Following on from the European Commission proposal last month to delay the SEPA deadline, today a European Parliament vote supported the six month SEPA deadline delay to 1st August, 2014.
The European Parliament vote is likely to be formally adopted into law by the European Council in the next few days. The official European Parliament press release can be found at: http://europa.eu/rapid/press-release_MEMO-14-81_en.htm?locale=en
There are mixed thoughts about the deadline delay. Some of these viewpoints mention the following:
- In recent months there has been an incredible effort to migrate to SEPA Credit Transfer and SEPA Direct Debit processing. The widely quoted December 2013 European Central Bank stats were at 74% for SEPA Credit Transfers and 41% for SEPA Direct Debits
- In my humble opinion, even if the stats rose to an unlikely 90% for SCT and 80% for SDD, within the Eurozone that still represents a significant number of suppliers not being paid, and in turn goods not being delivered. The impact this would have on industry across the Eurozone and within some of the weaker economies, would have been catastrophic
- The European Commission, the European Parliament and the European Council would have been criticised and the SEPA project, which is by no means going perfectly, would have been a complete disaster
- The delay introduces additional costs to the wider market since banks and payment service providers need to keep alive their legacy systems that process legacy formats
- This is a fair point, and there is some confusion in the marketplace around who will pay for this delay. But the alternative, to not process legacy formats beyond 1st February 2014, would have been a much higher price to pay!
- There is a view that some corporates, and to a lesser extent SME’s, were waiting till the last minute to migrate. Collectively this would have dramatically, so the argument goes, bumped up the number of SEPA compliant transactions
- In the absence of any data that supports this, I think this is a hypothesis that you don’t want to test. Its widely believed that the good SEPA momentum will also now diminish. Sure that’s inevitable, but a delay gives everyone a much better chance of working towards SEPA compliance. In my opinion, a carrot and stick approach is needed. We’ve been dealt the carrot (the 6month delay), now tell us what the stick will be. An improved communication around the penalties (in addition to your payments not being processed) if you’re not SEPA compliant will pay dividends.
- The deadline delay discredits the authorities that promote SEPA, notably the European Payments Council, European Commission and European Parliament
- The inevitable delay is not great publicity but I refer to my comments to point 1. The cost of sticking to 1st February, 2014 deadline would have been much higher than a little bruising to their ego.
Well there you have my views, what do you think?
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