IPS 2013: SEPA benefits hard to see for corporates
As the February 2014 deadline for implementation of Single Euro Payment Area compatible instruments approaches, focus is moving from banks to corporates – and the increasingly clear picture is that few European corporates see any great benefit from adopting the standards involved.
Several corporates taking part in the International Payments Summit 2013 in London this week have expressed this sentiment, both from the stage and away from the formal sessions.
Speaking in a special session on views from the corporate side, Peter Frambach, head of international payments at Ages Maut, an international transportation business based in Germany, put numbers to the issue: his firm has calculated that adoption of SEPA Direct Debits will be worth €15,000 a year to the business, but it has so far invested €400,000 to become SEPA compatible. “I wouldn’t call it a good investment,” he said, adding that the benefit would only be seen by corporates doing significant volumes of cross-border payments. “We do a lot of cross-border payments,” he said.
Frambach asked what would have happened if regulators had taken a similar ivew of the car industry usggesting that they would “phase out all legacy cars over a two year period ” and insist that drivers had to enter new vehicles from the front rather than through the door – “in order to prevent existing cars being used and to foster competition”.
Other panellists pointed out that the SEPA regulations have never taken into account the different business practices in individual European countries or regions. In Germany, for instance, the direct debit instrument is routinely used on a one-off basis, whereas in Finland and other Nordic countries the preference is to use credit transfers.