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Climbing the SEPA Mountain SEPA end dates have at last been defined, and corporate treasurers and finance managers cannot afford to lose any time in progressing their SEPA migration projects. We ask some experts to share the benefit of their experience of SEPA projects.

Climbing the SEPA Mountain

by Helen Sanders, Editor

“Today is your day! Your mountain is waiting. So...get on your way.”
Dr Seuss

As we have seen in this month’s Treasurer’s Voice, there remains a large proportion of companies of all sizes that have not yet embarked upon, or completed their SEPA migration. As Gerard Hartsink, outgoing Chairman of the European Payments Council (EPC) emphasised during the interview we publish in this edition of TMI, the setting of a defined end date for national payment schemes is a major milestone in the evolution towards a Single Euro Payments Area. As Karsten Becker, Senior Product Manager, Corporate Receivables, Deutsche Bank comments,

“With end dates now defined, SEPA has come full circle, from political to market to regulatory.”

Corporate treasurers and finance managers can therefore lose no time in progressing their SEPA migration projects. In this article, we feature expert comment from Frank Taal, Global Head, PCM Product Management, ING, Willem Dokkum, Global Head of Sales Payments & Cash Management, ING and Karsten Becker, Deutsche Bank, who share the benefit of their experience of SEPA projects.

A catalyst for change

Karsten Becker, Deutsche Bank notes that a defined end date is perhaps the catalyst that many corporates were seeking,

“With the end dates for national payment schemes now set, the situation for treasurers is quite simple: SEPA is no longer a voluntary project, but a regulatory requirement. In a sense, this is what corporates have been waiting for, as in many cases, there has not been sufficient incentive to migrate in the past."

Different countries, as well as individual organisations, have different starting points in terms of SEPA migration, which adds complexity to projects for multinational corporations, and also means that the experience of migration can differ substantially across Europe. As Willem Dokkum, ING comments,

“Although the SEPA end dates are now set in law, and parts of northern Europe are relatively advanced in their implementation, some parts of southern Europe have not progressed as far in their migration plans. Consequently, some institutions may not be ready in time. Some central banks and national governments have indicated that they may extend local formats and payment instruments until 2016, but this is not yet confirmed, so it would be better for companies to work towards the 2014 deadlines.”

Talk of extensions and exceptions can easily become a distraction from the primary message: SEPA is here and migration is a mandatory requirement.

Exploring migration

Firstly, what does SEPA migration really mean? Karsten Becker, Deutsche Bank outlines,

“As a minimum, companies must be able to send ‘SEPA-capable’ (although this is subject to interpretation) transactions to their bank. Therefore, as a first step, they need to understand what transaction formats their bank will accept.”

Banks and vendors offer different conversion services, as Karsten continues,

“Some companies are seeking to minimise migration effort by reviewing what file conversion services their banks or vendors can provide, but this remains a grey area. This may be particularly advantageous for those that would not otherwise be SEPA-ready, but in general it is recommended that corporates implement XML formats wherever possible.”

Essentially, companies need to convert their current payment formats into messages that comply with the SEPA Rulebooks for Credit Transfers (SCT) and where appropriate, Direct Debits (SDD). These use XML-based formats, that have the advantage that they can be rolled out more widely to achieve standardisation not just for payments in the Eurozone but globally. For SCT and SDD, this involves adding the IBAN (International Bank Account Number) and in the short term, BIC (Bank Identifier Codes) to settlement instructions.

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