The pan-european, cross-border payments system, known as
the
single European payments area (Sepa), began
processing direct debits from 2nd of November.
The Payments Services Directive (PSD), the pan-european law
that makes Sepa possible, became law on 1 November. Some banks are
set to overhaul the legacy payments systems as they attempt to
comply.
All European banks have one year to prepare for receiving Sepa
payments.
Sepa, which was introduced in January last year, makes
cross-border payments in Europe as straightforward as making a
payment within one country.
Some banks have already begun processing direct debits using the
Sepa scheme. In 12 months all banks will have to be able to receive
Sepa payments to be compliant.
There are two main ways of doing this. Banks can either become a
Sepa processor or they can outsource their Sepa payments to another
bank.
Gareth Lodge, analyst at Towergroup, said if banks are to meet
the Sepa requirements they will need to invest heavily. "They will
need to put systems in place that are as reliant, secure and
reliable as legacy systems are today."
A combination of harmonising the payments market through Sepa
and
using Sepa as a platform for e-invoicing could lead to savings to
European businesses of £268bn over the first six years,
according to a European Commission study published last year.
Chris Skinner, chairman at financial services think-tank The
Financial Services Club, said
many banks are not yet compliant. "There are only about a
quarter of European banks that are compliant."
Uncertainty about Sepa's implementation is making it difficult
for banks to commit to it. According to the comprehensive research
carried out by The Financial Services Club, only 13% of over 350
global payment professionals believe Sepa is being implemented
correctly.
Simon Bailey, director payments and transaction banking at
Logica, said that, because volumes will be initially low for Sepa
payments, banks will try and get by themselves. This will involve
linking systems together but this will only be a short term
answer.
"If it picks up
the banks will have to look at doing something more
formal."