The deadline for SEPA on February 1, 2014 was announced almost two years ago, and time is now running out. German companies in particular are behind in getting ready for the switch-over. By May last year, a mere seven percent had applied to the German Central Bank for the creditor ID required to start their SEPA migration project – some 14 months after the deadline was set. According to EU commissioner Michel Barnier last Thursday in Brussels, the deadline has now been extended to minimize the risk of disruptions to the payments chain. In its press release, the Commission explained that the slow pace of adoption was endangering the smooth transition to SEPA by February, so it was proposing an additional six-month transition period to give individual consumers and, in particular, SMEs more time to adjust, helping to protect them against potential payment gridlocks and insolvency.
The deadline extension came as a surprise for Georg Fischer, SEPA expert and Vice President Product Management for Strategic Customer Engagement. “We didn’t see any indication of major issues among our customers. The live date on February 1 certainly wouldn’t have passed without a few problems in the 33 SEPA countries, but I wasn’t expecting any chaos. This last minute suggestion by EU Commission to extend the deadline now has to be confirmed by European and local bodies. Central banks and credit institutes have already expressed opposition to the proposal, and that has caused new concerns for companies. It remains to be seen whether we can gain any clarity about the postponement and its duration at such short notice.”
IBAN to be used in 33 SEPA countries
The Single Euro Payments Area (SEPA) regulation is a new payments scheme designed to simplify and speed up cross-border financial transactions in the European Union. Under the scheme, all credit transfers and direct debits in SEPA countries will be standardized in the same format using the International Bank Account Number (IBAN). Consumers, however, can continue using the conventional bank account numbers and sort codes until 2016.
The SEPA area comprises the 28 EU member states as well as Iceland, Lichtenstein, Monaco, Norway, and Switzerland. Compared internationally, Germany is particularly unprepared for the switchover. Despite the announcement, companies are still well-advised to stop biding their time and to step up their efforts to become SEPA-compliant: according to news agency Reuters, European central banks are trying to prevent the extension in an effort to pressure companies and organizations to migrate their payment systems as soon as possible. The proposed extension still requires approval from the European Parliament and the Council of the European Union.