There is no doubt that regulation is a driving force in the payments industry at present and will remain so for the foreseeable future. The Payment Services Directive, the E-Money Directive, Basel III, Anti-Money Laundering and Know Your Customer rules, along with the SEPA End Date regulation, will continue to consume a sizeable amount of available IT budget at financial institutions. It is, however, the Single Euro Payments Area (SEPA) End Date regulation, on which many minds are focused at present since even with the current Eurozone crisis, the EU seems determined to issue this regulation before year-end 2011.
The SEPA End Date regulation promises to deliver a clear deadline for migrating domestic payments instruments on to SEPA standards. This deadline is important because current migration rates are far from matching set expectations, with only 20.5% migration for SEPA Credit Transfers (SCTs) and a very limited 0.1% for SEPA Direct Debits (SDDs) having taken place so far. With the likelihood of the end-date being set at end-January 2014, it is clear that a âwait and seeâ approach by both banks and corporates will not work, that smart decision making will be needed and that clear benefits are to be gained from seeking out a partner with whom to consult on possible strategies and solutions.
These are some of the key messages of a new white paper from SWIFT entitled Will the SEPA End Date really change the game?
The paper states that whilst the SEPA landscape is still far from clear despite the End Date regulation proposal, there are already concrete steps that financial institutions and infrastructures can take to reduce the pain and get ahead of the game:
â¢ Act wisely - have a clear view of your ambitions and those of your competitors in the European retail payments space and size investments accordingly whilst remembering that cheaper is not necessarily better.
â¢ If you do have ambitions in the European retail payments industry, go for the âno regretâ messaging solution; that which is future-proof and of which the price remains stable and predictable over time.
â¢ Analyse, map and prioritise all payment flows that will need to be migrated â this is a must.
â¢ Based on the facts that are known today, plan ahead and foresee alternative scenarios, including the possible need for âbackward or switch compatibilityâ should external factors impact the project.
And last but certainly not least, âGet help if needed!â say the SWIFT experts who have been supporting customers grappling with the implications of SEPA since the very first stages of the project.
âSWIFT can help market participants analyse their payments traffic across all of their banking communication channels to identify what they will need to migrate, and by when. Based on this, we can then assist with building a roadmap for migration, give recommendations on priorities and help customers reconsider their clearing strategyâ explains Marc Pomes Bordedebat, Senior Market Manager Payments, EMEA at SWIFT.