No matter how beneficial new approaches to
doing business may be they are often slow to gain acceptance. This
is well illustrated by many major businesses’ apparent lack of
enthusiasm for the Single Euro Payments Area (SEPA) indicated by a
survey of corporate treasurers undertaken by UK transaction service
provider VocaLink.
doing business may be they are often slow to gain acceptance. This
is well illustrated by many major businesses’ apparent lack of
enthusiasm for the Single Euro Payments Area (SEPA) indicated by a
survey of corporate treasurers undertaken by UK transaction service
provider VocaLink.
The first taste of the new payments regime came
on 28 January this year with the launch of the SEPA credit transfer
scheme. Eight months on and VocaLink’s survey found 35 percent of
respondents still have no experience of the scheme.
on 28 January this year with the launch of the SEPA credit transfer
scheme. Eight months on and VocaLink’s survey found 35 percent of
respondents still have no experience of the scheme.
In addition, Gertrude Tumpel-Gugerell, a member
of the executive board of the European Central Bank, revealed at a
meeting of the European Payments Council’s coordination committee
in September that five months after the SEPA credit transfer scheme
came into operation it accounted for 1 percent of transfers.
Unsurprisingly, she pointed out that 1 percent is not the “critical
mass required” but held out hope of stronger uptake of SEPA credits
once services under development are introduced.
of the executive board of the European Central Bank, revealed at a
meeting of the European Payments Council’s coordination committee
in September that five months after the SEPA credit transfer scheme
came into operation it accounted for 1 percent of transfers.
Unsurprisingly, she pointed out that 1 percent is not the “critical
mass required” but held out hope of stronger uptake of SEPA credits
once services under development are introduced.
The next stage in the evolution of SEPA will be
introduction of the SEPA direct debit (SDD) scheme scheduled for
November 2009. However, enthusiasm amongst respondents is
concerning with only 28 percent expecting to use SDDs by the end of
2009 and 36 percent not expecting to implement SDD until 2011 or
later.
introduction of the SEPA direct debit (SDD) scheme scheduled for
November 2009. However, enthusiasm amongst respondents is
concerning with only 28 percent expecting to use SDDs by the end of
2009 and 36 percent not expecting to implement SDD until 2011 or
later.
There were over 240 respondents from Europe,
the US and the Asia-Pacific region to VocaLink’s survey, the
largest proportion of which represented companies with annual
revenues over $1 billion. Half of the respondents were
European.
the US and the Asia-Pacific region to VocaLink’s survey, the
largest proportion of which represented companies with annual
revenues over $1 billion. Half of the respondents were
European.
VocaLink MD for Europe Paul Taylor said: “Our
research shows there is a huge opportunity for banks who take an
early lead in the market, especially for SEPA direct debit
services. The trick is to make it attractive to those
customers.”
research shows there is a huge opportunity for banks who take an
early lead in the market, especially for SEPA direct debit
services. The trick is to make it attractive to those
customers.”
This sentiment was echoed by Tumpel-Gugerell in
her speech. Referring to the SDD scheme as “clearly the member in
the [SEPA] team with a serious handicap”, she emphasised the need
to communicate the benefits it will bring more effectively and for
banks to offer marketable, user-friendly SEPA products and
services.
her speech. Referring to the SDD scheme as “clearly the member in
the [SEPA] team with a serious handicap”, she emphasised the need
to communicate the benefits it will bring more effectively and for
banks to offer marketable, user-friendly SEPA products and
services.
She stressed that misconceptions have resulted
in direct debit users being reluctant to adopt SDD.
in direct debit users being reluctant to adopt SDD.
Tumpel-Gugerell added: “They have heard rumours
and are afraid that it will not meet their needs. ‘It is not safe,
it is too safe; it is not modern, it is too modern; it is too
different or more expensive than previous procedures.’ A lot of
opinions were voiced before the product was even visible.”
and are afraid that it will not meet their needs. ‘It is not safe,
it is too safe; it is not modern, it is too modern; it is too
different or more expensive than previous procedures.’ A lot of
opinions were voiced before the product was even visible.”
Also highlighted by Tumpel-Gugerell were
serious obstacles facing the introduction of SDDs in November 2009.
Standing out among these is the issue of multilateral balancing
payments or, as she termed them, multilateral interchange fees
(MIF) between banks.
serious obstacles facing the introduction of SDDs in November 2009.
Standing out among these is the issue of multilateral balancing
payments or, as she termed them, multilateral interchange fees
(MIF) between banks.
She continued that practice regarding MIFs for
national direct debits varies across countries and that there is no
precedent for cross-border direct debits as these do not
exist.
national direct debits varies across countries and that there is no
precedent for cross-border direct debits as these do not
exist.
She posed the question: “So, what should be
done for the SEPA direct debit scheme?”
done for the SEPA direct debit scheme?”
The answer is simply that there is no
definitive answer. However, as Tumpel-Gugerell stressed, the SDD
scheme is scheduled to be introduced in little more than a
year.
definitive answer. However, as Tumpel-Gugerell stressed, the SDD
scheme is scheduled to be introduced in little more than a
year.
“This will hardly be enough time to find a
comprehensive solution that meets all needs and answers all
concerns,” she said. “We face a situation where bankers run the
risk of not being able to deliver the direct debits by November
2009. This is not acceptable, because SEPA direct debits are a
vital piece in the SEPA puzzle.”
comprehensive solution that meets all needs and answers all
concerns,” she said. “We face a situation where bankers run the
risk of not being able to deliver the direct debits by November
2009. This is not acceptable, because SEPA direct debits are a
vital piece in the SEPA puzzle.”
As an interim solution she proposed permitting
what she termed “a properly justified MIF for cross-border SEPA
direct debits”. Existing domestic MIFs would be kept in place and
be applied to both legacy direct debits and SDDs carried out at the
national level.
what she termed “a properly justified MIF for cross-border SEPA
direct debits”. Existing domestic MIFs would be kept in place and
be applied to both legacy direct debits and SDDs carried out at the
national level.
“This would ensure the necessary level
playing-field in the national context for the SDD scheme and the
national legacy direct debit schemes,” said Tumpel-Gugerell. “Given
that most direct debits will initially still be conducted at the
national level, the vast majority of direct debits would thus be
treated in the same manner.
playing-field in the national context for the SDD scheme and the
national legacy direct debit schemes,” said Tumpel-Gugerell. “Given
that most direct debits will initially still be conducted at the
national level, the vast majority of direct debits would thus be
treated in the same manner.
However, she emphasised this would be a
temporary measure with the objective remaining the replacement of
national legacy direct debit schemes with the SDD scheme and the
elimination of transaction-based MIFs.
temporary measure with the objective remaining the replacement of
national legacy direct debit schemes with the SDD scheme and the
elimination of transaction-based MIFs.
Tumpel-Gugerell believes failure to find an
interim solution to the MIF issue could have dire
consequences.
interim solution to the MIF issue could have dire
consequences.
She warned: “It would threaten the very
existence of a single European payments area, run counter to the
goals of the Lisbon agenda, reverse all the work and efforts
invested in this project, and throw the payments sector back into
the dark ages of fragmentation along national borders.”
existence of a single European payments area, run counter to the
goals of the Lisbon agenda, reverse all the work and efforts
invested in this project, and throw the payments sector back into
the dark ages of fragmentation along national borders.”
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