It's offical then. SEPA is dead. For the EU to begin a round of consultations at this late stage is little short of hilarious. If the EU Commission has not the will to force SEPA deadlines, then why should the market accomodate it? Cross border transaction volumes in Europe will remain in the low single percentages for decades so there is no real demand from citizens or from most businesses that trade domestically, and asking banks to forgo the FX revenues and fees they charge for "international" payments has always looked like asking turkey's to vote for Christmas. Perhaps the real definition of SEPA I heard recently is true, Sending Electronic Payments to America? Visa and MasterCard must be rubbing their hands together.

not Electronic but Sending European Payments to America

SEPA never really had a chance. The banks didn't like it or want it and in the end it looks like they have finally killed it too. The time for "strong incentives" was over long ago. Despite all the "threats" over the past several years from Charlie McCreevy and Gertrude Tumpel-Gugerell it certainly looks like the banks have won. Unless you get a 100% buy-in at the start of any project from all the stakeholders you are going to end up like this.

The key drivers to stimulate SEPA activity, should be  in a first stage cross border corporates and cross border facilities , that could take advantage of bulk cross border remittance.

Adoption should naturally follow.

In a second phase retail banks themselves could take advantage of SEPA, by beeing able to compete outside of there geographical domain of presence.

Why choose a bank in my country, if I can find a cheaper one ouside, with no crossborder fees ! 

EU launches consultation on SEPA ... but obstacles still lie ahead

Despite the EU's steps towards launching a consultation on an end date for SEPA migration, confusion around timeframes, combined with the lack of a strong business case has led to corporate lethargy regarding migration to the new instruments. However, the SEPA directive presents them with not only a challenge but also an opportunity. National legacy systems are clearly a huge barrier to SEPA take-up. Many organisations, including France Telecom Group Treasury, are finding it challenging to handle the conversion from Basic Bank Account Numbers (BBANs) that they currently use for domestic payments, to the IBAN and BIC format, and are concerned about the cost associated with this process. However, companies who are slow to comply will then risk payments being rejected and consequently might receive penalties if their systems are not SEPA compliant.

Despite the associated challenges, SEPA also creates opportunities that banks need to emphasise to their corporate customers. For example, SEPA can allow corporates to enjoy efficiencies, cut costs and consolidate their systems and processes by reducing the number of bank accounts they hold and the number of payments formats they need to support. Moreover, through a more standardised approach to euro payments, corporates have the potential to grow their international customer base without adding extra, national complications.

Most importantly, by failing to provide the right data for SEPA payments, namely valid IBAN and BIC, corporates can impede the transaction going via the SEPA route. Since the corporates cannot force a transaction to go via SEPA mechanisms but can prevent it, they are in the position of power, not their banks. And whilst a the EU launching a consultation on whether and how to set migration deadlines, I believe that banks need to better engage with their customers if communities are to hit whatever deadline for SEPA migration will be set.