Today sees the end of a six-month extension to the deadline for European businesses making and receiving payments to and from the Eurozone using the Sepa standard. This means using International Bank Account Numbers (Ibans) and the ISO2022 XML format.
“After 15 years of work, the Single Euro Payments Area (SEPA) has been successfully implemented for credit transfers and direct debits in the euro area. Every month more than 2 billion payments will now flow across the euro area in new standardised formats,” said the European Central Bank (ECB).
Consumers and businesses can now use a single bank account for all euro credit transfers and direct debits in Europe, which allows businesses to expand into new markets without extra payment costs.
“It allows consumers to use just one euro bank account for all credit transfers and direct debits, no matter where in Europe the recipients or businesses may be,” added the ECB. “It allows businesses to grow and to broaden their reach within Europe, and reduces costs by providing a standardised framework for all their payments. Businesses can now use a single system and set of accounts for all their euro trade in Europe,”
“The successful completion of SEPA further accelerates Europe’s financial integration”, said Yves Mersch, executive board member at the ECB. “It removes barriers to credit transfers and direct debits which will no longer impede businesses or consumers.”
More on Sepa
UK companies that deal with companies in the Eurozone but do not have operations there have another 18 months to achieve Sepa compliance. Businesses that are not compliant will not be able to make or take euro payments after the deadlines.
UK companies supplying businesses based in the Eurozone risk losing customers if they cannot receive payments using the Sepa standard. If a Eurozone business must make the choice between a Sepa-compliant supplier and a non-compliant supplier, they will prefer the compliant supplier.
Research of 600 companies across Europe released in January revealed that SMEs were falling short of compliance deadlines. The study carried out by Vanson Bourne for accountancy software maker Sage, found over half of mid-market businesses that need to be Sepa-compliant did not even know when the deadline is.
It revealed that, of the 83% that claimed to know when the deadline is, only 63% of those organisations actually did. This means over half of the overall sample (52%) did not know the deadline.
Furthermore, 49% of businesses did not have a complete Sepa compliance plan in place and only 15% of businesses could already make Sepa transactions, found the research.
Businesses must ensure enterprise resource planning (ERP) systems can comply with Sepa and many mid-market companies have turned to software suppliers to give them Sepa-compliance off-the-shelf.
But it is more than just compliance. Lionel Jouve, at French retailer Printemps, told Computer Weekly earlier this year that Sepa is not just about compliance but what the future could bring.
“We have customers that are very sensitive to IT progress. It is in our strategy to be compliant but at the same time it could change payments in the future,” said Jouve.
He said the company wants a single payments process for customers wherever they are, adding that the process can reduce the risk of fraud.
A standard platform for payments is also attractive to improve processes and reduce costs. “All this technology costs money and we want a standard system rather than separate systems from all ten of our banks,” said Jouve.