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ECB: Many advantages of SEPA already exist

“It is a general misconception that the migration to SEPA will be completed on February 1, 2014,” says Wiebe Ruttenberg, Head of Market Integration Division at the European Central Bank (ECB). “On that date we will have ‘only’ completed the migration to SEPA Credit Transfer and SEPA Direct Debit within the Euro area. This means that only two out of the three most important cashless payment instruments will be harmonised by then. The harmonisation of certain standards and business rules for card payments will occur after that date and be another important milestone. The harmonisation of Internet and mobile payments should not be forgotten either.

In February 2014 we are taking a huge step to build a foundation for SEPA and we will continue to develop it further.

Ruttenberg’s division manages the integration of the retail payments market in Europe. The ECB is like a spider in the web of all the national central banks in the Euro zone. Needless to say that SEPA is high on the agenda of the ECB these days.

Monitor, share best practices and communicate

“First, we monitor what is actually happening in the market. Our SEPA website informs the public about the latest developments. Every quarter we publish national and every month Euro area indicators – the percentage of payments that are SEPA-compliant. We are about to introduce more qualitative indicators as well, based on a traffic light approach. For each country the level of preparation already made by banks, corporates and public authorities will be assessed.

Besides monitoring it is important for the ECB to address issues and share best practices between central banks as well as payment service providers. In this context, we also work closely together with organisations like the European Payments Council. For example, we created a list of niche products per country and discussed with the market participants and the national central banks whether there is an actual need for these products.

Finally, communication is an important part of our effort to ensure a smooth SEPA transition. On our website we offer country fact sheets with information on the transitional arrangements chosen by individual member states – if any. Such arrangements are for example temporary waivers for niche products or conversion services. We believe that communication is vital to the success of SEPA, but in all communication the cultural context needs to be recognised. A payment is not just about transferring money, but it’s about the behaviour of consumers and businesses. That is why we believe the real communication should take place on a national level – and we support national central banks in this.”

Easily taken for granted

Ruttenberg believes it is important to highlight the advantages of SEPA to banks, corporates and consumers, “Many advantages of SEPA already exist to businesses and consumers but they are easily taken for granted. If you compare speed of cross-border transactions now to a few years ago, a lot has happened already. Credit transfers used to take up to five days, now they are processed within one day. Also, the fees for Euro credit transfers within the EU have decreased by almost ninety per cent. By February 1, 2014, the migration to the same pan-European credit transfer and direct debt schemes will remove any difference between national and cross-border payments within the Euro area. The rest of SEPA will follow suit by 2016.

For banks, SEPA requires investing in new payment systems. If you take into account that these systems are upgraded or renewed every five to ten years and that SEPA preparations have been going on for ten years now, it is fair to say that there has been plenty of time to include SEPA in the regular investment cycle. As of 2014 the burden of parallel processing between domestic and SEPA-formats will be taken away. Having said that, SEPA also opens opportunities for banks. SEPA allows banks to easily expand geographically and offer more innovative payments solutions.”

This was part one of two articles about the ECB. In the next blog post Ruttenberg will talk about the consequences of the current economic climate for SEPA.

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