Companies in Europe’s largest economy are some of the worst offenders in their lack of readiness to migrate to a new eurozone payments system, 100 days before it is due to be introduced across the European Union.
In a new report from the Frankfurt-based European Central Bank, it said most large companies in Germany have yet to migrate to the Single Euro Payments Area (Sepa), which is designed to simplify credit transfers and direct debit operations across the EUs 28 member countries in addition to Iceland, Lichtenstein, Norway and Switzerland.
According to Germanys Bundesbank, under 14% of all credit transfers and less than 1% of all direct debits adhered to Sepa standards in the third quarter of the year.
Bloomberg reports that Bundesbank board member Carl-Ludwig Thiele said at a conference in Frankfurt on Thursday: If companies arent able to adhere to Sepa by the legally prescribed deadline, they risk a liquidity squeeze and costs because of wrong or late settled payments. A true final spurt is needed in Germany.
The proportion of companies that have successfully migrated to the Sepa direct debt scheme is even worse across the eurozone. Apart from Slovenia, the ECB said none of the eurozone countries is close to completing the migration by the 2014 deadline.
The ECB says many companies including big billers or large companies, public administrations, and small and medium-sized enterprises across the eurozone have decided to migrate only in the last quarter of 2013 or even later.
The ECB calls this big bang late migration and warns about the rise of operational risks as a result, including capacity issues and bottlenecks for payment providers and software vendors at the end of this year.
Since our first migration report, we have been emphasizing the fact that both payments providers and users are responsible for being sufficiently prepared. And our message to them is still the same: dont leave it to the last minute.