The National Bank of Belgium (NBB) has published its fourth progress report on the country’s migration towards the single euro payments area (SEPA), under the auspices of the steering committee on the future of means of payment. This committee, chaired by NBB director Jean Hilgers, brings together all economic stakeholders concerned, namely leading representatives from the public sector, the banking sector, businesses and consumer rights associations. It organises the social dialogue on the subject of SEPA and provides encouragement for its introduction in Belgium. Following on from the three previous reports, this latest report describes the progress made to date.
In practice, what the switch over to the SEPA Credit Transfer (SCT) involves for the citizen is replacing the traditional Belgian bank account number by its International Bank Account Number (IBAN) format. As for the changeover to SEPA Direct Debits (SDDs), the citizen does not have to do anything: the issuer of the invoice makes all the necessary changes, such as the adjustment to the IBAN format.
Belgium is by far the front-runner in the migration towards SEPA. In July 2012, the share of SCTs had reached more than 58% of the total number of credit transfers made, a much higher proportion than in most other countries. The public authorities and big billers have to a large extent completed their migration; it is now up to small and medium-sized enterprises (SMEs) to make their changeover to SEPA.
The migration towards the SDD was a lot more difficult to start with. In response to a certain demand in the market from businesses wanting to settle their payments between each other, these companies started to use them, but only in the business-to-business (B2B) version, so the volumes remained at a very low level. However, at the end of 2011 one of Belgium’s biggest billers started using the European direct debit, boosting the share of European direct debits to a level somewhere between 12% and 15%, compared with less than 1% in the rest of Europe.
In Belgium, there are 13,728 creditors that use the direct debit as a payment instrument. Together, they manage 31 million mandates (direct debits). The 10 biggest users account for 34% of the total number of direct debits, and the 20 biggest creditors represent 44%. If this cross-selection is extended to the largest 200 creditors, this share even comes to almost 90%. The speed and efficiency of the migration towards the SDD is therefore largely in the hands of a relatively small number of companies/creditors.
Until now, active communication on SEPA has remained fairly limited, pending publication of the European Parliament and Council Regulation designed to speed up migration towards the European payment instruments. This regulation has effectively clarified the picture: all transfers and direct debits must be executed in the European format by 1 February 2014. A good many SMEs still have to embark on their migration. Yet, a speedy and smooth transition is only possible if they are given all the information they need. Each stakeholder with a wide base of payment services users must make sufficient effort to pass on information about SEPA to them in good time.
Slowly but surely, the Belgian payment systems landscape is falling into line with the reality of SEPA. The Bancontact/Mister Cash (BCMC) national debit card system is being adapted to the SEPA standards, and the Belgian payment card market is now completely opening to card issuers and payment card system operators. Moreover, interbank processing and clearing of retail payments, currently run by the NBB, have been outsourced to a major foreign service supplier (the French payments system, STET). Belgium is thus one of the first countries to have achieved the planned consolidation of clearing and settlement arrangements.
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