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SEPA - Still engulfing payment agendas?

Another New Year, but still the same old SEPA discussion – when? If? Whilst the industry is inching forward, with the draft of the regulation proposing the migration to SEPA schemes published in Dec 2010, there is still along way to go and the hard work doesn’t stop there for anyone. Based on the conversations that I’m having with clients, there are some points worth remembering.

Firstly, many have forgotten that this is a draft that has to go through the due political process. That in its self could take many months. One only has to remember the hoops that the Payment Services Directive went through, and how many amendments and concessions that took place. It took nearly 2 years to move from this stage to the final legislative act, though thank fully the expectation is that this will be quicker.

Secondly, the banks and processors are scouring the draft regulation to interpret and understand the text. A number of discussions are raging on even how to interpret the end dates themselves, whilst several observers have noted that the proposals fail to bring sufficient clarity to the standards and technical requirements that have to be used.

The net result is that many are saying the proposal is yet one more compromise, diluting the original vision of SEPA even further.

But the magnitude of the task that was undertaken should not be forgotten. Nor should the progress made so far. After all, Europe is a series of compromises and the co-ordination here extends perhaps even further than the introduction of the Euro.

The next step is to start looking forward, not stopping the industry from moving forward.

So what are the next steps? SMI are helping both supply and demand side of SEPA, but the success of SEPA is closely linked with both.

• Communication to the end users must be high amongst the tasks that banks undertake – the earlier, the better. However good the plans the banks draw up, there will an end user out there somewhere who spot an exception to the plan!

• Learn from previous migrations from how they were managed to the end results. For example, the UK migrated from transmission protocol, BACSTEL to a new one, BACSTEL-IP, with many associated changes. Knowing how many organisations moved at what stage in the window for example will be invaluable.

And banks need to decide whether they are ready. Many of the SEPA CT solutions were rushed on the assumption that take-up might never come. Banks ought to take this opportunity to think strategically about the long term, not the pressing deadline which is often the case. SEPA is payments re-engineered – but the benefits will be reduced unless payments processing is re-engineered too.

Gareth Lodge, Guest Blogger
Gareth runs the Payments Practice for Secura Monde International, the global cash and payments advice and consulting firm, where much of his time is spent helping clients with SEPA related issues.