Searching for the Positives in SEPA
Three European treasurers – from Germany’s Ages Maut, Swiss pharmaceuticals group Roche and Telecom Italia – struggled to find the positives in SEPA, when the initiative came up for discussion during the session.
“We survived” was all that Massimo Battistella, Telecom Italia’s manager of accounts receivables, could manage to say in favour. “Treasurers were essentially forced to leave national domestic payment schemes for a pan-European one that, in some countries, wasn’t as good.”
Some European Union (EU) nations inside the eurozone did benefit from moving to the supposedly harmonised pan-European payment formats, admitted Battistella. In addition the project does offer centralisation and other potential benefits, such as the ability to consolidate on a single virtual bank account across Europe. The problem is that differing tax and liability interpretations in some countries has so far prevented this single bank account. Other impediments to harmonisation remain, such as 19 slightly differing versions of XML ISO 20022 messaging.
“True straight-though processing (STP) in your treasury is not possible, because the information inserted in SEPA payments is not good enough,” added Battistella, in a plea for more data-rich services to be developed following the migration end date last August. Non-euro countries such as Denmark and the UK are due to join SEPA in 2016; although in reality many are prepared already, as doing business cross-border in Europe without payment compatibility is difficult.
“Things didn’t live up to our expectations,” said Martin Schlageter, head of treasury operations at Roche. His firm did at least use the project as an excuse to get budget and push through treasury centralisation, by moving to an in-house bank (IHB), payments-on-behalf-of (POBO) and other such structures, alongside new automation technology.
Cost versus Benefit
According to Peter Frambach, head of international payment services at Germany’s toll systems operator Ages Maut, no-one would have moved to SEPA had they not been forced to do so. “From a commercial viewpoint there just haven’t been enough savings,” he said. “At my corporate it cost us €400,000 and it’s only delivered €15,000 worth of benefits so far.”
Frambach did qualify his criticism by reminding his treasury audience that there are 5,500 banks involved in the SEPA coverage area. Inevitably, not all of them were fully ready in time for the launch, plus there are millions of organisations impacted by the initiative and hundreds of millions of people. “It’s not an easy project and I hope the promised benefits will accrue in later years,” he added.
The EU’s other main payment regulation, the Payment Services Directive (PSD) II, was also discussed during the panel session. PSD II is supposed to further open up the market to alternative payment services providers (PSPs) and may offer treasurers more non-bank cash management options, or leverage over price negotiations. However, the prospect of more regulation was not necessarily viewed as a positive.
Panel moderator at the session, Tom Buschman, is a former treasurer from Shell and now owner of the Edge consultancy. He did manage to find one positive, in a bid to gee up the generally unenthusiastic audience. “In the Netherlands large billers have started working with banks to encourage electronic e-mandates (for direct debits). In future their co-operation could lead to further STP benefits in later years.”