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I am deputy editor at The Banker, a Financial Times publication. I joined the magazine in August 2015 as transaction banking and technology editor, which remain the beats I cover. Previously I was features editor at Profit & Loss, an FX and derivatives publication and events company. Before that I was editorial director of Treasury Today following a period as editor of gtnews.com. I also worked on Banking Technology, Computer Weekly, and IBM Computer Today. I have a BSc from the University of Victoria, Canada.

Thursday, 6 August 2009

Only a Quarter of Firms Use SEPA Processes

19 Aug 2008

Over six months after the adoption of the single euro payments area (SEPA) credit transfers, only 4% of firms are using SEPA schemes for both incoming and outgoing payments, while 22% use SEPA schemes for either incoming or outgoing payments, according to a survey of its clients by investment bank Dresdner Kleinwort. These are mainly large companies with a turnover of between €500m and €5bn. Almost 75% of those companies surveyed are not yet using the new schemes.

The slow uptake of SEPA has occurred despite the fact that two-thirds of all companies surveyed see benefits in adopting the schemes. From the 4% of companies already using SEPA for all payments, almost nine out of ten gave lower transaction costs for cross-border payments as the reason for implementing the new schemes.

The survey results also showed:

•Only slightly over 20% of companies were considering implementing the new formats and processes within the next six months.
•50% of companies are only willing to migrate when it becomes mandatory.
•Companies with a turnover of up to €100m or less than 10,000 payment transactions per year are particularly cautious about adopting the SEPA schemes.
•Companies see required changes to ERP systems as less of a challenge (36%) than the number of different formats in Europe (56%) and obtaining IBAN. Many also raised concerns about obtaining IBAN and BIC information from their business partners (47%).
•For companies already actively using the SEPA schemes, obtaining IBAN and BIC information is proving more difficult in practice than expected (78%), whereas changes to ERP systems (11%) and the different SEPA formats (25%) are rated less challenging.
In an interview with gtnews, Arne Borkowski, director, global cash management sales team at Dresdner Kleinwort, said that most firms have been hesitant to make the SEPA transition because SEPA is still incomplete. "We have the credit transfer but not the direct debit and most of the companies want to have both instruments in place before they embark on a change project. For many firms that do a lot of direct debits, it does not seem in their best interest to change to a half completed payments transaction package." SEPA direct debit is to be introduced in November 2009.

He said that most firms had high expectations that cross-border payments fees would be reduced but that is not the only aspect they look at when attempting to build a business case. "There are huge investments needed to migrate to SEPA and therefore it depends whether they can build a business case to do it. Banks had to do it because they had to be ready on 28 January this year, but companies don't have to be ready - they can wait for their business case."

Borkowski believes that an impetus for SEPA adoption will come from the public sector. "When a bigger part of the public sector is SEPA-ready, then this will have a big impact on all others that follow them. Because if the public sector is SEPA-ready, then they will request their counterparties to be SEPA-ready - and they have the power to do so," he said.

First published on www.gtnews.com 

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