According to SEPA rapporteur and EP Member Sari Essayah,  "[CTDD] really benefits citizens. It will enable them to make payments from one bank account to another all over Europe, just like a domestic payment.” She stressed that businesses will benefit too, by “not needing more than one bank account in Europe for each payment purpose”.

But some experts believe SEPA still has a long way to go. “For the last 10 years, the payments industry has been working towards achieving SEPA”, said Zilvinas Bareisis, a Senior Analysts at Celent. “The SEPA vision might be simple and laudable, the solution is far from simple. With continued questions about the future of the Euro, and the domino effect that it might entail, questions have naturally been raised about whether SEPA is still a valid objective,” Bareisis said.

Michiel Willems © 2012 CP Publishing Ltd. London, UK. Pictures: recent-ecl.blogspot.com (top) / Wikipedia.org (above)