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SEPA: Commission introduces an additional transition period of 6 months to ensure minimal disruption

Press Release reads (See CTMfile comments in italics.):

The Commission has adopted a proposal to give an extra transition period of six months during which payments which differ from the SEPA format can still be accepted so as to minimise any possible risk of disruption to payments for consumers and businesses. The proposal does not change the formal deadline for migration of 1 February 2014.

Internal Market and Services Commissioner Michel Barnier said: "An efficient Single Market needs an efficient SEPA. The entire payments chain - consumers, banks, and businesses - will benefit from SEPA and its cheaper and faster payments. Cross-border payments are no longer exceptional events which is why an efficient cross-border regime is needed. [CTMfile: Yes, you’ve said that before.]

As of today, migration rates for credit transfers and direct debits are not high enough to ensure a smooth transition to SEPA despite the important work already carried out by all involved. [CTMfile: It’s not just today, it’s been obvious for months.]

Therefore, I am proposing an additional transition period of 6 months for those payment services users who are yet to migrate. In practice this means the deadline for migration remains 1 February 2014 but payments that differ from a SEPA format could continue to be accepted until 1 August 2014. [CTMfile: Yes but what happens if, on 1 August 2014, the migration rates are still not high enough? There is no way you can have an absolute deadline, e.g. cheques in the UK. Payment systems have a life of their own, only when the usage is under 5% do they die naturally.]

I regret having to do this but it is a measure of prudence to counter the possible risk of disruption to payments and potential consequences for individual consumers and SMEs in particular. [CTMfile: Bet you do.]

There has been evidence in the past few months and I have warned many times that migration was happening too slowly and call once more on Member States to fully assume their responsibilities and accelerate and intensify efforts to migrate to SEPA so that all can enjoy its benefits, that is, faster and cheaper payments across Europe. The transition period will not be extended after 1 August." [CTMfile: You blinked once, the market will not believe you that you won’t extend it again and again.]

Market reaction

Payment providers are saying it is not an unexpected event, but are surprised at the lateness of the intervention which will benefit SMEs most. While corporates are e-mailing CTMfile saying “they have bottled the SEPA transition” and are starting to calculate how much unnecessary expense has been caused trying to meet the February 1st date.

Michael Barnier, the ECB, and the EPC should go on holiday; the anger at this mess has only just started. 

Hopefully, the extra six months will be used to sort out things loose ends in the SEPA regulations such as the ‘one leg-out ACH payments’ problem.

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