The second migration report reveals disturbing SEPA migration statistics | equensWorldline

The second migration report reveals disturbing SEPA migration statistics

Marcel Woutersen

Senior Communications Consultant

21 November 2013

The second migration report reveals disturbing SEPA migration statistics


Compared to the situation described in the first SEPA migration report, there is now a greater and faster migration from legacy credit transfers to SEPA Credit Transfers (SCTs) in most countries. This is one finding of the second SEPA migration report that has been published by the European Central Bank (ECB). On the flipside, the ECB warns that many stakeholders have decided to migrate in the last quarter of 2013 or even later and that this approach ‘gives rise to operational risks and it limits the possibilities of tackling any setbacks or unexpected developments during the changeover.’

The migration report describes the process towards the SCT and SEPA Direct Debit (SDD) schemes. The report is based on the quantitative and qualitative reporting by the national central banks of the Eurosystem. The European Central Bank and the national central banks together constitute the Eurosystem, the central banking system of the Euro area. This blog is a resume of the migration report. All findings belong to the European Central Bank.

Slight improvement in preparedness

According to the most recent migration report the overall preparedness of payment service providers (PSPs) has further improved in the first half of 2013, although significant efforts are still needed in terms of making customer service channels ready and providing more information to customers on the SDD scheme. Among payment service users (PSUs), small and medium-sized enterprises (SMEs), municipalities and regional authorities continue to represent the groups with the lowest level of general awareness, although communication campaigns launched in the second and third quarters of 2013 have helped to improve this situation.

The SEPA zone is adjusting to SCT

According to the Euro area SCT indicator, the use of SCTs accounted for 56.26 per cent of the total credit transfer volume that originated in the Euro area in September 2013. This shows that in the first three quarters of 2013, the pace of migration accelerated.

The national SCT indicators continue to demonstrate a relatively large variation in the level of migration across countries. Since the publication of the first SEPA migration report, Luxembourg and Slovakia have joined Slovenia and Finland in the group of countries that have practically completed migration to SEPA. Greece, Cyprus, France, Belgium and Spain are well advanced in their progress, with more than 50 per cent of credit transfers already being executed in the SCT format. Migration to the SCT scheme in Austria, the Netherlands and Portugal is also taking place at a fast pace. However, in four countries, the current level of migration is still below 20 per cent. Overall, and compared to the stage of progress at the end of 2012, almost all countries now seem to be making steady progress towards migration to the SCT scheme.

Migration to SDD is behind plan

Migration to the SDD scheme is still behind plan, after the first three quarters of 2013. In some of the larger direct debit markets, PSPs will only provide their final solutions for migration in the last quarter of 2013. This has caused some PSUs, particularly the big billers and the SMEs, to adopt a wait-and-see approach when it comes to migrating to the SDD scheme. The ECB warns that this approach increases the risk of not being able to complete the preparations by the deadline.

No significant progress towards migration to the SDD scheme has been made since the first SEPA migration report. Based on the Eurosystem’s Euro area SDD indicator, only 6.84 per cent of direct debits were executed under the SDD scheme in European infrastructures in September 2013. Furthermore, when comparing this data with the findings of the first SEPA migration report, little change could be observed in the national ratios by the end of September 2013. Apart from Slovenia, none of the countries are close to completing migration. Greece, Belgium and Austria are a little more advanced, albeit the latter two with ratios of below 20 per cent. In the other countries, including the four largest direct debits markets, migration is still marginal in terms of the volume of actual transactions processed in the SDD format. In Estonia, Finland and Cyprus, national legacy direct debits will either be replaced by SCT-based e-invoicing solutions or simply phased out.

The risks of being late with migrating

Many stakeholders have opted for late migration in the fourth quarter of 2013, or even later, in spite of the risks inherent in such a strategy and the earlier warnings given and recommendations made by the Eurosystem. The ECB emphasises, in line with the stance taken by the EU Council and the European Commission, that there is no alternative to meeting the legal requirements as set out in the SEPA migration end-date regulation.

The risks due to late migration include:

  • The limited capacity and bottlenecks at PSPs and software vendors at the end of 2013
  • The limited time for PSUs to adapt to PSP systems
  • Insufficient end-to-end testing between end users and PSPs

The experiences of those stakeholders that have already completed migration to the SDD or SCT scheme show that there is a real need for a fine-tuning period after changeover. The risks due to late migration – even though being of an operational nature – could eventually impact the wider supply chain and even jeopardise the public’s confidence in payment services in general.

The ECB calls for an intensive and constructive dialogue between key stakeholders and competent authorities at the national level to jointly address migration issues and the remaining challenges.