The six-month extension is over, but don’t just pretendit is all systems go for SEPA.
Essential SEPA compliance may be a reality at today’sAugust 1 extension deadline (or not), but in all likelihood, treasurers willfind that the Single Euro Payments Area project is far from complete. The dreamthat Deutsche Bank and others have advocated for with SEPA is closer to beingmade real, but it is wrong to pretend that you can realize it today.
History in chasing the dream
The dream of course is to centralize all payments andcollections in one structure and pay on behalf of and receive on behalf of allentities in the Eurozone from one payment and collections center, one platformand even one bank account. Pursuit of this dream has been going on for a longtime. To help put this pursuit in context, we provided two look backs this weekat articles from the archives that shed light on how long MNCs have beenchasing this dream for centralized cross-border payments and collections.
The first one, Sendingthe Remittance Advice Separately, shows how keeping remittance adviceintact through electronic funds transfers and clearing system has been aperennial problem. A recent call with treasury technology solution managersfrom NeuGroup member companies revealed that at least one major globaltransaction bank had been suggesting (during the SEPA extension window) a workaroundsolution to centralized collection woes in Europe. Despite SEPA using thelatest XML standards to allow remittance advice (including receive on behalfinformation) to flow through the payments area along with the payment, thepractical reality is that this information still gets cut off or overwritten.The workaround—to use the unique identifier to reunite the payment with the remittanceadvice routed separately—is also not new.
The second item, CentralizedEuropean Payment and Collection Solutions Pre-SEPA, looks back at Citi’sthen state-of-the-art solutions in the summer of 1996. This article shows howfar we have come today with SEPA.
While chasing the dream has been going on for some time,and will likely to continue for some time, the pursuit is worthwhile as itbrings the current reality ever closer to living in it. Just don’t pretend thata six month extension means you should be living the dream now.