SEPA Direct Debit has arrived ... hasn't it?

Five days to go and the SEPA Direct Debit start date is finally upon us, but is anyone in the industry taking any notice? As many have commented, it is not the ‘start dates’ but the ‘end dates’ that hold the most importance. The confusion about an end-date for legacy payment systems, and even a timeframe  to set an end-date, has added to the lack of interest and urgency regarding implementation of the SEPA framework on the side of banks and corporates alike. It is widely acknowledged that only setting a fixed end-date can provide the impetus needed to force the financial services industry into motion. Nevertheless, it will be fascinating to see the take up levels of SEPA Direct Debits over the next year, bearing in mind the lack of a strong business case for their introduction.

Despite the associated challenges, SEPA does create opportunities that banks have been slow to emphasise to their corporate customers, such as greater efficiency in terms of consolidating their systems and rationalising the number of bank accounts they hold as well as having a common standard for direct debit transactions in Euro countries. As such, corporates are in a strong position to encourage take up of SEPA but also to hinder it at the same time by failing to provide the right payments data in the right form – something for the banks to bear in mind. Furthermore, the lack of awareness around SEPA migration requirements also stretches to conversion from domestic account numbering systems to the IBAN and BIC system required for SEPA. The conversion to IBAN and BIC is be essential for corporates to avoid rejection or failed payments, thereby reducing transaction costs.

So SEPA Direct Debits have arrived but the question remains, is the industry ready or, more importantly, willing to take full advantage of them?