All For One And One For All – SEPA Standardizes Pan-European Payment

Standardization appears to be central to the European Union’s mandate, having since its inception introduced European passports for citizens, a

Standardization appears to be central to the European Union’s mandate, having since its inception introduced European passports for citizens, a single currency for the entire continent and now a unified payment integration initiative designated Single Euro Payments Area (SEPA). 

In essence, the component makeup of the system is intended to operate in a similar method to a direct debit solution, however it differs from that on the basis that it is based on the SEPA interbanking system. 

Since its introduction in March 2012, it has begun to take shape as a means of transmitting cross-border payments in a standardized fashion, and there has become an increasing number of electronic methods of payment via the SEPA method, some of which now offer mobile applications which facilitate payment across Europe from the user’s smartphone. An example of this is qooqo.com, which executes transactions via the SEPA direct debit system whilst the user is on the move. 

Technical Considerations 

In the run-up to the implementation of SEPA, various solutions have been developed in order to provide companies across the continent with a means of efficiently transferring their systems to the new method. 

One such company is technology provider SunGard Systems, which has developed a Software As A Service (SAAS) in order to ease companies into the new structure. 

Luc Belpaire, Product Director of Payments at SunGard’s AvantGard discussed the SEPA initiative and the benefits of SunGard’s AvantGard SEPA Converter at its launch at the end of 2011: Mr Belpaire views SEPA as a cost saver long term: “Harmonizing payment instruments will drive the cost of cross border transactions down” he explained. 

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“Alot of backoffice systems at large multinational corporations are not compliant with SEPA. We have developed a service which is designed to reduce the complexity and move away from often legacy ERP systems that are being used by such corporations. It is very important to understand that the SEPA initiative is about replacement of all the individual methods of payment with one single method”. 

“We invested in SEPA converter, which is not only a file converter, but a service which aims to capture the value proposition that alot of those corporations will face in transforming their existing payments into local SEPA instruments which will coming at a very cheap price. 

“The idea is that as a corporation you can submit your cross-border payment files, and we can capture them in our service, classify them into SEPA compliant transactions and regroup them in order that they can be delivered to the banks” concluded Mr Belpaire. 

SunGard’s solution operates a transactional pricing model, whereby companies pay for the service based on the number of transactions that have been made. Typically a cross-border transaction pre-SEPA would cost a corporation between 20 and 25 Euro. Under SEPA the price goes down to a few cents. Therefore if there is high transaction volume, there is a value proposition. 

Phasing In The New Standard 

On February 1 2014, Europe’s unified payment transaction system will be launched. The national processes will then be adjusted in accordance with this. In the future, in Europe only SEPA Credit Transfers (SCT) and SEPA Direct Debits (SDD) will take place. It will then be mandatory in all SEPA countries to use these two payment methods. Optionally, each country can decide on an extended changeover period, up to February 1, 2016.

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