29 Jan 2008
The speed with which banks adopt Single Euro Payments Area (Sepa) payments systems is crucial to the scheme's success, according to a report by Capgemini for the European Commission.
Sepa, which launched yesterday, could either save the sector €123bn (£91bn) or cost it an extra €43bn (£32bn) by 2012 - depending on how well it is adopted.
Banks must migrate rapidly if they want to make savings, said EU Internal Market and Services Commissioner Charlie McCreevy.
"The study shows the importance of all stakeholders supporting Sepa and becoming early adopters of the new products in a market-driven process," he said.
Under Sepa, all international payments in Europe will be treated as domestic transactions by 2012, improving the efficiency of the region's financial institutions.
But deadlines have slipped. Yesterday's start date was originally due a month ago. And the timetable for other elements including cross-border direct debit payments have been put back by as much as two years, as banks prove wary of investing in the necessary technology in a heavily regulated market.
There is still a lack of consumer pressure for banks to comply with Sepa deadlines, says Capgemini.
"Many banks and retailers are worried about the relatively high investments they need to make, while many potential users are simply not yet aware of the potential benefits Sepa could bring to them," says the report published today.
UK banks are already struggling to comply with the faster payments scheme – a £300m technology programme to cut banks’ three-day clearing periods to less than 24 hours.
The scheme has already been delayed by six months until May 2008 because banks were missing implementation deadlines.
Dear Sir/Madam
I transfered money using SEPA from a Lloyds TSB account to my account in Germany and was charged £28.00. Lloyds TSB offered SEPA on their Business and Corporate customers International Moneymovers application so I indicated it as my choice considering it to be a low cost option. I wasn't advised of any charges at the time and was quite surprised receiving their advice of by post.
I got in touch with the FSA who denied any knowledge of SEPA. It took my advising them that I found 3 entries on their site dealing with SEPA, than being put on hold for several minutes only to be finally told that the FSA had no knowledge about the current practice/implementation of SEPA. For any advice on the subject I would be very grateful indeed as I want to carry out several more money transfers from the UK to the same account.
Yours faithful
Frank Luetkebohmert
Posted by: Frank Luetkebohmert 16 Apr 2008
Of course, the success of SEPA and the ?123bn it could save the sector depends on how well banks adopt it. But the key phrase in this article is "market-driven". It is very surprising that the interest across UK business has, like that for Faster Payments, been lacklustre to say the least. The potential for SEPA is huge - and the time to act is now.
Businesses will see extraordinary benefits from SEPA but they need the banks to be enthusiastic and in order to achieve this, they need to be showing enthusiasm themselves. Any investment that has to be made in SEPA-ready software is a classic example of spending to save in the long term.
If businesses are going to make the banks sit up and take notice of SEPA, they could take certain specific steps: They should set up a project team to monitor and research legislative developments, if they have not already done so. They should also be asking the right questions of banks, which will all have different approaches.
2012 is the deadline for all European cross-border transactions to be treated as domestic payments. With the right preparation in place and all parties concerned already thinking ahead to the many financial and business benefits this will bring, European businesses will truly be able to see just how much of a difference SEPA could make to them and in turn, be able to encourage the banks to take action.
Adrian Stafford-Jones
Managing Director, Albany Software
Posted by: Adrian Stafford-Jones 19 Feb 2008
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