SEPA: Significant progress made but concerns need to be addressed without delay (Sixth SEPA progress report)
In the sixth progress report on the Single Euro Payments Area (SEPA), published today, the Governing Council of the ECB welcomed the evident progress made on this project, but emphasised that work urgently remains to be done to ensure the success of SEPA. The sixth progress report also contains a list of “Ten milestones for SEPA implementation and migration”.
There have been many new developments since the publication of the fifth progress report in July 2007. The successful launch of SEPA in January 2008 was a major achievement. With the introduction of the SEPA Credit Transfer (SCT) on 28 January 2008, the first benefits of SEPA have materialised for banks and, more importantly, for the end-users of payment services. National SEPA implementation and migration plans have been drafted and published. Most automated clearing houses that were processing credit transfers in euro are now able to process SCTs. In January 2008, SEPA was also started for card payments, but more effort is needed in this area if the goals of the SEPA project are to be achieved, for example the emergence of at least one additional European card scheme. Preparations for the third type of payment instrument, SEPA Direct Debit (SDD), have continued over the past year, resulting in the adoption of the Rulebooks. The launch of the SDD is scheduled for 1 November 2009. Nevertheless, the launch of this important SEPA instrument needs to be accompanied by clarification between the banking sector and the relevant competition authorities with regard to the possible interbank pricing models. This issue needs to be resolved urgently. Finally, considerable progress has been made in the fields of e-payments and mobile payments.
The areas which require most attention now are: a) the timely launch of the SEPA Direct Debit on 1 November 2009; b) the emergence of an additional European card scheme; and c) measures to stimulate migration to SEPA Credit Transfer and SEPA Direct Debit, including the setting of a realistic, but ambitious end-date for national credit transfers and direct debits.
The key messages of this report, which should be followed up by the market to ensure the success of SEPA, are as follows:
- Banks need to ensure more communication, clear product offerings and the delivery of a consistent customer experience in order to stimulate the uptake of SEPA Credit Transfer by all customers, with public administrations, in particular, becoming early adopters.
- The remaining obstacles to a timely launch of SEPA Direct Debit should be overcome. To move forward, solutions must be found urgently, e.g. by providing clarity on the launch date, ensuring the continued validity of existing mandates, meeting customer requirements, increasing communication efforts and closing the debate on the multilateral interchange fee.
- SEPA needs to enable end-to-end straight-through-processing (whereby payments are processed smoothly and without manual intervention) and to move beyond core and basic products by embracing innovative products and services, such as m-payments, e-payments, e-invoicing, etc.
- The setting of a realistic, but ambitious end-date for the migration to SCT and SDD is a necessary step in order to reap the benefits of SEPA early.
- A more ambitious approach needs to be taken towards the SEPA for Cards and supporting market initiatives to create a European card scheme.
- The European payment industry should ensure that it has adequate influence over the SEPA cards standards, which should preferably be non-proprietary standards – The EPC is to advance the SEPA cards standardisation programme.
- Security is the basis for trust in SEPA payments, and all stakeholders need to continue and even intensify their efforts.
- Infrastructures are leading by example, but the remaining restrictions on interoperability should be removed.
- Good governance of the SEPA project requires changes to the EPC’s mandate and organisation. One short-term step would be to strengthen the EPC’s Secretariat so that it can adequately support the EPC in its many tasks. In the medium to longer term, more substantial changes are needed to improve the EPC’s effectiveness, transparency and accountability.
- Clarity and certainty with regard to the SEPA tasks: the SEPA implementation and migration milestones provide a list of concrete tasks that the Eurosystem expects to be fulfilled to ensure the success of the SEPA project.
The addressees of the report are not only the banks and future payment institutions, but all relevant stakeholders, such as corporates, public administrations, merchants and consumers.
The report, which is being published in English today, will be available in other official Community languages in due course.