SEPA

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Sunshine Through the Clouds? Research findings on progress towards SEPA migration Many treasurers will read another article about SEPA and wonder “why do we need to be told so many times?” The reason is that not everyone has heard, and even fewer have listened.

Sunshine Through the Clouds?

Research findings on progress towards SEPA migration

by Helen Sanders, Editor

The first of February 2014 has become a date that will sit alongside the millenium ‘bug’ on 1 January 2000, euro migration on 1 January 2002, and Lehman’s collapse on 14 September 2008 in treasurers’ consciousness. By this date, every organisation in the 32 SEPA (Single Euro Payment Area) countries will need to have migrated their domestic and cross-border euro credit transfer and direct debit payments and collections to the new SEPA Credit Transfer (SCT) and SEPA Direct Debit (SDD) instruments. Many treasurers will read this and shrug: “yes, we know, why do we need to be told quite so many times?” Well, the reason is that not everyone has heard, and fewer have listened.

With one year to go, 1 February 2013 was therefore the date on which the SEPA stopwatch started, with the launch of myriad new websites, blogs, research and press releases on SEPA. Now, a few weeks later, in a more sober light (although the stopwatch is still ticking) a cynic may think that the release of new SEPA collateral is simply a sales ruse; indeed, one banking friend I spoke to recently had called an existing customer to discuss their SEPA migration, receiving the response, “I’ve said I’m not interested, thank you. I’ll stick to what I do now.” As Andrew Reid, Head of Cash Management Corporates, EMEA (ex-Germany) at Deutsche Bank’s Global Transaction Banking, summarises,

“SEPA is not a value-added service offered by banks and consultants, but a fundamental shift in the payments environment in Europe.”

The fact that banks, vendors and consultants will wish to leverage SEPA as an opportunity to attract new customers is inevitable but in some respects immaterial, and bearing in mind that they are typically the ones to enable migration, they are also essential. SEPA migration is mandatory and urgent. This article outlines the findings of a recent survey carried out by TMI in association with Deutsche Bank, and provides comparisons and comments from a complementary research initiative by PricewaterhouseCoopers, the SEPA Readiness Thermometer, launched in January 2013.

Research participants

The survey was carried out during February 2013. Participants were typically senior finance and treasury professionals (85% treasury manager or above; 37% CFO/Finance Director or Group Treasurer). Although all regions were represented, over 75% of respondents were based in Europe. All sizes of company large enough to have a dedicated treasury function were included, with over 50% of companies turning over more than €1m per year.

1. Progress towards SEPA migration

Figure 1

The survey asked respondents what progress they had already made towards SEPA migration (figure 1). With only 10 months to go before the migration end date, 35% had fully or mostly completed their credit transfer migration, while 13% had fully or mostly completed their direct debit migration. Bearing in mind that the SEPA direct debit (SDD) schemes were launched later than SEPA credit transfers (SCT) and there has been on-going uncertainty about issues such as transfer of existing mandates, it is not surprising that migration towards SDD is at an earlier stage; however, both SCT and SDD share the same February 2014 end date. Fifty-four per cent of respondents have either not started their SCT migration or still need to make substantial progress: 29% had not started at all. A similar proportion have yet to start, or not yet materially completed their migration to SDD. These statistics are similar to those in PwC’s recent SEPA Readiness Thermometer, published in February 2013, which noted that nearly 22% had not yet embarked on their SEPA project.

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