We all know Bruce Springsteen’s view on getting paid. Clearly, the European Payments Council (EPC), the decision-making and coordination body of the European banking industry in relation to payments, charged with developing the Single Euro Payments Area (SEPA), had the Boss in mind, when scoping out this innovative program. As the EPC website informs us: “more than 500 million citizens, over 20 million businesses and European public authorities can make and receive payments in euro under the same basic conditions, rights and obligations, regardless of their location”, so that is in 33 countries: 28 European Union (EU) member states, plus Iceland, Liechtenstein, Norway, Switzerland and Monaco.
Got any prospects, customers, suppliers, imports, exports or business there?
If so, this concerns you!
SEPA electronic transaction (>88 Bn annually) transfer system has made banking services better, cheaper, faster and more secure; transparent pricing, guarantees ensuring prompt and full payment receipt, and banks assuming responsibility if something goes wrong. The cost savings expected from SEPA have been evaluated at €22 Bn per year (PWC report in 2014), with other quantifiable benefits including: a one off $227 Bn liquidity unlock, 9 million bank accounts closed, 973 000 man years saved in processing (lost jobs!), e-invoicing growth, real time credit transfers and management…the list is impressive for all parties. This has given rise to European payment factories (a business opportunity to grab…), companies that deliver payment-related services on an industrialized scale, boosting the trend towards outsourcing payments, generating both scale and scope advantages, some of which are passed on. In short, there will be attractive service offerings for companies that wish to benefit from centralized payments processing. Any business transacting in Europe stands to benefit due to improved transaction processing, lower costs, faster and more secure receipts, improved credit management and most importantly increased cross border, international sales/purchase/business opportunities.
Now let’s check out the timing, when is this happening? The short answer is it already has. The 1 February 2014 was the deadline in the euro area (Germany, France, Spain, Italy and 14 other countries…) for compliance, a very important European milestone in many political and economic ways. In non-euro countries (the United Kingdom and 14 other countries…), the deadline will be 31 October 2016. That means that as of these dates, the existing national euro credit transfer and direct debit schemes will be replaced by SEPA Credit Transfer (SCT) and SEPA Direct Debit (SDD). Implementation has seen the usual technical and budgetary problems causing some minor delays. So the program is in place and you should make sure that you are benefiting.
We often get asked about European ecommerce, payments, security and fraud. The four main types of fraud threatening ecommerce business are: card, man in the middle attack, hacking and malicious code. So the question is, has SEPA addressed these problems? The answer, regarding cards, the biggest source of fraud, is yes. A recent (July 2014) European Central Bank (ECB) report, noted that credit and debit card fraud has fallen in Europe (in 2013 the figure was $2.1 Bn, compared to the United States at >$5 Bn) especially due to the proscribed widespread adoption of the chip based technology known as Europay MasterCard and Visa (EMV). Such fraud is now increasingly to be found in non-SEPA countries, notably Russia, Turkey, the Middle and Far East. In terms of online security you can always reduce your risk through the use of geo-localization and IP address source management, but our general recommendation is to use payment factories (they have the experience, scale and resources), outsource the hosting of payment pages and storage of cardholder data.
SEPA (a part of the Europe 2020 Digital Agenda) is a huge success, and as such is excellent for growing European cross border business. I figure that the Boss must be happier now when demanding payment, as the chances are that it will arrive before sailing day and the necessity to go to jail.
For more information, go to the source: http://www.europeanpaymentscouncil.eu/