Still Not Ready For SEPA

The deadline for SEPA migration is one year away, but only 30% of credit transfers are now SEPA-compliant, Experian Analysis has found. The number is even less cheerful for direct debits – with only 2% complying with SEPA standards.

The migration towards the Single Euro Payments Area is compulsory, but that does not seem to be stopping businesses from avoiding the switch. This last-minute strategy could prove costly for many – it is estimated that wholly avoidable costs from failing to address data errors and validate data on migration could cost the Eurozone up to €20bn.

Research from Experian shows that only 65 per cent of Euro transactions are underpinned by fully accurate destination routing data and 12 per cent of electronic payments made to and from businesses in Euros currently contain data errors. Businesses which currently use IBAN-format account numbers have reduced error rates (4.6%) in comparison with those using domestic account numbers (12.7%), although these error rates are still problematic. Also, 45 per cent of SEPA-compliant International Bank Account Numbers (IBANs) stored by large European businesses do not have the valid corresponding Bank Identifier Codes (BICs) required to enable successful routing of transactions.

Jonathan Williams, Director of Payment Strategy, Experian, said: “Migrating existing customer records to the IBAN standard will be a huge challenge given the sheer number of accounts, and, as a result, large businesses face notable challenges to migrate and maintain SEPA-compliant mandate information in time for the 2014 deadline. Businesses must look to use, leverage and embed data validation within their systems and processes if they are not to incur significant costs as their operating countries move to SEPA payments, due to the error levels inherent in the data which the SEPA system is liable to expose.”

With a year to go until the official deadline businesses will have to work a lot harder to make sure they are fully SEPA-compliant and avoid unnecessary costs.