The European Commission just proposed a six-month “grace period” beyond the SEPA migration deadline of February 1st, 2014. What does this announcement mean for companies? Why should SEPA migration remain a priority for all companies?
On the operational side of things, SEPA is ready to be implemented. It is highly likely that a large majority of transaction flows will be in compliance with the SEPA standard on February 1st. In France, by the end of December 2013, 70% of transfers and 50% of direct debits were already in compliance. No major disruption was observed. This is due, in part, to the preparedness of the payment services providers who are already processing tens of millions of SEPA transactions per day. The results are even better than hoped; to date, the SEPA incident rate is lower than that of domestic direct debits.
The situation with regard to those who submit payment orders, however, is worrisome. A large majority of small- and medium-sized businesses, the last market segment to migrate, will not be ready. In the interest of not overwhelming these companies, the Commission proposed not imposing the planned sanction mechanism on those who are late in migrating for a maximum period of six months. In other words, the SEPA project has not been postponed, but a flexibility clause could be added to allow all companies the time to migrate. The proposition remains to be agreed upon by both the European Council and the European Parliament.
Despite the mobilization of central banks, despite the informational campaigns in the press, information sent to customers by banks and, on a wider scale, by payment services providers, the level of awareness among owners of small- and medium-sized businesses remains limited. This new grace period gives us a chance to clear up some misconceptions, if any remain:
YES – SEPA migration is required for all companies conducting business in Euros, and not only those who exchange payments with suppliers or customers in other European countries.
NO – SEPA migration is not an expensive process. The cost to make the transition is largely compensated for by the elimination of bank interchange fees and the opening up of competition in the European region, which has put pressure on transaction costs.
YES – You can ask your bank to help you with the migration, but they are not your only resource. You will also find specialists like SlimPay who offer turnkey solutions that do not necessarily require you to be associated with a single bank.
More than ever, SEPA migration needs to be in your 2014 to-do list. Take advantage of this grace period to reduce your costs and maximize your cash flow by accelerating the processing of your payments.
