Cash & Liquidity Management
Published  6 MIN READ
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Minimising SEPA Migration Risk: a practical approach

by Jonathan Williams, Director of Strategic Development, Experian Payments, and Ruth Wandhöfer, Head of Payments Strategy and Market Policy, EMEA Treasury and Trade Solutions, Citi Global Transaction Services

With the Single Euro Payments Area (SEPA) now a reality, and momentum building towards a migration deadline, companies should be considering their migration plans seriously. SEPA brings a wide variety of benefits, particularly for companies operating across borders. However, every company that is seeking to maximise payments, collections and cash management efficiency should be considering SEPA migration now to leverage the advantages of payments harmonisation in Europe. Every major change project inevitably presents some challenges. Therefore, to help clients implement SEPA payments and collections as smoothly as possible and take early advantage of SEPA benefits, Citi has formed a strategic alliance with leading payments processing provider, Experian Payments, to provide customers with an innovative SEPA data conversion service based on proven, robust processes and technology.

New data requirements under SEPA

Since 2006, the use of BIC (bank identifier codes) and IBAN (international bank account numbers) has been compulsory on cross-border payments in euro. With the introduction of SEPA, however, this information will now be mandatory for domestic as well as cross-border payments. Use of IBAN/ BIC formats for payment instructions results in more secure, efficient payment processing and fewer errors; consequently, it will ultimately be beneficial for all individuals and organisations. These fields also resolve technical issues that exist in some markets (see fig. 1 below).

However, the need to amend payment instructions for all beneficiaries of euro payments brings migration challenges for all companies across the 31 countries covered by SEPA. BIC and IBAN information needs to be collected and recorded for every supplier, employee and other payee paid in euro. Internal systems used for payments origination, or in which payment instructions are stored, need to be modified to hold and transmit this information to other systems, and interfaces need to be amended. If either the BIC or IBAN is absent, erroneous or incorrectly formatted on a payment, it is likely to be delayed, rejected or penalised.