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This is not a SEPA payment??

Well meaning regulators at the ECB and the European Payments Council do try to make things better, e.g. the stated aim of SEPA is to improve the efficiency of the eurozone. They have accepted that payment habits and systems change very slowly, so the SEPA regulators have allowed numerous local variances, e.g. the RIBA in Italy. 

However, in some areas, they have just not understood the implications of their rules, e.g. the SEPA rules state that only if the originating account and the receiving account are in the SEPA zone, it is a SEPA payment. So, theoretically, one leg-out ACH payments are not allowed according to the SEPA rules, e.g. if

  • ABC Corp has an Australian Dollar account in Australia with an Australian bank (Bank 1)
  • Bank 1 has a Euro account with a German bank in Frankfurt (Bank 2)
  • XYZ GmbH has Euro account with a German bank in Germany (Bank 3)
  • ABC Corp wants to send a transaction to XYZ GmbH in Germany
  • ABC Corp initiates payment from their AUD account in Australia
  • Bank 1 receives a payment from ABC Corp, does FX and initiates Euro ACH payment from EUR account in Frankfurt
  • Bank 2 receives the EUR payment and processes as a Euro ACH payment
  • Bank 3 and XYZ GmbH the receive Euro ACH payment.

The originating account is definitely not within the SEPA zone so, according to SEPA rules, the payment will have to be made by wire from a local account. This is much more expensive and inefficient with SMEs being particularly impacted as they don’t have the payments volume to warrant setting up new bank accounts. However, there are banks that will do a SEPA ACH payment for their clients as they have been doing this for many years, but theoretically it is not allowed within the SEPA rules.


CTMfile take: The EPC is currently advising that it is not allowed. Banks and the EPC are now getting legal counsel advice as to what is allowed and what isn’t. Surely the EPC should immediately admit that they have just missed this in their rule setting, and agree that this standard practice is allowed? This will the least of their problems when we reach February 1st - plus the one thing they don’t want to be accused of is being anti efficiency improvements!

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