How to Plan a Smooth SEPA Project and Evaluate the Benefits of SCT and SDD

With 29 months to go, take-up of SEPA direct debit (SDD) has barely touched 1% of transactions in most countries. While the SEPA credit transfer (SCT) has a high rate of adoption in some countries (overall it is 20% in the eurozone), it is still seeing little interest in some of the big euro member states. Banks are urging their clients to begin SEPA migration projects – but so far the majority of corporates in Europe are waiting for further concrete developments. In the current financial climate, SEPA migration may not be at the top of the agenda for many large corporates and small and medium-sized enterprises (SMEs) across Europe.

However, there are significant financial and strategic benefits to using the new SEPA schemes and companies need to evaluate these and understand how SEPA can help them reduce costs. With a definitive end date now more likely and with experienced onboarding teams ready to assist in some large European banks, the SEPA migration project is something that corporates now need to consider seriously. This article looks at some of these benefits and at the best ways of planning a successful migration project.

SEPA: When and How?

There has been much debate and confusion over when and how corporates in the eurozone would eventually start using the SCT and SDD. Larger banks such as BNP Paribas began to offer the SEPA means of payment in 2008 (SCT) and 2009 (SDD) and the expected date for a global changeover was initially split in two dates for the two schemes. These suggested ‘end dates’ have now rolled into one proposed date for both SCT and SDD – 1 February 2014.

The end date of 1 February 2014 is likely to be approved by the European Parliament by the end of 2011, at which stage it will become definitive. Will the goal posts move again? In this market anything is possible.

Corporates: Action or Apathy?

So how have corporates reacted to the news that the changeover date is now likely to be the same for SDDs and SCTs – both on 1 February 2014? ‘Apathy’ is perhaps an unfair judgement, but it is fair to say that corporate attitudes to SEPA remain of the ‘wait and see’ variety.

A small minority of early adopters (not only corporates but also public institutions) have already adopted the SEPA tools and are already using both SCT and SDD. Feedback from these clients is quite positive in terms of financial and operational benefits. Understandably, other corporates in most countries are waiting for the official confirmation of the end date. Only then will they start their SEPA migration projects.

Can the rest of the market learn something from the ‘early adopters’? They are companies, after all, who have realised they could achieve some significant advantages from migration. In fact they are seeing multiple benefits of using SCT and SDD and in some cases, companies have already exploited the migration to SEPA as part of a wider centralisation of their treasury and payment activities.

SEPA Migration: Big Variations in National Adoption Rates

The implementation of SEPA tools by corporates has not been as high as hoped, but there have been extenuating factors – namely the economic volatility and the absence up until now of a final end date.

The latest figures, which relate to the second half of 2010, from the European Central Bank1 (ECB) show there are big variations of migration in different countries. Luxembourg leads the way with 89.92% of all credit transfers now made with the SCT format.

Cyprus, Slovenia and Belgium are also doing well with 56.27%, 42.39% and 30.17% respectively of each country’s total credit transfers now made with SCT.

Spain and Finland lag behind with 19.98% and 13.46% respectively, while the remaining euro-member countries have a long way to go, with SCT adoption rates ranging from less than 1% to 7.17%.

The adoption rate of SCT by non-euro member countries has also been high, with Denmark, the UK, Latvia, Sweden and Lithuania all having an SCT adoption rate of between 59% and 85%.

Overall, SCT transactions in the eurozone reached 20.52% in July 2011 according to the ECB and had the value of EUR111.7m.

The migration figures for SDD are much lower than SCT rates. SDD transactions, as a percentage of the total volume of direct debit transactions, were just 0.13% in July 2011, with a value of EUR720,000. So far SDD is only being used by companies who have made a conscious decision to become early adopters – they are few but are satisfied at having a standardized means of direct debit across Europe.

Why Move to SCT and SDD?

For the treasurer, there are great benefits in using a single means of payment across Europe. It seems, however, that the majority of companies still need to be convinced that SCT and SDD will make business sense. They need to be able to measure concrete returns on their investment in SEPA infrastructure. In reality, SEPA adoption is not just about harmonising payments in Europe – there are also financial and strategic benefits for companies.

One advantage is that a SEPA migration project provides an opportunity for companies to harmonise and simplify their internal payment processing.

Benefits for Multinationals and SMEs Alike

The benefits of streamlining and rationalising your payments and collections for SEPA apply to both SCT and SDD. Whether the transactions are made domestically or cross-border, the decision-making process and account structure can be much simpler, making them easier to control and monitor. This has obvious knock-on effects for easier cash flow monitoring and forecasting. This is of particular benefit for multinational companies with multiple treasury locations spread across Europe. The harmonising of collections management and payment initiation brings significant cost reductions and better cash flow visibility.

SMEs in Europe also tend to operate across several countries, buying and selling internationally. SEPA can simplify internal processing for SMEs, alleviating the consideration of different payment cycles/formats and simplifying the company’s account structure

The benefits of SEPA may vary by country as well. For example in Belgium, companies that have adopted SDD are now able to achieve certain types of transactions that the Belgian domestic direct debit system is not able to support. This has enabled some companies in Belgium to streamline their B2B collection processes, which wasn’t possible with the previous means of collection. This has been an incentive for some corporates to adopt SDD in Belgium because the benefit was clear and immediate.

How to Plan the Perfect Migration

SEPA has been a collaborative project from the start involving the European Payments Council (EPC), clearing houses and banks. But it is the corporate end user that stands to benefit most from the harmonised payments infrastructure, and it is the corporate’s decision when and how to start implementing and using the SEPA tools.

SEPA migration is an important decision for the corporate. It is advisable to set up a dedicated SEPA project – the duration of the project will vary from company to company, according to each organisation’s payments and collections structure. This is why the corporate must understand the benefits, and evaluate the advantages of the simplified account structure and reduction of costs.

While the banks’ basic role is to process SEPA transactions once the corporate client has migrated, some banks are also equipped to help their clients through the initial stages of SEPA adoption, through their experience and specialised ‘onboarding’ services. Corporates migrating to SEPA with BNP Paribas get significant benefits from the bank’s onboarding desk, in order to streamline and shorten their migration project.

BNP Paribas supports their corporates clients throughout their migration project and provides a detailed and extensive checklist to help corporates through each stage of SEPA adoption – from evaluating whether the corporate is ready for migration, to the nitty-gritty of what the transfer of payment tools actually involves. Here are just a few pointers of how a SEPA migration project can be set up and planned successfully.


  1. Get senior management involved from the start – their sponsorship of the SEPA migration project will be crucial to its success, so they need to be convinced of the business benefits. The project will need cooperation and resources from various departments and levels of the company, so involve all internal stakeholders from the outset. Remember that the project depends on the size and organisation of your company. If the organisation is relatively small, the project will reflect that but expect a more complex migration if your company has multiple locations and decentralised treasury operations.
  2. Plan a smooth migration. It is important to roll out the migration country by country and bank by bank before you start issuing a high volume of transactions.
  3. Work closely with your relationship banks to put the migration project together and take advantage of their experience and expertise. BNP Paribas offers clients the practical experience and knowledge it has gained while supporting several migrating clients that are now running SEPA.
  4. Get a correct internal database for bank identifier codes (BICs) and international bank account numbers (IBANs) or get an efficient conversion tool. This is basic, but without a reliable BIC and IBAN database you cannot use SDD or SCT.
  5. In the case of SDD adoption, verify whether your current company collection process is ready for the transition to a creditor mandate flow (CMF) model. SDD is based on creditor mandate flow (which means that when a direct debit mandate is issued, the creditor holds the mandate and manages its life cycle), but if your company’s current direct debit scheme is based on debtor mandate flow (DMF) – in which case the debtor’s bank usually holds the mandate), there are additional implications and you may need to make adjustments in order to work with the CMF model.
  6. If you are implementing a B2B SDD scheme, put in place a strict follow up to the mandate’s confirmation – this is a key success factor for the SDD migration. In some cases the adoption of the SDD can also bring the opportunity to review the client contract process, so make sure you take full advantage of this.

SEPA Don’ts

  1. Don’t plan to migrate too close to the end date. Many companies will start their migration within the four-to-six months leading up to the SEPA end date. So ensure you have a smoother migration with the full attention of your relationship banks by starting the project in good time.
  2. Make sure your migration is gradual and smooth – don’t try to begin using SEPA tools overnight but take it step-by-step.


Overall, the market has passed the half-way mark to SEPA – in fact the finish line is now in sight. It remains for corporates to start their migration projects – if the 1 February 2014 end date is confirmed by the end of 2011, we will be seeing a higher rate of corporate migration to SCT and SDD in 2012 and 2013.

While the implementation of SDD tools is more complex than SCT, close collaboration with your relationship banks will be of enormous value. By using the experience and expertise of market players who are already using SEPA tools, all corporates should be able to plan a smooth and successful migration project.

To read more from BNP Paribas, please visit the company’s microsite.


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