SEPA Migration: Time is running

By Josef Etz on 30. January 2014 in Market Insights

The proposal of the European Commission to extend the deadline for SEPA payments from February 1st to August 1st 2014 has led to some insecurity in the market. Off-the-record statements from key players differ from their official statements and there is no question all major players will still accept national account details by next week, after the official SEPA deadline of February 1st. There might be even some banks that are still not capable processing SEPA. Nevertheless, the migration will happen in the long run. Enough traction has been generated and there will not be a second delay in August. Don’t miss your chance in this very moment. Do the migration – and sleep well!

In the following post, we want to give you a short und comprehensible sum up of what has happened since the European Commission published their proposal in the beginning of January.

SEPA transition – yes or no?
The proposal of the European Commission to extend the SEPA transition deadline until 1 August 2014 (see our most recent blog post on SEPA’s extended transition period) will be adopted by the European Parliament and the Council of the EU retroactively by mid-February. However, the adoption does not change the formal deadline for transition of 1 February 2014. It only means that payments that differ from the SEPA format can continue to be accepted until 1 August 2014. Meaning SEPA is coming, time is running and payment service providers/ independent sales organizations and merchants should start their SEPA migration right now!

When the European Commission released their proposal to prolong the SEPA transition deadline by six month on January 9th, they caused a lot of confusion in the market. Discussions ranged from the European Commission releasing a proposal or a decision, the length of the additional transition period and some even suggested that this wasn’t the last extension of the SEPA migration.

Fact is the European Commission released a proposal only, which still needs to be adopted by the European Parliament and the Council of the EU representing the member states. On January 16th, the European Parliament’s Committee on Economic and Monetary Affairs (ECON) already agreedon the European Commission’s proposal to extend the transition period by six months and on January 17th, the spokeswoman of Internal Market and Services Commissioner Michel Barnier stated that the EP and the Council will adopt the proposal to February 1st retroactively by mid-February. Already in December, she stated, an informal consensus on the topic had been achieved. The Internal Market and Services Commissioner Michel Barnier himself said: “The transition period will not be extended after 1 August.”

What does this mean to payment service providers/independent sales organizations and merchants?
The EC proposal suggests modifying the ‘EU Regulation (EU No 260/2012) establishing technical and business requirements for credit transfers and direct debits in euro’ to give an extra transition period of six month during which payments which differ from the SEPA format can still be accepted. Meaning the proposal does not change the formal deadline for migration of 1 February 2014. This is also why the European Central Bank urges all market participants to complete the transition of all credit transfer and direct debit transactions to the SEPA standards by February 1 and why they still have the countdown running on their webpage.

SEPA migration accelerating
Looking at some recent statistics released by the European Central Bank show that migration to SEPA gathered pace strongly in December 2013. According to the latest figures provided by national central banks, 74% of credit transfers in the euro area were already SEPA-compliant at the end of December 2013 (in November 2013 that was 64%). Of all EU direct debits 41% were SEPA-compliant, a steep increase from the 26% registered in November 2013. In releasing the latest figures, the ECB states that if the current pace of migration continues, the vast majority of stakeholders will complete their migration by February 1st 2014.

Start your SEPA migration right now
At PAY.ON we offer our clients, PSP/independent sales organizations and further payment providers, a smooth migration and/or integration to SEPA within only one day. Meaning a SEPA migration with PAY.ON requires only little effort to implement and has maximum impact on client’s existing processing set-up. Find out more in our recent blog post on PAY.ON’s SEPA solution and immediately get in touch!

Josef Etz

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