Banks in Europe have to be prepared for some of their corporate clients not being ready for the SEPA end date of 1 February 2014 and will miss the deadline. (In surveys of corporates‘ readiness for SEPA the numbers saying they will not be ready varies from as low as 6% to 55%.) How can banks say to their clients that they are on their own if they are not going to be ready? One senior cash management banker said. "How can I let them down. We have been converting their files for years?" Another senior banker when asked what should corporates do if they are going to miss the SEPA deadline, "Do nothing. They can continue with their legacy formats until they are ready to change. Find a bank like us that can do all the data conversions."

The ECB have said that:

• in a post-migration environment, payment service providers may still offer conversion services, provided that these services are operationally fully independent from all subsequent payment services offered by that PSP.
• once the migration deadlines have been met, all payment orders, if not submitted to the respective PSP in the formats stipulated by the SEPA Migration End-date Regulation, would have to be rejected by the respective PSP, and would not be accepted for further processing.

Conclusion: the banks and other companies can and will continue to offer conversion services.

This raises a whole range of issues:

• how long will the conversion services be available?
  • the Italian banking community decided to postpone to February 2016 the date when corporates will have to provide XML formats to their banks. Therefore, banks will perform a conversion from the current formats to the new ones, during this grace period. The modality and the prices will be left to the competition between insititutions, so the conversion can be provided on the channels, on the legacies or both, and free of charge or with fees
  • in most cases, until they are not needed, the banks and the conversion companies will continue to support their customers
• when to convert your internal systems?
  • when the company is ready and the upgrade is cost effective, e.g. for large insurance companies who have systems, which only contain a few hundred policies, it will probably not be worthwhile updating for 3 - 5 years
• what will the conversion cost in the short term and the longer term?
  • for some companies, it will always be a free bank service
  • for other (probably smaller) companies there will be a bank charge that will probably increase over time
• what is the minimum conversion that corporates have to do?
  • see below.

Do nothing?
In extreme circumstances a company can do NOTHING IF:

• for SEPA Credit Transfers, they use a bank/conversion company to:
• translate BBAN to IBAN
• format mapper to convert legacy formats to SEPA ISO XML
• for SEPA Direct Debits they use a bank or a conversion company's SDD mandate management platform to turn the legacy direct debit files and legacy mandates into a SEPA Direct Debit transactions.

There are some banks that will, if necessary, advise their clients to do nothing. BofA Merrill's head of EMEA Market Management, Mike Edwards, commented that "In some situations, our response to clients is that it is better to do nothing and to use our conversion services until they are ready – while ensuring we continue to work with them on their path to migration."

However, this is an extreme example and not all banks and data conversion companies can do this. Indeed some banks are insisting that they will only accept XML files after the SEPA migration end date which requires a massive conversion programme, and if you haven't started now, it is probably already too late or at least a critical path project.

Typical minimum conversion required to survive the SEPA end date
The effective minimum conversion required is:

• BBAN to IBAN and BIC in own ERP files to route out the errors that have been present for years, but remember that:
• even with using some of the most experienced data conversion suppliers, they may not have the functionality to describe correctly the bank sub-branches in places like Germany and Czechslovakia, so checking the final results is essential
• payroll payments conversion to SCT including ensuring that the payments are tagged with the correct 'salary code' so that the payment will be identified as a salary payment for tax and bank charge purpose. An approach used by some corporates is to rely on the in-country payroll provider to carryout this conversion so that all local requirements are observed

and then rely on your bank and/or third party data converters to deliver or receive the SCT/SDD payments.

The very last resort in Plan B will include the use of TARGET2 payments, cheques and cash if, for example, your employees have not been paid their wage/salary.

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The reality is that for corporates making and collecting payments in Europe, there will never be a single consistent Europe wide standard that they can plug into. Even in the 33 SEPA countries there are and will be, for many years, differences between the countries and across the whole of Europe there are even more differences. So corporates will have to continue to carryout format mapping and digital conversions. This why payment platforms such as AvantGard Trax and Jaccoo are so essential to hide the user from these complexities.