SEPA Technical Requirements: A Guide for Finance

For many companies operating in the Eurozone, the deadline for the Single Euro Payments Area (SEPA) is looming large on the horizon. As of February 1, 2014—less than five months from today—all domestic credit transfers and direct debits denominated in euros will need to be processed using SEPA credit transfers (SCTs) and SEPA direct debits (SDDs). PwC estimates that these payments account for between 40 percent and 95 percent of in-country transaction volumes. Yet because the European Payments Council took a while to announce the so-called “end date” for SEPA compliance, some corporations kept their SEPA projects on hold for years. The projects should be in high gear at this point.

SEPA-compliant payment processing requires some fairly complicated changes to the way that accounts receivable (A/R) and accounts payable (A/P) software stores and accesses data about a company’s banks and customers. It also requires that domestic financial transactions use SEPA-specific formats. Organizations that haven’t yet begun the transition, or those in which the SEPA initiative isn’t making rapid progress, may find themselves unable to make or collect euro-denominated payments six months from now. A PwC study released last month found that systems for SEPA-compliant payment processing are currently operational in only 11 percent of companies. Twenty-one percent of SEPA projects are still in the design phase, and 10 percent of companies are just now assessing their needs.

Meanwhile, leading-edge businesses are taking full advantage of the technology investment they’re required to make to comply with SEPA. They’re expanding the scope of the project to improve efficiency throughout their A/R and A/P processes and systems.