Forthcoming Regulation Steps Up SEPA Pressure

While regulations such as Basel III, the Payment Services Directive (PSD), the E-money Directive, Anti-money Laundering (AML) and Know Your Customer (KYC) are arguably the current driving forces in the payments industry, it is the single euro payments area (SEPA) end-date regulation where many minds are focused, as the EU seems determined to issue this regulation before year-end 2011, according to a whitepaper from SWIFT.

The SEPA end-date regulation will deliver a clear deadline for migrating domestic payments instruments on to SEPA standards. This deadline is important because current migration rates are far from matching set expectations, with only 20.5% migration for SEPA Credit Transfers (SCTs) and a very limited 0.1% for SEPA Direct Debits (SDDs) having taken place so far. With the likelihood of the end-date being set at end-January 2014, a ‘wait-and-see’ approach by both banks and corporates will not work, and according to SWIFT, smart decision-making will be needed with clear benefits to be gained from seeking out a partner with whom to consult on possible strategies and solutions.

The paper entitled ‘Will the SEPA End Date Really Change the Game?’ states that while the SEPA landscape is still far from clear despite the end date regulation proposal, there are already concrete steps that financial institutions and infrastructures can take to reduce the pain and get ahead of the game:

  • Act wisely – have a clear view of your ambitions and those of your competitors in the European retail payments space and size investments accordingly whilst remembering that cheaper is not necessarily better.
  • If you do have ambitions in the European retail payments industry, go for the ‘no regret’ messaging solution which is future-proof and of which the price remains stable and predictable over time.
  • Analyse, map and prioritise all payment flows that will need to be migrated – this is a must.
  • Based on the facts that are known today, plan ahead and foresee alternative scenarios, including the possible need for ‘backward or switch compatibility’ should external factors impact the project.

Finally SWIFT stress the importance of seeking help if needed.


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