With the Payment Services Directive (PSD) due to come into force on 1 November 2009 and the single euro payments area (SEPA) Direct Debit (SDD) scheme to follow on 2 November, Europe should be at the start of a transparent, harmonised and integrated market for payments and payment processing. Instead, Europe’s policymakers, banks, corporates and infrastructure providers have become increasingly frustrated with 58% of them saying that the PSD is being transposed inconsistently and 63% stating that this is because of different interpretations at the country level. Only 13% believe it is being implemented correctly, according to a European research report that has been published by The Financial Services Club, sponsored by BT, Earthport and Logica.
The research surveyed over 350 global payments professionals about SEPA and the PSD’s progress, as well as conducting over 25 interviews with the key organisations involved, including the European Commission (EC), European Central Bank (ECB), European Payments Council (EPC), Euro Banking Association (EBA) and European Association of Corporate Treasurers (EACT), as well as leading banks, infrastructures, payment institutions, corporates, vendors, consultancies and more.
The conclusion of the research is that European member states are implementing the PSD in a completely inconsistent manner that threatens to derail the progress of the SEPA. Certain member states were particularly cited as at issue more than others, with Germany and Italy seen to be actively blocking progress, while France and Spain are viewed as delaying the process.
On a more positive note, participants do expect new payments institutions to gain market share, particularly money transfer service providers, and that these changes have motivated many banks to look for more innovative services for their clients, particularly around corporate information services, e-payments, m-payments and e-invoicing.
Overall, the findings suggest that Europe’s payments programme is moving in the right direction, but is still too slow and fragmented to achieve the objectives of true harmonisation without more co-ordination and management between the Commission, ECB and EPC, with the member states banks, policymakers, corporations and citizens.
For example, Werner Steinmuller, head of global transaction services for Deutsche Bank, stated that: “Efficient markets need efficient payments systems. If it’s not happening, then it’s a crossroad for SEPA and the PSD, that may stop these changes succeeding.”
Roel Wolfert, head of payments at Logica, said: “The variation of the PSD’s implementation across Europe may have negative impact on the progress of SEPA. But at the same time, banks need to invest in new and innovative solutions to combat competition from new payments institutions and to meet the changing needs of their clients. We are committed to delivering solutions that ease the migration to SEPA for banks and their corporate clients, and also to helping banks find new revenue streams after implementing the PSD.”
Chris Skinner, chairman of the Financial Services Club and leader of the research project, added: “European payment initiatives have come a long way over the past seven years, in the bid to achieve a harmonised financial market. However, the time, cost and gradual process has slowed to the point of boredom and frustration for many involved and there is now a big concern that a further period of static vacuum, as the PSD irons out its inconsistencies, could undermine the achievements of the SEPA programme.”
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