Paying suppliers via the SEPA compliant SCT is working well, and most companies are experiencing no real problems. Unfortunately, the vital payroll payment systems are becoming a major problem:

• many payroll service providers (PSP) are not completely ready, e.g. using legacy payment formats, have not yet made the adjustment to the local/ per country standards to be able to accept standard XML files
• some (many?) banks receiving the salary payments - employees have their salary accounts at all sizes and types of banks across Europe - are not yet fully SEPA compliant for the latest XML standards
• some countries have indicated that legacy formats, e.g. CGI, will be the format for payroll, while other countries are ‘just a problem’.

There are all sorts of versions of these problems across the SEPA region. 

Testing and going live
Most employers are reporting that their payroll tests are experiencing problems of some kind. Furtherore, time is running out for testing. Going live in December is not an option because December is such a vital salary month, often including bonuses, etc. So that just leaves January to go live, before the February deadline, or to go live in February - which is really scary. 

 

Plan BsIt is pretty clear that the banks’ Plan B is going to be, if things are not ready, to keep the legacy payment systems open into February and beyond. (There are rumours of banks having closed-door meetings, etc. to decide on what to do if things really are not ready.)

But for those employers (most? all?) who will have converted all their bank accounts to IBANs, etc., so their payments just won’t be accepted in the legacy payment systems anymore. The PSPs and the banks receiving the payroll payments are just going to have to be ready... but they won’t all be. 

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Is the only real Plan B for employers: wire payments for those employees who haven’t received their salary? For employers in Europe February 2014 really could be a nightmare.