Is SEPA in danger of becoming FEPA?

I spent quite a bit of my time last week attending various industry events and conferences and discussing payments-related topics with industry participants. As it always is in Europe, the conversation inevitably turns to SEPA and PSD, and the overwhelming sentiments there these days seem to be frustration and confusion. Banks are frustrated by the lack of progress in migrating to SEPA instruments and decommissioning old instruments and infrastructures. Most are in favour of a clear end date - as one banker said, "we, banks, are excellent at meeting deadlines and terrible at implementing anything without one". Some are confused by the apparently increased flexibility in interpreting the proposed SEPA standards, leading another commentator to quip that "at this rate, SEPA will soon become FEPA - a Fragmented European Payments Area". There were times at the conference when I had to pinch myself and ask if it was really 2010 and not the late 90s, as banks continued to lament their inability to measure the P&L of their payments business and corporate customers continued to lambast their banks for being unable to meet even the most basic requirements, such as delivering a payments message in full rather than truncated (and STP benefits wiped out) or opening an account in less than five months (yes, really!) or without reams of complex documentation in Greek or Italian. I am yet to attend an event which would not discuss payments innovation and iDeal and PayPal were among the most frequently cited examples of what can be achieved via innovation. While iDeal is a Dutch banking industry initiative, I was somewhat perplexed that the banking establishment did not seem to be moved much by PayPal's progress. To some extent this can be explained by the fact that most PayPal's transactions to-date have been funded individually using one of the banking payment instruments, such as card or bank transfer. Banks still seem to view PayPal as an "overlay" on the banking infrastructure and therefore, 'nothing to be worried about' - a dangerously short-sighted perception in my opinion. And, while we are on the subject of innovation, expect to hear more in the coming months about Ixaris and Syncada - two of the most interesting and innovative companies I met last week.