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The Final 70 Days As the SEPA migration end date of 1 February 2014 approaches, the Editor talks to Luca Poletto, Head of SEPA at BNP Paribas, about how corporate treasurers and finance managers should be focusing their attentions in these final few weeks.

The Final 70 Days

An Executive Interview with Luca Poletto, Head of SEPA, BNP Paribas

As the SEPA migration end date of 1 February 2014 approaches, Helen Sanders, Editor, talks to Luca Poletto, Head of SEPA at BNP Paribas about how corporate treasurers and finance managers should be focusing their attentions in these final few weeks.

With less than 70 days to go before the SEPA end date, at what stage are European companies in their migration plans?

Luca Poletto

For most organisations, SEPA Credit Transfer (SCT) migration is relatively straightforward, and large, mid-cap and SME customers alike are now at an advanced stage in their preparations. Consequently, we envisage that most companies will be SEPA-compliant for SCT by the 1 February 2014 end date.

The situation is more challenging for SEPA Direct Debits (SDD). Our customers that have high volumes of direct debits (such as utilities and telecoms companies) have already started migration testing or are typically planning to do so over the coming weeks, with a view to going live on SDD in January 2014. Although the timelines are aggressive, with little scope for error or delay in final testing, and a great deal of effort by corporate and bank alike, we are generally optimistic about these companies’ ability to migrate SDD mandates and processing before the end date.

Smaller companies that operate domestically or have lower direct debit volumes are often far less advanced in their migration plans, or in some cases have still not started. In many cases, these companies still have the impression that SEPA migration is a quick and simple process, particularly if their volumes are relatively low. In the three countries that have announced a waiver until 2016 (Portugal, Spain and Italy) banks are permitted to offer SEPA conversion services so that companies can continue to use domestic formats, which will then be converted automatically to SEPA payments. This opportunity does not exist across the rest of Europe, however, so companies need to prioritise their migration plans as a matter or urgency.

What have been the major factors behind this delay in companies starting their SDD migration projects?

Corporate creditors are familiar with domestic direct debit schemes, and have built their systems and processes around them. Multinational corporations with direct debits in different countries see the advantage of a harmonised approach, while large creditors with high volumes of direct debits recognise the potential cost and risk of non-compliance. Smaller companies that operate domestically, however, have far less motivation to migrate as there is little apparent benefit to doing so. Consequently, especially for the latter, SEPA migration is a compliance project and has not been prioritised compared with initiatives that offer more obvious operational or strategic advantage.

What impact is some countries’ introduction of variations to the CGI ISO 20022 formats having on companies’ migration projects, and indeed could have on the wider harmonisation objectives of SEPA?

If a company wants to use the ISO 20022 format across all countries, this is entirely achievable and many of our customers are doing so. Harmonisation across Europe is a major objective of SEPA which we fully support at BNP Paribas. In some countries, there is a wish to keep the new SCT and SDD closer to local market practices, making it simpler for domestic companies to migrate, and increasing confidence in the new instruments. In Spain and Portugal, for example, it is important that the beneficiary bank can identify salary payments in order to be able to offer better conditions such as credit facilities to account holders. This has to be done by the ordering party by inserting ‘SALA’ as the category purpose code in the SCT transaction. In Belgium, The existing structured remittance information will continue in for SCT in the form of a structured tag. This allows companies making payments to Belgian beneficiaries to avoid errors when initiating transactions, therefore also facilitating reconciliation by the payee.

To give treasurers and finance managers better insight into local implementation guidelines and additional optional services (AOS) that apply in each country, we have outlined these in detail on our website at The website also includes detailed migration guidance.

What should be the priorities for companies whose SEPA migration projects are still in progress, given the timescales involved?

To make best use of the time still remaining, companies need to keep their plans as simple as possible:

Firstly, they need to reduce the number of banks with which they will go through the migration process. By concentrating flows through as few banks as possible, the migration will be more straightforward and the amount of testing minimised. Having achieved initial compliance, they can work with their remaining banks.

Secondly, some customers are considering the use of an alternative means of payment as a temporary measure. For example, customers that will not have migrated direct debit collections by the time of the end date may wish to use SCT until they have completed the migration.

Most importantly of all, companies need to work with a bank and/or solution provider that has demonstrable experience in SEPA migration that can provide the necessary experience and focus on the key tasks. This a vital means of reducing project risk and ensuring SEPA compliance. BNP Paribas, for example, has extensive expertise and experience in working with companies of all sizes across Europe to support their SEPA migration, including both SCT and SDD. Conversely, working with less experienced partner banks or suppliers creates unnecessary project and compliance risk.

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