The European Commission’s decision to allow a six-month grace period to companies that have yet to migrate to a Sepa format has come as welcome news for those struggling to meet the deadline.
“Given that overall Sepa market volumes were well below the 100% set target (64.1% for Sepa credit transfers and 26% for Sepa direct debits), the extra time will allow companies to minimise any negative impact on their businesses,” says Steve Everett, global head of cash management at RBS.
Sepa (single euro payments area) is expected to improve the speed and efficiency of cross-border euro-denominated payments and bring major operational benefits to corporates with trading relationships in the euro area.
All corporates and public sector bodies in the eurozone are required by EU regulation to have fully migrated from existing national payment schemes to the new Sepa payment instruments by February 1, 2014. Organisations based outside the euro area have until November 1, 2016 to do so for euro-denominated payments to suppliers in the region.
According to a release issued by the European Commission earlier this month, the extra six-month transition period for companies does not change the formal deadline, but payments that differ from a Sepa format “could continue to be accepted until August 1, 2014”.
Internal market and services commissioner Michel Barnier says: “I regret having to do this but it is a measure of prudence to counter the possible risk of disruption and potential consequences for individual consumers and SMEs in particular.
“I have warned many times that migration was happening too slowly and call once more on member states to fully assume their responsibilities and accelerate and intensify efforts to migrate to Sepa so that all can enjoy its benefits, that is, faster and cheaper payments across Europe.”
The transition period will not be extended beyond August 1.