Just say no to SEPA

Just when you thought there was nothing left to say about the Single Euro Payments Area (SEPA), there appears to be plenty. All this talk of SEPA and pan-European payment intrustments over the last few years anyone would have thought there would be an instant market for the instruments.

But as the January 2008 deadline for banks to start offering SEPA Credit Transfers approaches, it appears neither corporates or public sector organisations have much of an appetite for the new SEPA payment instruments. Corporates maintain that the new SEPA instruments are not a significant improvement on existing national instruments, so why should they adopt them?

This is borne out by the World Payments Report 2007 which after analysing SEPA migration plans and preparations in 13 of the eurozone contries, concluded that it is unlikely a critical mass of SEPA payment instruments will be achieved by 2011. The European Financial Management & Marketing Association (EFMA), one of the co-publishers of the report alongside Capgemini and ABN AMRO, has called for regulators to provide incentives in order to mobilise public sector companies and corporates.

But with the new SEPA payment instruments symbolising bank-to-bank standards, corporates have not been engaged enough by the banking community to fully participate in SEPA, and for them SEPA is not SEPA without add ons such as pan-European e-invoicing standards and banks dispensing with their support of proprietary standards and applications so corporates can more easily communicate with multiple banking providers.

So much for full transition to SEPA by 2010 it seems (most banks probably realised that the transition period would extend beyond 2010, however there appears to be no end in sight as to when banks will stop supporting the existing national payments infrastructure and move wholly to the new SEPA payment instruments).

The World Payments report indicates that some countries want to retain national payment systems as long as demand exists, but doesn't this defeat the original intent and purpose of SEPA, and how long can banks bear the brunt of the cost for running two systems in parallel?