Editor's opinion: To EPC or not to EPC, that is the question.
The European Commission's public hearing today regarding drafting legislation setting migration end dates for SEPA instruments, may have made references to Shakespeare, but at the crux of it, "To EPC or not to EPC" is the issue that is flummoxing the Commission, and having given the banks eight years to get SEPA right, it now appears the end users will have their chance.
At the public hearing held today by the European Commission into drafting new EU-wide rules for a binding end-date for migration to SEPA Credit Transfers (SCT) and Direct Debits(SDD), it was apparent just how much the regulators, banks and other stakeholders underestimated the work involved in getting consumers and corporations to abandon existing national payment schemes and migrate to the new SEPA ones.
From the onset of the Single Euro Payments Area (SEPA) project, the presumption was that self-regulation would be enough for banks and EU stakeholders to migrate to new pan-European schemes. That thinking, as we now know, given the low volume of SCTs and direct debits so far, was fundamentally flawed. The banks, under the auspices of the European Payments Council (EPC) developed the new SEPA payment schemes, but they alone, are not going to be able to sell consumers something they never originally asked for, or something that they did not really help draft.
Try as Gerard Hartsink, chairman of the EPC might to say that banks at the national level sought consumer feedback and that the EPC invited consumer groups to its meetings, if there was a real and meaningful consultation with end users from the very beginning, then the SEPA project might not be in the mess it is now with consumer representatives such as Monique Goyens of the Belgian End User Committee branding SEPA a "bank, instead of a market-led" project. In the end, too much emphasis was placed on the interbank implementation and not enough on the people that will use these new instruments.
Corporate treasurers have been equally vocal about their lack of engagement in the drafting of the EPC's SEPA schemes. ""The original sin of the EPC and EC is that the EPC are not an independent body," said Gianfranco Tabasso of the European Associations of Corporate Treasurers (EACT).
It is only now, eight years after the EPC started drafting the SEPA payment schemes that a SEPA Council comprising a range of public administration, consumer and corporate stakeholders has been formed. Tabasso said the Council provided the correct governance framework for SEPA, but he questioned the new tack the EC had taken around setting technical standards for SEPA. He said it was not clear and that the EPC had already done the standards work.
Consumer groups, however, see it quite differently. Goyens said consumers were concerned about ensuring adequate safeguards for users of SEPA Direct Debits, and she clearly came out in favour of the European Commission's "essential requirements" approach, which questions whether migration to the EPC SEPA schemes should be mandated by the Commission or whether the EC should simply mandate essential or technical requirements for SEPA.
EC representative Michael Thom put it bluntly when he said the issue was "To EPC or not too EPC," which drew a resounding laugh from the audience. But this is no laughing matter, as Thom rightly pointed out, and this is the fundamental divide that will determine how the SEPA project moves forward and whether the investments already made by banks and others in the EPC schemes have been a complete waste of time. "It would be convenient to just cut and paste the EPC schemes," said Thom, "but that does not address concerns on the user side about giving a private body [the EPC] a monopoly for retail payments. Will that stop future innovation? And what about governance?
The EC already seems to have made its mind up about not just sticking to the original EPC schemes it asked the banks to draft in the first place. Hartsink, the EPC's chairman expressed his consternation that the Commission was contemplating such a "radical vision at such a late stage". At pains to point out the EPC was not a monopoly, Hartsink compared its SEPA schemes to "standardising railroad tracks" and said SCTs and SDDs were not corporate brands. By leaving the door open for existing national payment schemes to become SEPA compliant would cause fragmentation and punish early movers, said Hartsink, and interoperability between competing schemes would be onerous and confusing.
But in this current economic climate, and having already given the banking community eight years to get SEPA right, the EC seems more willing to listen to consumers than it is the banks.
Date Posted:17th November 2010