SEPA end date would send a strong political message and increase confidence in the euro
SIA Expo in Milan calls for SEPA end date to be finalised without delay, however, the European Commission says substantial challenges remain with respect to a single or two end dates, a pan-European cards framework and new payment innovations.The European Commission should deliver, without delay, the end-date by which credit transfers and direct debits will be harmonised at the European level, says Carlo Tresoldi, chairman of Italian payments software provider, SIA.
Speaking at the SIA Expo in Milan (an annual event which was previously called Do You SEPA), Tresoldi said by setting an end date for full migration to the SEPA (Single Euro Payments Area) payment instruments, would send a strong political message and would give certainty to the market.
But can SEPA really pull the eurozone out of the crisis it has found itself in, particularly when the issue is more about debt in certain countries rather than payments harmonisation? Tresoldi maintains that an integrated Europe would increase the confidence of financial market operators, and achieve efficiencies at the corporate and public administration level.
The SEPA project itself has suffered from a lack of uptake by corporates and public administrations. However, Tresoldi maintained that 50% of credit transfers across Europe have a SEPA origin, and that their use is growing. The only missing element he says is the end date for full migration to the SEPA instruments.
According to a survey by CeTIF (Università Cattolica) and Capgemini-SIA, in 2010, Italian SEPA transfers increased by 977% from 1.1 million transactions in 2009 to approximately 11.8 million transactions in 2010. SIA says despite a slow start, there has been "significant migration" to SEPA Credit Transfers (SCTs) which it estimates accounts for 6% of total transactions.
The European Council and Parliament disagree on SEPA end date
However, setting an end date for full migration to the SEPA instruments and the switching off of domestic payment systems, is not that straightforward. Jean-Yves Muylle, head of DG Internal Market & Services - Retail issues, consumer policy and payment systems, European Commission, said the European Council and Parliament disagreed as to whether there should be one or two end dates.
He said that the European Parliament wanted a single end date for both SEPA credit transfers and direct debits (SDD) but that the Commission wanted 2013 as the end date for full migration to SCTs and Feb 2014 as the end date for migration to SDDs. "A single end date would be easier to communicate to users," said Muylle, "but two dates have the advantage of keeping the momentum going in those member states where migration has taken place."
Muylle said there was a need for additional features to protect consumers and that existing direct debit mandates perhaps should be maintained or resigned by users after the migration to SDDs, as it was a particularly "sensitive issue" in countries such as Germany.
European cards framework
The EC is also eager to resolve issues regarding a pan-European cards framework. Muylle said some of the outstanding issues regarding a cards framework revolved around standardisation and certification procedures, which were not harmonised across Europe. There are also concerns, he said, about losing efficient debit card schemes at the domestic level. "They provide an attractive and competitive product for users and merchants," he said, adding, "We need to move beyond the feasibility phase to a fully-fledged pan-European cards scheme."
New payment instruments
Despite these challenges, Muylle believes SEPA is a "sprinboard" for innovation and new payment instruments in the areas of online and mobile payments and e-invoicing. At the SIA Expo, EBA Clearing's MyBank project, a new pan-European e-payment service leveraging existing online banking applications was discussed.
When it comes to e-invoicing, Muylle said challenges remain in terms of limited interoperability from sender to recipient on a cross-border basis. The Commission is also concerned about payments fraud as being a barrier to development of e-commerce in Europe.
"Technology has changed the offering of payment services," said Daniela Russo, Director General, Payments and Market Infrastructures, European Central Bank. "We need to develop a vision of what we want for the future." She said more efficient solutions were needed for global remittances as most of the money remitted today was cash, which needed to be duplicated by more "workable solutions" that were less vulnerable to money laundering. She says the Commission has established a Secure Pay forum which is looking at security issues surrounding innovation in payments.
Date Posted:18th October 2011