SEPA: Just 42 Working Days to Go

Foto: Fotolia
Photo: Fotolia

The SEPA (Single Euro Payments Area) project is entering its critical phase: companies have until February 1, 2014 to migrate their credit-transfer and direct-debit payment schemes to the new European procedures, SEPA Credit Transfer (SCT), and SEPA Direct Debit (SDD). However, only about 14% of bank transfers in Germany currently comply with the required SEPA credit-transfer standards. Carl-Ludwig Thiele, a member of the Executive Board of the Bundesbank, voiced his concern about this situation at a joint press conference with the German credit sector, the Federation of German Consumer Associations, and the Bundesbank in Frankfurt am Main at the end of October: “We’re behind almost everyone else in Europe,” he said.

Rapid action is also required to migrate direct-debit systems in time for the deadline.  In the third quarter of 2013, the proportion of SEPA-compliant payments was only about 0.68% of the total number of direct-debit payments processed in Germany. This is way below the European Central Bank’s expectations. Nevertheless, the Bundesbank reports that, as of November 12, 2013, a total of 1,115,659 creditor identifiers (CIs) had been requested and issued in Germany. All payment recipients require a CI to use the SEPA direct debit procedure.

SEPA migration: companies underestimate the risks

To place this figure in context, Germany has an estimated 3.6 million registered businesses and a further 580,000 registered clubs and associations. Not all clubs and associations collect their membership fees via direct debit, so not all of them need a creditor identifier. Nevertheless, the Bundesbank estimates that it should receive a total of around 4.2 million applications for a CI. Clearly, the current total of applications received falls well short of this estimate.

According to the Second SEPA Migration Report, dated October 2013, many stakeholders have elected not to migrate their payment procedures until the final quarter of 2013. Yet, postponing the migration could involve considerable risk if, for example, a business runs out of time to respond to unexpected delays. Inability to process payments  ̶  and even insolvency  ̶  are genuine threats.