European Central Bank calls for 'urgent' action on Sepa

The European Central Bank has called for an overhaul of governance and management of the European Payments Council in its latest report on impediments to the creation of a Single Euro Payments Area (Sepa).

In it's sixth Sepa progress report, the ECB welcomes the effort made so far, but stresses that work "urgently remains to be done" to ensure the success of the Europe-wide project.

The report contains a list of 'ten milestones for Sepa implementation and migration', including calls for the development of a new bank-backed European card scheme to challenge the dominance of MasterCard's Maestro system, and clarification of the rules governing the launch of the new Sepa Direct Debit payments instruments that are slated for introduction in November next year.

The Central bank says the banking sector and relevant competition authorities "urgently" need to resolve outstanding issues regarding the possible interbank pricing models for direct debits.

It also calls on the industry to stimulate migration to the new Sepa payment instruments by setting a "realistic, but ambitious" end-date for national credit transfers and direct debits.

The ECB has also suggested changes to the mandate and organisation of the EPC, the bank-backed Sepa standards body.

"One short-term step would be to strengthen the EPC's Secretariat so that it can adequately support the EPC in its many tasks," says the ECB. "In the medium to longer term, more substantial changes are needed to improve the EPC's effectiveness, transparency and accountability."

Read the full progress report:

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Comments: (1)

A Finextra member 03 December, 2008, 09:40

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Even among banks, the take up of SEPA instruments has been slow since the introduction of SEPA Credit Transfers earlier this year. As a European-wide initiative which is mainly driven by the banks, it is not yet clear, however, whether their corporate customers intend to or are able to make use of the service next year.

In order for corporates to see the benefits of cross-border SEPA payments, next year’s introduction of SEPA Direct Debits not only requires the banks to listen to their corporate customers, it also requires the harmonisation of all EU members’ legal framework for payments in line with the Payment Service Directive (PSD). Despite the challenging economic climate, financial institutions must readdress SEPA by thinking about how the new payment instruments can benefit their customers and not just be a tool for creating payment efficiencies. As such, Europe’s banks need to look at the opportunities SDDs will create for their corporate customers and start communicating these to them.

In addition, corporates are looking to consolidate their cross-border banking relationships, however, they have so far had to make do with a patchwork solution of software, integration and communications links from several different banks, which can be a costly undertaking. As such, the business benefits for corporates to migrate to SEPA instruments have been minimal. The solution may lie in a new banking services model: electronic Full-Service Banking (eFSB).

The concept involves the provision of all possible banking services across a common network through a standard set of interfaces, all of which can be easily integrated into a corporate’s business processes. Instead of many bank-specific software and interfaces, a corporate can take advantage of the bank services it requires across a worldwide network and through one automated gateway.

However, due to current delays and confusion about the timeframes, a full implementation of SEPA is realistically likely to happen between 2011 and 2012. The EPC’s Deputy Secretary General Erik Månsson is fully aware of the fact that ‘SEPA should not be treated as a hobby activity’. As such, questions remain around who will enforce this deadline and what will be the consequences of non-compliance . Ultimately, it might be one for the judges to decide?