SEPA

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Is SEPA truly pan-European? The KLM SEPA Story Dutch airline KLM was one of the first companies to implement the SEPA Credit Transfer on a large scale. What lessons can we learn from its experience?

Is SEPA truly pan-European?

The KLM SEPA Story

by Ruth Wandhöfer, Payments Industry and Strategy, Treasury & Trade Solutions, EMEA, Global Transaction Services, Citi, and Plenary Member, European Payments Council with Michael Imeson, Contributing Editor, The Banker

Dutch airline KLM was one of the first companies to implement the SEPA Credit Transfer on a large scale. What lessons can we learn from its experience?

The first phase of the Single Euro Payments Area has arrived. Many payment users - companies, public sector bodies and consumers – have enthusiastically embraced it while many others continue to use national Euro payment products and are likely to do so for years to come.

So what is it, in the corporate world at least, that convinces some companies to move quickly to SEPA standards while others are content to carry on as before? What are the advantages of SEPA products over the old ones? And how do companies handle the changeover?

The fact that KLM is active in so many countries in Europe made it obvious there were big benefits to be had from harmonising payments and collections.

The answers to these questions can be provided by the experience of KLM Royal Dutch Airlines, an early SEPA adopter and a valued and long-standing Citi client. Citi created a state-of-the-art global payment factory together with the airline several years ago, located in its Amsterdam treasury management centre, and this has brought with it significant efficiencies.

“When SEPA appeared on the horizon, KLM saw it as an opportunity to drive further efficiencies,” recalls Edwin Hartog, Global Client Manager for KLM in Citi’s Global Transaction Services. Edwin worked closely with David van Mechelen, a Senior Manager in KLM’s Treasury and Corporate Finance department, to draft a SEPA implementation plan. “The two most important objectives were, first, for the global payment factory to adopt the SEPA Credit Transfer (SEPA CT) as soon as it became available in January 2008 and, second, to change the payment format to the XML standard used by SEPA,” says Hartog.

The two organisations’ IT teams ran a small pilot on the XML format, after which plans were made for a full roll out of the format and the SEPA CT in all 22 SEPA countries where Citi provides KLM with transaction services.

“It was quite a challenge, but because of the thorough testing of the format, the roll out in January 2008 went smoothly,” says Hartog. “At the time we were unaware of any other SEPA roll-out of this scale.”

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