The Sepa revolution quietly creeps in
What does Sepa involve?
Sepa and the PSD: a brief history
Much of the detail involved in the Single Euro Payment Area is only of interest to banks and, provided a corporate’s banking provider is on top of the situation, it should be fairly straightforward. As Anne Boden, head of transaction banking Europe for ABN Amro, notes: "Sepa is now the de facto future standard so all RFPs are based on Sepa pricing and solutions." So banks that are not being proactive in advocating Sepa solutions can expect to lose business when a corporate’s cash management mandate comes up for renewal.
The main challenge for corporates is the collection and use of International Bank Account Numbers (Ibans) and Bank Identifier Codes (BICs) data, which are used for Sepa Credit Transfer (SCT) and Sepa Direct Debit (SDD). In practice, this involves corporates working with their Enterprise Resource Planning (ERP) systems provider to add the required fields and ensure that they are used correctly. In the case of SDD, re-mandating by the consumer might be necessary, although in some countries it might be possible simply to switch existing mandates.
More generally, corporates need to make sure that someone within their organization is coordinating Sepa and – as important – considering how it could be used to improve efficiency and lower costs. Sepa raises the possibility of using just one account to unify accounts payables and receivables across countries. In addition, it offers scope for higher automated reconciliation rates because of end-to-end delivery of reference numbers. Efficiencies resulting from Sepa should also increase straight-through processing rates.
Perhaps the ultimate gain of Sepa – and the one banks fear the most – could come from the consolidation of bank accounts and relationships. Sepa is expected to accelerate moves toward payment factories, where local subsidiaries process accounts payables and receivables, and shared service centres, where payments and receivables processing is centralized and additional functions such as reconciliation, intra-company settlement/netting, invoicing and management of foreign exchange positions occur. Inevitably, Sepa will put pressure on banks’ fees and, ultimately, will lead to fewer – but deeper – banking relationships.
