Banking deadline extended

Sepa aims to make Europe more competitive in the global economy

A key deadline in establishing Europe’s borderless banking market has been extended, but many UK banks will still not meet the timetable, warn experts.

Under the Single Euro Payments Area (Sepa) scheme all payments within the EU will be treated as domestic, saving transfer costs and increasing the region’s global economic competitiveness.

The first phase ­ the credit transfer scheme ­ was due to be operational at the start of this month. But the deadline was moved to 28 January because most institutions have not completed the necessary IT changes.

Even the revised timetable is unlikely to be met, according to Gartner analyst Alistair Newton.

“There is a general acceptance that not every bank will be signed up by the end of January ­ many will probably make announcements later in the month,” he said.

Only Vocalink, the infrastructure provider for Sepa itself, has said it will definitely be compliant with the new timetable.

The banks’ lack of urgency may be due to regulation overload, particularly in the UK, said Sam Subesinghe, principal adviser at consultancy KPMG.

The faster payments scheme, for example, is designed to reduce the clearing time from three days to one. And, like Sepa, it requires significant technological investment from banks.

“In the UK domestic market, the faster payments scheme has taken priority because it is where the consumer focus lies,” said Subesinghe.

Sepa’s cross-border direct debit phase is also behind schedule.

The plan, which will allow international direct debits, has been severely delayed by legal issues.

The banking sector is now waiting for the EU Payment Services Directive to be implemented in individual member states ­ which is unlikely before November 2009 at the earliest.

With little compulsion from customers, banks’ attention is largely elsewhere, according to Subesinghe.

“People are not rushing on this part of Sepa because there is not much consumer pressure to do so,” he said.

“There are plenty of alternative, cheap ways for consumers to make international payments other than through the banks.”