ECB calls for mandatory Sepa migration deadline

The European Central Bank (ECB) says self-regulation on Sepa has not achieved the expected results and is calling on legislators to now set a mandatory migration timeline.

In its seventh Sepa progress report, the ECB says there has been genuine progress on migration for project designed to enable customers to make cashless euro payments to anyone located anywhere in Europe, using a single account and a single set of instruments.

There are 32 European countries participating in the project and more than 4400 banks have joined the Sepa credit transfer scheme, with 3000 signed up for the Sepa direct debit scheme.

However, the banking industry's self-imposed deadline of December 2010 for Sepa credit transfers and direct debits to be in general usage will not be met.

By August 2010 only 9.3% of all credit transfers processed in the euro area were Sepa. Since its launch in November 2009, Sepa direct debits remain at a share well below one per cent of all DD transactions processed in the euro area.

Therefore, the ECB warns that European legislators now need to take action, setting a mandatory timeline for migration and the discontinuation of national instruments to ensure Sepa is completed, "preferably" by the end of 2012 for credit transfers and by the end of 2013 for direct debits.

The Eurosystem is "confident" that concerns raised by market participants on the envisaged regulation on migration end dates "will be properly addressed by the European authorities".

In addition to deadlines, the ECB also identifies other issues that need to be addressed, including the provision of "innovative" payment services such as online and mobile, the creation of a new European card scheme and the phasing out of magnetic stripe on cards.

Gertrude Tumpel-Gugerell, member, executive board, ECB, says: "Sepa is progressing from the market-driven phase of design and implementation to the phase of mandatory migration, aiming to ensure that the necessary adoption really takes place. At this stage, Sepa faces a number of specific challenges that only the market and the regulators together can master. I hope that the constructive cooperation between all stakeholders will become even closer in the decisive two to three years ahead, so that our joint efforts help us to achieve the final goal: an attractive integrated and competitive European market for euro payment services."

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Comments: (3)

Gary Wright 22 October, 2010, 17:42

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Finally we might see some urgency even if the banks will be draging their feet all the way. What would be useful would by if the ECB insisted on a marketing of SEPA to consumers and SME unaware of what SEPA is and what they should be pushing banks to offer

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A Finextra member 25 October, 2010, 03:34

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Well what a surprise! Even if consumers don't need it, the market does not want it and the banks can't see a business case to support it, here comes the ECB asking for legislation. What the ECB has always chosen to ignore is the fact that the vast majority of payments in Europe are domestic - and domestic payment systems are more than capable of supporting them. Try asking a French consumer when they last bought something that was not only sold in France but was probably also grown or manufactored in France. Sure, SEPA would be very helpful to support the 2% of payments that are not domestic, but this has never been a very economically sound argument for making all European payments SEPA compatable. But then there was never an economic argument for the European Union in the first place. Next up pension harmonisation (to take the strain off the Germans)...unless the French put a stop to that one too!

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Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 25 October, 2010, 12:46

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I agree with much of what Keith says. At the same time, virtually all issues applicable to SEPA were equally well applicable to EURO and yet so many countries adopted the single currency. I think what's principally different with SEPA is the added complexity - ex: such a long IBAN account number - which poses almost-insurmountable hurdles to its everyday use for local payments.