Twelve EU countries have a SEPA migration deadline looming on 31 October. The transition is expected to be smooth but corporates should be aware of the change.

The Single Euro Payments Area (SEPA) regulation sets out rules for the initiation and processing of credit transfer and direct debit transactions denominated in euro within the European Economic Area (EEA). Financial institutions within the euro area were required to adopt the rules from 1 February 2014. The end of this month is the deadline for institutions in the 12 EEA countries that do not have the euro as their national currency. From this date, existing national euro credit transfer and direct debit schemes will have to be phased out and replaced by SEPA alternatives.

Which countries are affected?

The countries affected by the 31 October 2016 deadline are: Bulgaria, Croatia, Czech Republic, Denmark, Hungary, Iceland, Liechtenstein, Norway, Poland, Romania, Sweden and the UK – all of which are members of the EEA but have their own currencies.

These countries will need to submit their 'local' or 'legacy' formatted euro currency payments in accordance with the SEPA guidelines for either the SEPA Credit Transfer scheme or the SEPA Direct Debit schemes, using the ISO 20022 XML format using the relevant IBAN.

How does this affect corporates?

If you make or receive payments in any of the 12 countries mentioned above, there are several things to be aware of:

• make sure you know in advance of any payments taking place in these countries and have a conversation with your banks about which SEPA formats will be used (you have probably already done this by now!);
• local or legacy euro currency payment formats will need to be replaced by a SEPA format;
• the change also applies to any manual euro currency payments;
• payments in domestic, non-euro currencies (sterling, leva, zloty, etc) won't be affected.

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CTMfile take: This transition, one of the final pieces in the SEPA regulatory jigsaw, has of course been planned far in advance. But it might be worthwhile for treasurers to keep an eye on any payments in these 12 countries to make sure things run smoothly in the coming weeks.