The full impact of the introduction of the new SEPA Direct Debit and SEPA Credit Transfer systems will only really be felt when the legacy systems are withdrawn. Exactly, when varies by country, as the list at the bottom of this item shows.
However, now that corporates have had over a month’s experience with SEPA, comments and conclusions are beginning to emerge. Some corporates feel that SEPA overall is good and has enabled them to take the opportunity to refine their whole approach to payments and collections in the eurozone, e.g. not need local euro accounts and customers don’t have to pay cross-border. Others have had few problems with meeting the February deadline, and, overall the implementation, even with B2B SEPA Direct Debit has gone relatively smoothly except for huge problems in Italy. But the over-riding impression is that there are still lots of ‘loose ends’ that need resolving, which include:
- most of the local clearings have some variation from the CGI standards, there are at least 19 variations from the standard
- whether a single account can be used to make payments from across the eurozone is doubted
- most direct debits are still collected locally into local bank accounts, there appear to be few cross-border SDDs
- countries are still changing their clearing systems, so local knowledge is invaluable
- the time when credits via SEPA Credit Transfer system arrive is slightly different from the local clearings which can cause problems when employees are looking for their salary
- the future use of BICs is in dispute: the EU is saying they will no longer be needed, and so many service providers are planning to get rid of them, but some banks are insisting they continue to to be used.
AND many companies have still not converted, with the result that MNCs are receiving significant % of payments in the legacy ACH payment formats. When the these legacy ACH systems are switched off, then these payments won’t be cleared. Spain, theoretically, switches off their credit transfers on 17th March, there could be chaos on Monday, and chaos in Belgium & Ireland on 1 April.
There are many different closing dates, viz:
- countries already closed: Slovakia - migrated on mass on February 1st; Finland - already use SCT and have just implemented SDD
- countries that will not use full six month extension: Belgium - limit to two months; Ireland - limit transition to March 31st; Spain - processing of legacy ACH transactions will not be possible post 17th March and post 9th June for legacy direct debit transactions
- countries who have announced other limitations: Germany - legacy B2B Direct Debit scheme not permitted post 1 February, others permitted; Italy - all legacy ACH transactions must be SCT compliant by 1 February, now legacy DD mandates allowed after February 28th, and corporates not allowed mixture of legacy DD and SDD; Luxembourg - no legacy DD mandates or DD payments post 1 February
- other countries - France, Austria, Portugal, Netherlands: processing of legacy transactions will be permitted post 1 February. However, all markets have strongly reiterated the need for organisations to complete migrations to SEPA.
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