Valentine Day Massacre, or Will Love Be in the Air?

So. Now we know. Feb 14 is the date that is the talk of the town and payments people in Europe in particular. No, spring hasn’t softened us and made us all amorous. (Some perhaps, but not all!). I refer of course to the SEPA end date of Feb 2014, which was finally confirmed by European Parliament last month. The name SEPA end date is its self confusing – more than one corporate has asked me why it isn’t called the SEPA start date as that may be more accurate. Volumes are still some way short of anything that be called significant market share. The latest indicators from the ECB show SCT take-up is at 24% and SDD at 0.4%. Even EMV at POS is only at 69%. The other comment from corporates I get is about the timing. The vote comes after they’ve already set, and in many cases, started, their budgets for this financial year. For those I’ve spoken too, this is resulting in not doing much, if at all anything, about it in the near future The supply side seems to have its own issues too. Many banks are ready for domestic scale SEPA volumes. But a number it would seem aren’t. The solutions that were put in place for compliance when SEPA sending/receiving became mandatory are under review, or, in some cases being ripped out & replaced. This has a number of consequences. Firstly, for this to successfully happen, it requires both parties to be ready. There are a few elements in the final text that no corporate I’ve spoken to is aware of. They may not be issues but frankly they don’t know. Specifically, the requirement to use ISO20022 to send payment files is the one that most are unaware of. One assumes that the bigger the corporate and/or the volume of payments they make, the more they are au fait with the regulations. The challenge then is that the smaller end of the market, particularly as there are over 23 million SMEs in Europe, and it sometimes feels, almost as many solution suppliers providing payment gateway/generation software to them! Secondly, any migration always happens at the last minute unless there is a clear, tangible benefit for moving early. That helps the banks that aren’t ready in some ways in that it buys them time. But equally creates opportunities for those that are ready to aggressively target corporates now. The stage is being set for a very interesting and busy 2013, with a potentially very dramatic finale.