The European Commission has proposed an extension to the deadline for European countries to be compliant with the Single European Payments Area (Sepa) of six months in a final warning to laggards
By submitting your personal information, you agree that TechTarget and its partners may contact you regarding relevant content, products and special offers.
February is the deadline established by European law for Eurozone countries to migrate to the Sepa credit transfer (SCT) and Sepa direct debit (SDD) schemes. All European businesses making and receiving payments to and from the Eurozone – which includes most large UK businesses – must do so using the Sepa standard. This means using International Bank Account Numbers (Ibans) and the ISO2022 XML format.
Jonathan Williams, director of payments strategy at Experian, said the extension is not a surprise. “We always expected a situation where there would not be penalties for a period after the February deadline. But when the six months is up they will be looking to penalise organisations that have not made the effort to meet the regulation.”
In July research from Experian revealed that just 2.5% of direct debit payments and 45% of credit transfers were compliant with the Sepa standard.
In October the European Central bank (ECB) said that “payment orders that do not comply with the legal requirements as laid down in the Sepa Migration End-date Regulation will not be allowed to be processed by payment service providers after 1 February 2014.”
More on Spea
The ECB said today that, despite the proposed extension, most organisations that need to be Sepa compliant will be by February and urges all organisations to try to complete by this date. “The Eurosystem takes note of the European Commission’s proposal to modify the EU Regulation related to the Single Euro Payments Area (SEPA), introducing an additional transition period of six months.”
Strong and successful migration efforts have been carried out by stakeholders in the euro area. The most recent information from national Sepa communities suggests that the pace of migration is high and accelerating, and most stakeholders will complete their migration on time.
The Eurosystem therefore stresses that the Sepa migration end date of 1 February 2014 remains and urges all market participants to complete the transition of all credit transfer and direct debit transactions to the SEPA standards by this date.”
Chris Skinner, chairman at the financial Services Club, said he is not surprised by the proposed extension because interest in Sepa is limited. “Other things have taken over such as the financial crisis and meeting regulations.”
He added that it is the corporate customers of banks that are responsible for meeting Sepa requirements and the majority have done little. “Most have not even thought about it.”
Tony Virdi, head of banking and financial services UK at Cognizant, said : "The recent news that the European Commission is extending the SEPA migration deadline by six months will no doubt come as a welcome relief to many UK organisations. While major banks have already started advising and guiding their corporate clients in readiness for migration, there are too many financial institutions who were unsure whether the immediate migration date of 1 February 2014 applied to them, so have not started planning for SEPA migration yet."