EU businesses “unprepared” for SEPA, warns survey
Europe’s businesses are unprepared for the arrival of the Single Euro Payments Area in February 2014, with many completely unaware of its consequences, according to new research by IT business services provider Steria.
SEPA is intended to simplify and harmonise bank transfers in the European Union, and as one of the pillars of European integration, and is meant to help underpin the use of the single currency.
However, some 65% of businesses in France and 58% in Germany have not even started migrating to SEPA direct debits, while in the UK, which is not a member of the Eurozone, the figure is 97%. Across the region, one business in five issuing direct debits is not even aware of SEPA, according to the survey. Just 9% of German businesses issuing direct debits have migrated to SEPA, while in France the figure is 6% and the UK 3%.
Despite the lack of adoption, SEPA will affect 96% of businesses in France and Germany and 65% of British businesses with European cross-border sales activities. All businesses that use credit transfers or direct debits denominated in euros will need to comply with SEPA from February 2014 at the latest. In total, SEPA covers the 27 countries in the EU, plus Iceland, Norway, Liechtenstein, Switzerland and Monaco.
“SEPA direct debit’s impact goes beyond IT and affects many business functions,” said the Steria document. “Businesses need to assess thoroughly SEPA direct debit’s consequences to plan for their migration.”
SEPA encompasses card payments within the SEPA card framework, as well as direct debit and credit transfer transactions. As of September 2012, 30% of credit transfers had migrated to the SEPA credit transfer scheme and 2% of direct debits used the SEPA direct debit scheme.
Part of the problem may stem from ambivalence about the benefits of the project. Some 40% of European businesses think that SEPA direct debit simplifies payments, while 33% consider it will make the payment process more complex. In the UK, 74% of businesses are not aware of SEPA direct debit at all.
“Europe currently has a very fragmented payments landscape and SEPA contributes to the convergence of different payment methods,” added the Steria document. “As payment methods tend to converge in the future, European businesses can benefit from SEPA to plan ahead, redesign cash management processes and generate synergies between business units. SEPA is a matter of seizing opportunities to become innovative.”
Last month, the pan-European payment infrastructure provider EBA Clearing introduced SEPA services on its STEP2 platform. STEP2 is the pan-European Automated Clearing House that processes bulk payments in the euro. The change meant the time needed to send SDD Core collections to debtor’s banks decreased from five days plus to just one day, making bulk transfers in euros more efficient.
The Steria research was based on a survey of 300 businesses in France, Germany and the UK.