End Users Say SEPA May Fail Without Additional Optional Services

The single euro payments area (SEPA), which aims to establish one set of Europe-wide rules for credit transfers, debt transfers and payment card services, risks not being sufficiently taken up by the market and failing to meet its objective to improve the efficiency of cross-border euro payments, according to eight leading European business and consumer organisations.

The Payment Systems End User Committee (EUC) published a position paper on the SEPA Direct Debit (SDD) scheme, a payment instrument that can be used for both national and cross-border euro direct debits throughout the SEPA area and that is to be launched in November this year. According to the EUC, the core SDD scheme proposed by the European Payments Council (CMF) does not cater to the needs of a large number of users. The EUC therefore asked for additional optional services (AOS) to be provided under the so-called ‘CMF+’ scheme. End users also called for a better involvement in the governance of SEPA and for more engagement from the European Commission and the European Central Bank in the process.

Finally, the EUC stressed that end dates for the migration to SEPA should be agreed beforehand with all stakeholders. “One year and a half after the launch of the first SEPA product [SEPA Credit Transfer], less than 2% of all credit transfers are made using the new system. Direct debit, which is the second SEPA product, risks a similar fate unless corrective action is taken before its launch in November this year. Our paper spells out a series of concrete proposals on how to improve the current state of affairs. This is perhaps the most coherent and constructive initiative taken so far by SEPA users acting together through their professional and trade bodies,” said Olivier Brissaud, the EUC representative in the SEPA process.

EUC paper’s proposals:

  1. Corrections must be made on direct debit, i.e. an instruction that a bank receives from an account holder to collect an amount directly from another bank account. The current scheme proposed by the CMF offers fewer services than the existing national schemes. According to the EUC, end users will have little incentive to change over to the new system under these conditions. A ‘CMF+’ scheme offering a basic service coupled with tailored optional services at an extra cost would be a better option and encourage the transition.
  2. The governance of SEPA must be improved and its structure must be changed. End users must be fully involved on an equal footing with payment system providers and regulators. SEPA cannot achieve its goals unless those who will use it are fully involved in its construction.
  3. The EUC paper comments on the issue of end dates for the migration from national systems to SEPA. Setting end dates is not absolutely necessary or desirable at the present time, say end users. No decision on end dates should be taken until the remaining areas of disagreement have been resolved to the satisfaction of end users. The setting of arbitrary end dates by legislation would result in a failure of SEPA, concluded the EUC.


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