Will SEPA ever get off the Ground?
“Usually when you make designs by committee you end up with the lowest common denominator.”
A super alliance called the End User Committee (EUC) has come up with a new report on SEPA and what is wrong with it – notably what is wrong with the forthcoming SEPA for Direct Debits.
The organisations within EUC are also sitting on the European Payments Council stakeholder consultation forum so it is a very heavy lobbying organisations that one should listen to. Among the organisations are European Association of Corporate Treasurers and The European Consumers’ Organisation.
SEPA Credit Transfers have now been live for more than 1½ years and still less than 2% of euro payments are SEPA payments. It is definitely less than even the pessimists had calculated before SEPA payments took off in January 2008.
The intensions of SEPA are good and absolutely correct - Europe needs a common market for payments just as it has for most other goods and services.
However, payments are today still very national with lots of national specialities that make them work well within the national borders but are useless outside the country.
And this is also one of the problems with SEPA – there are so many special cases to regard and so many existing systems with limits that cannot be ignored.
Therefore you have to have committees to design the new payment system.
Usually when you make designs by committee you end up with the lowest common denominator.
You don’t just start with a blank sheet of paper; you have to consider the history and system used today. Therefore SEPA have some limits, some restrictions and some missing parts.
As I have said before you can increase the usage of SEPA payments by using the stick or the carrot – the stick being the deadline.
The EUC didn’t recommend using the deadline – even though some of the committee’s members have in the past recommended a deadline – at least for SEPA Credit Transfers.
However there is still a big risk that we will end up with many “mini-SEPAs” due to national interpretation and implementation of SEPA and eventually just make SEPA payments just as complicated as the many national payments are today.
However, I believe SEPA will succeed – it has to – but it will take much longer than first estimated.
