The European Commission estimates that the cost of a failed transaction will be EUR 50 on average. This does not include the negative impact on customer and supplier relationships, and any impact on employees who have not been paid their wages/salaries. (See) Well, it could get a whole lot worse because the European Union can apply penalities for infringement of SEPA regulations. 

Article 11 of Regulation (EU) No 260/2012 states that member States shall, by 1 February 2013, lay down rules on the penalties applicable to infringements of this Regulation and shall take all measures necessary to ensure that they are implemented. Such penalties shall be effective, proportionate and dissuasive. Member States shall notify the Commission of those rules and measures by 1 August 2013 and shall notify it without delay of any subsequent amendment affecting them.

Your company could incur significant penalties plus the processing costs of failed transactions.

Accuity report
The recently published Accuity report ‘Penalties for infringement of SEPA regulation’ showed that: 

• these countries have not yet sent details of their penalty provisions ot the European Commission: Belgium, Cyprus, Czech Republic, Denmark, Estonia, Germany, Hungary, Iceland, Italy, Latvia, Liechtenstein, Luxembourg, Malta, Monaco, Norway, Poland, Slovakia, Sweden, Switzerland
• the penalties already published mainly focus on the payment service provider such as:
  • Austria: Anyone providing payments without the requiredauthorisation, committing an act that falls within the jurisdiction of the courts, can be penalised by the Financial Market Authority a fine of up to €50,000. And a payment institution can be fined €100K
  • Malta: €50k penalty and then daily fines if the offense continues
• some countries also focus on the sole trader, for example -Slovenia: For serious violations, a fine of €25,000 shall be imposed on a legal person or sole trader or individual independently performing an activity

If the authorities really do implement these penalties, the payment service providers are not going to put up with companies submitting non-SEPA formatted payments for long, unless they have robust conversion systems in place.

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But will the authorities really impose these penalties? In general, it is unlikely if all the other fudges that have already been granted are anything to go by. However, you never know, some countries might…….