Payment systems users warn of risks of Sepa failure

Payment systems users warn of risks of Sepa failure

European business and consumer organisations are warning that plans to create a Single Euro Payments Area (Sepa) are doomed to failure unless payment systems end users are more widely consulted.

In a critical paper on the Sepa Direct Debit scheme - scheduled for introduction in November this year - the Payment Systems End User Committee (EUC), says businesses have little incentive to switch to the new payments instrument.

The Committee, which represents the views of eight major business trade associations, is also calling for an urgent review of the Sepa governance structure.

"Up to now, the payment users' community has been more or less ignored," say the report's authors. "Sepa cannot achieve its goals unless users are fully involved in its construction. End-users, payment system providers and regulators must all be involved on an equal footing in a new Sepa governance structure."

On Direct Debit, the EUC says that the current scheme proposed by the European Payments Council (CMF) offers fewer services than the existing national schemes. According to the EUC, end users have little incentive to switch to the new system. The position paper instead proposes a "CMF+" scheme offering a basic service coupled with tailored optional services at an extra cost.

EUC spokesman Olivier Brissaud says: "One year and a half after the launch of the first Sepa product, less than 2% of all credit transfers are made using the new system. Direct debit, which is the second Sepa product, risks a similar fate unless corrective action is taken before its launch in November this year."

The European Commission is currently contemplating the introduction of a final end-date for the migration from legacy national payment systems as a means to stimulate wider uptake of the new Sepa-compliant intruments.

However, the EUC cautions that such a move could destabilise the entire Sepa project.

"No decision on end dates should be taken until the remaining areas of disagreement have been resolved to the satisfaction of end users," states the report. "The setting of arbitrary end dates by legislation would result in a failure of Sepa."

Read the full report:Download the document now 1.2 mb (PDF File)

Comments: (4)

Gary Wright
Gary Wright 21 July, 2009, 17:22Be the first to give this comment the thumbs up 0 likes


My White paper published two years ago made the exact point. White (SEPA against the tide)can be requested for free from

It was not rocket science for me to produce this paper as i did the mind blowing thing and talked to the users. Something that all those involved in SEPA appear to not to do.

I think the penny has now dropped that SEPA is in grave danger of falling apart. Again something i have said for years and that now looks certain unless action is taken. No crystal ball just plain common sense with a semblance of bussiness nouse


A Finextra member
A Finextra member 22 July, 2009, 00:11Be the first to give this comment the thumbs up 0 likes

It's like a plot from a disaster movie. It goes like this.

The big bosses of the EU want to make Europe look like a single market, yet only 2-3% of transactions are cross border. Nothing is likely to change this for decades. Banks and Payment companies spend $millions building SEPA payment services without asking anyone "will you use them"? Artbitary dates for inforcement are set by the bosses. The French say "non". Nobody reacts. Banks and Payment companies soldier on like Capt. Scott heading to the South Pole. The mission is unstoppable, the end result a failure. Roll on SEPA DD - the sequel "Capt. Scott goes to the South Pole again!"

Stanley Epstein
Stanley Epstein - Citadel Advantage Ltd - Modiin 22 July, 2009, 09:33Be the first to give this comment the thumbs up 0 likes

Politicians and market forces do not mix. In the end government, whether national or the European Commission, cannot dictate how markets work, be they for financial or tangible products. One just shudders at the wasted costs of the SEPA endeavour.

Richard Crookston
Richard Crookston - R Crookston - Lampeter 22 July, 2009, 10:08Be the first to give this comment the thumbs up 0 likes

If SEPA DD is causing this much trouble one wonders about other aspects of SEPA, notably that for cards.  Has anyone got a clue about the level of acceptance - or not - of the retail community and the largest group, the bank cardholders.  Can someone point me to where has there been any widespread consultation or communication with the potential users?  Where have the results of any such consultation been published?  Where is the "marketing" of the changes to the cardholders? 

I, too, believe that governance of SEPA is a major concern (even though it has been tinkered with recently) and have been warning about it since the first drafts and outline plans emerged.  One accepts that payments are the resposibility of the retail banks; that is a fact. However, it seems that to date the SEPA organisation has been inward looking and sorely lacking in its approach to, and engagement with, the real world outside a closed coterie of the few who have set themselves up as the standards producers. 

SEPA for Cards was due (make careful note on the use of due) to come into force in 2010 and one wonders if any of the card, terminal and authorisation systems manufacturers have a real handle on what is required, when, how and the cost.  So how retailers and cardholders will react when they see yet more payment systems changes being foisted on them after chip and PIN and national security standards such as that imposed by APACS in the UK, one can only guess. My guess is that it will not be positive!

It is past the time when SEPA needs to engage far more closely and openly with the user and supplier communities.