Monday, 2 July 2012

Payment integration under pressure as Europe battles with Eurocrisis

LONDON - The financial crisis and the uncertainty about the future of the Euro put progress of ambitious European payment integration plans, such as the Single European Payments Area (SEPA), increasingly under pressure. 

"The Spanish bail out and discussions about deeper Eurozone integration may slow down SEPA," said Michael McKee, Partner at DLA Piper in London, while Mark Taylor, Partner with Hogan Lovells, thinks that “the focus and priority of regulators and governments is inevitably drawn elsewhere. There is a risk that this may lead to a slower rate of progress.”

According to Nathalie Moreno, of Speechly Bircham, “the impacts of increased lending and bailouts to keep the Euro afloat will surely affect the ability to make a certain decision on the future of SEPA”.
To make SEPA a success “we surely would need to ensure we have a Euro”, said Gareth Lodge, a Consultant at Celent. McKee agrees with Lodge: “There is no question that the SEPA project is fundamentally tied up in the future of the euro itself."

The crucial role that banks play in the development of SEPA raises concerns since “those banks who have heard of SEPA, and an alarming number still have not, are placing big bets as a way of capitalising on their strengths and their competitors weaknesses. Whilst others are simply trying to survive the month”, said Lodge. 

Euro in jeopardy?
Regarding the EU Green Paper, published in February and calling for an integrated market for card, internet and mobile payments, Moreno believes that “as the markets fragment more it is difficult for many to reconcile a unified approach to enable efficient cross border payments”.
“SEPA is more and more political”, said McKee. That is “why the Green Paper raises issues about mandatory completion times and about SEPA governance; a coded threat that the Commission, European Central Bank and Member States want to wrest more control of the [SEPA] project from the banking industry." Moreno agrees with McKee: “There is a worry that regulatory intervention could hamper the banking sector’s competitiveness in the global marketplace and also lead to the lack of development and innovation in this space.”   

There are also concerns whether the SEPA migration deadline of February 2014 is still realistic: “There will be more than a handful of banks and corporates who will miss the deadline. The questions then are how many, by how much and how long are they given,” said Lodge.

Michiel Willems © 2012 CP Publishing Ltd. Picture: /