Developments in European payment system are continuing apace….

SEPA progress

Most multi-national corporations in Europe have now completed the move to SEPA standards and systems, as have most SMEs. MNCs are finding that there are no major problems in receiving SCT payments from SMEs. The only remaining problem is SDDs in Italy with the 100s of small local banks, many of whom are not SEPA compliant in some way. MNCs are now going direct to each of their clients and client’s bank to resolve the issue. One of the problems is that the RIBA will still be available and is widely considered to be better than SDD system. 

The extended information (140 characters) doesn’t seem to have had much impact yet, as few seem to be using it. However, some global MNCs are looking to use the carrier in the XML messages to take all the ERP information on the payment outside of the SEPA payment systems, but this only works if both paying and receiving banks have systems to support the Remittance Location Advice (RemittanceLocationAdviceV01) message (remt.002.001.01). (See IFX report on how to use the additional data fields in remittance processing.)

Bitcoin - hold off until regulatory regime in place

Europe's financial institutions should steer clear of virtual currencies such as Bitcoin until a regulatory regime is in place, the European Banking Authority (EBA) has warned. 

In an opinion document for the EU Council, EC and European Parliament, the EBA argues that virtual currencies could bring some important benefits, such as faster and cheaper transactions and greater financial inclusion. However, it also identifies more than 70 risks that, taken together, "outweigh the benefits". To address these risks would require a "substantial body of regulation".

RMB clearings in Europe

Frankfurt’s establishment as the Eurozone’s first offshore clearing hub for RMB trade settlement will be a huge boost to European corporates trading with China, especially those that are mid-sized, a senior Commerzbank official says as they will be in a position to settle directly in RMB via their local market.

London and Paris are also developing RMB clearings hubs.

Mobile payment developments

Developments in Europe show an accelerating development of mobile payments and contactless payments:

• survey shows that already 42% of people in Europe shop by mobile 
• UK mobile payment system Zapp, the UK’s real-time payments on people’s mobile phones through their existing mobile banking application for secure payments between consumers and merchants, has announced new network of payment partners across the UK
• several banks, including Barclays, have announced they will be employing contactless payment chips in wristbands to make it faster and easier to pay at point of sale.