It has well been realized by most that SEPA, or the Single Euro Payments Area, is providing an efficient way to transfer and collect funds across borders. Gone are the challenges of managing all the different legal payment frameworks of each country. A report from consultancy Aite says bolsters that view but says there is still room for improvement.
“SEPA will enable corporations to significantly improve their treasury and liquidity management by rationalizing their banking relationships,” says Paolo Zaccardi, analyst in Wholesale Banking at Aite Group and author of the report. “Yet several aspects still need to be resolved for SEPA’s promises of faster, more efficient, and safer payments to be fully realized.”
For instance, there are “country-specific and noncompliant variations of SEPA payments and products,” according to the report. One is waivers allowed for “derogations,” which means “niche products” like Italy’s “ricevuta bancaria elettronica” will still be used until February 1, 2016. And then there are other products in Belgium, Italy and France that are entirely outside SEPA’s scope and won’t be replaced by anything equivalent.
“SEPA is a big achievement, but it requires further fine-tuning, and all the main stakeholders—financial institutions, PSPs, payment processors, companies, and customers—are wondering about the value beyond the SEPA migration,” according to the report, “The European Payments Landscape:
Beyond SEPA.”
So far, the Aite report said, “all the actors involved have been too focused on compliance so far and have failed to consider” the above issues.
Still, the benefits so far have outweighed the negatives. These include enabling companies “to significantly improve their treasury and liquidity management by rationalizing their banking relationships.” Still, says Aite, MNCs should think about creating or enlisting payment and collection factories “that handle incoming and outgoing payments from one single unit for numerous subsidiaries.” And for banks, SEPA will allow a lot more information to be transmitted with the payment. This means they now have the opportunity “to develop value-added services for corporates in order to improve their STP rate and produce more revenue.”
And as SEPA acceptance grows, Aite also sees a new type of service provider, “capable of providing cloud services to companies and orchestrating multibank access, payment services integrated with supply chain finance, cash management, and treasury management services.”
This is the type of efficiency that treasurers love.
“To leverage the full value of SEPA and get the benefits from the automation of manual activities and resources currently engaged in the payment and reconciliation value chain—estimated in an amount of EUR21.9 billion to be saved annually—banks, PSPs, payment processors, and companies have to embrace a widespread use of ISO 20022 standard and e-invoicing services,” the report says.