On November 2, the European Payments Council (EPC) launches the Sepa Core Direct Debit Scheme and the Sepa Business to Business Direct Debit Scheme.
The Sepa Direct Debit (SDD) Schemes enable bank customers - for the first time ever - to make and receive direct debits within and across 32 European countries collectively known as the Single Euro Payments Area (Sepa).
On the occasion of the launch, the EPC, which represents the European banking industry in relation to payments, has called on businesses and public administrations to assess their current payment architecture and consider taking full advantage of the new payment and collection method to achieve significant efficiency gains resulting in cost reductions.
Gerard Hartsink, Chair of the EPC, comments: "From today, banks across SEPA countries start to roll out SDD services to customers. By 1 November 2010 there will be full reach for the SEPA Core Direct Debit in the euro area as mandated by EU Regulation. This presents European businesses with a prime opportunity to benefit from harmonised standards and streamlined processes when making and receiving payments across 32 countries - consisting of the 27 EU member states, Iceland, Liechtenstein, Norway, Switzerland and Monaco."
Building a payment scheme can be compared to designing a car model: it is important that the basic model meets key market requirements. At the same time, the model must be fit to add extras on demand. This concept provides maximum choice to customers and, in consequence, the SDD Schemes developed by the EPC in close dialogue with the customer community are based on this concept.
Gerard Hartsink states: "The SDD Schemes offer businesses significant efficiency gains through the automation of payment processing and the ability of businesses to optimise the cash management process. The latter can be achieved by businesses consolidating accounts currently maintained in different European countries to handle local payments into one single account and subsequently centralising liquidity."
As a key milestone in the creation of an integrated euro payments market across SEPA, the SDD Schemes will also facilitate the expansion of businesses across national borders, by introducing a standardised payment infrastructure. Innovative end-to-end SEPA solutions based on global ISO standards will also lead to decreased IT costs, streamlined back office functions and simplified reconciliation.
The EPC recently published recommendations on how to map SEPA transactions to payments reporting between banks and customers. As a result, payment-related information can now be moved along the entire process chain (customer to bank, bank to bank, bank to customer) in a manner compliant with the SEPA schemes and global ISO standards - enabling businesses to further automate payments processing.
Gerard Hartsink concludes: "Businesses operating within and across SEPA countries stand to gain a great deal from the introduction of the SDD Schemes, and an integrated euro payments market across SEPA generally. To realise these benefits, companies must become active - as a first step, the EPC would recommend the formation of a dedicated SEPA team. A subsequent impact assessment would reveal the true value that SEPA might have on the business. To engage further in supporting SEPA and to stay up to date on developments, companies are welcome to liaise with SEPA Stakeholder Forums on a national level.
"The SEPA Schemes defined by EPC are instruction manuals for payment processing. In this context it is important to note that the development of payment services and products based on the SEPA schemes, including all product-related features such as pricing, is outside the scope of the EPC. The real deal for businesses is the competitive and custom-tailored SEPA service offered by individual banks. Companies are therefore encouraged to shop for the SEPA bank products that best fit their needs. It is expected that the roll-out of SEPA will increase competition among payment service providers to the benefit of bank customers."
The bottom line is that while SEPA payment tools, such as the SEPA Direct Debit Schemes, offer businesses many tangible benefits, SEPA as a whole offers companies the opportunity to reassess the way they currently operate and ultimately to add value to their business.