20 September 2012
Interview with Javier Santamaría, part two: ‘Early movers confirm: SEPA pays off’
In a previous blog post, chairman Javier Santamaría of the European Payments Council (EPC) discussed the transition towards SEPA and the role EPC plays in this process. In this second part, Javier Santamaría will highlight the main advantages of SEPA to consumers and companies and the importance of communicating the SEPA objectives.
What, in your opinion, are the main advantages of SEPA to consumers and companies?
Javier Santamaría: “The SEPA Credit Transfer (SCT) and SEPA Direct Debit (SDD) Schemes are based on the most advanced technical standards made available by international standards bodies such as the International Organization for Standardization (ISO). The schemes offer businesses significant efficiency gains through the automation of payment processing and the ability to optimise the cash management process. The latter can be achieved by businesses consolidating accounts currently maintained in different European countries to handle local payments into one single account and subsequently centralising liquidity. The SCT and SDD Schemes facilitate the expansion of businesses across national borders by introducing a standardised payment infrastructure. The SEPA Schemes therefore support and facilitate trade across the European Union (EU) internal market. Innovative end-to-end SEPA solutions, based on global standards developed by the ISO, will also lead to decreased IT costs, streamlined back office functions and simplified reconciliation.
The economy as a whole will also benefit if invoices are paid when they are due. The business community depends on reliable cash flow and the SDD Schemes enable the biller to collect payments on the exact due date. The SDD business-to-business (B2B) Scheme, in particular, fully supports the intra-European supply chain management of companies on the financial side.
The introduction of SCT and SDD makes paying bills significantly easier for mobile European citizens including workers, students, holiday home owners, tourists or retirees living abroad. At the same time, the SEPA Schemes benefit consumers, who wish to purchase goods or services from retailers located in SEPA countries other than their home country. All consumers will be able to rely on one home account for all – domestic and cross-border –payments throughout SEPA. It is also convenient for consumers not to have to deal with the consequences of late payments. The SDD Scheme, specifically, enables the consumer to know exactly when his or her account will be debited.
In our view, this question can however best be answered by SEPA practitioners on the demand side of the payments market, who have successfully concluded migration to SCT and SDD. Early movers representing companies (corporates), public administrations and government agencies, who reported on their migration experience in the EPC Newsletter unanimously confirmed that SEPA pays off. These case studies are available on the EPC Website.”
What is the role of banks and companies to educate their clients on the SEPA transition?
Javier Santamaría: “As EPC Chair, I can only speak on behalf of the EPC, not on behalf of individual institutions. As pointed out in the previous blog post, the EPC has undertaken substantial efforts to contribute to educating SEPA stakeholders on the SEPA transition. At the same time, individual payment service providers are making available the tools to support their customers during the migration phase.”
Is SEPA high enough on the agenda of national governments?
Javier Santamaría: “SEPA was launched as a political initiative by EU governments and the EU authorities with the objective to further integrate the Euro payments market. Educating the general public on the SEPA objectives at national level is therefore the prime responsibility of the political authorities – such as EU governments – driving EU integration. Already in December 2009, the Economic and Financial Affairs Council (ECOFIN), which comprises the Economics and Finance Ministers of the EU Member States, emphasised that the full benefits of SEPA ‘can only be obtained through the full migration of existing national Euro payments transactions’. At that time, the ECOFIN also called on public authorities in all EU Member States (i.e., themselves) to ‘significantly step up their migration efforts and lead SEPA migration by example’. The EPC is not in a position to judge the efforts rolled out by national governments in the Euro area to support citizens and businesses to make the transition. The EPC would assume that EU Member States followed their own call to action.”
What is the worst case scenario if banks or payments providers do not prepare in time for the transition?
Javier Santamaría: “The EPC does not engage in and recommends abstaining from speculating on ‘worst case’ scenarios. There are no indications in our view that market participants are not going to comply with their legal obligations established with the SEPA Regulation. As discussed in the previous blog post, European payment service providers are ready for SEPA. The focus is now on supporting the demand side in the migration process. On a general note: it seems to be fashionable among certain market observers to predict the failure of SEPA. We have witnessed this tendency for years. The fact is: SCT and SDD will replace existing national Euro credit transfer and direct debit schemes in line with the provisions of the SEPA Regulation.”
About the EPC
The EPC is the coordination and decision-making body of the European banking industry in relation to payments. The purpose of the EPC is to support and promote SEPA.
Following the introduction of the euro notes and coins in 2002; EU governments, the European Commission and the European Central Bank (ECB) called on the banking industry to develop harmonised schemes for electronic euro payments. The EPC is responsible, among other things, for the development and maintenance of SEPA payment schemes as defined in the SCT and SDD Rulebooks in close dialogue with the customer community. The rulebooks contain sets of rules and standards for the execution of SEPA payment transactions that have to be followed by adhering payment service providers. These rulebooks can be regarded as instruction manuals, which provide a common understanding on how to move funds from account A to account B within SEPA. The schemes are based on technical standards defined by standards bodies such as the International Organization for Standardization (ISO). The SEPA payment schemes developed by the EPC have open access criteria in line with Article 28 of the EU Payment Services Directive (Directive 2007/64/EC of the European Parliament and of the Council of 13 November 2007 on payment services in the internal market).
The EPC consists of 74 members representing banks, banking communities and payment institutions. More than 360 professionals from 32 countries are directly engaged in the EPC’s work programme, representing organisations of all sizes and sectors of the European banking industry. The ECB acts as an observer in all EPC working and support groups and in the EPC Plenary (the Plenary is the decision-making body of the EPC, see chart below). The EPC is a not-for-profit organisation, which makes all of its deliverables, including the SEPA Scheme Rulebooks and adjacent documentation, available to download free of charge on the EPC Website. The EPC does not supply technology, goods or services.
The particular payment products and services – based on a particular payment scheme – offered to the customer are developed by individual payment service providers operating in a competitive environment. The development of payment products based on the SEPA payment schemes including all product-related features is outside the scope of the EPC.
 Regulation (EU) No 260/2012 establishing technical and business requirements for credit transfers and direct debits in euro and amending Regulation (EC) No 924/2009.