As the February 2014 deadline quickly approaches, a large number of European businesses are still a long way off from reaching the requirements of the mandatory switch. SEPA, or Single Euro Area Payment, is a scheme designed to make domestic and international payments within the Eurozone countries simpler and more efficient.
However, according to Experian, only 30 percent of all credit transfers and only 2 percent of all direct debits meet the high SEPA standards. Experian, which launched the survey to determine Eurozone readiness, found that a high number of transactions are filled with errors which are hampering efforts to meet the deadline.
Under SEPA, businesses would migrate to the Iban format for accounts, which historically have had significantly lower error rates than other formats. Migrating to the Iban format is only half of the equation and according to Experian, 45 percent of businesses which have made the move, do not have the required BICs to enable successful routing of transactions.
“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,” says Jonathan Williams, director, payment strategy, at Experian.
While European businesses still have 12 months to reach the SEPA standards, the impetus is clear as each failed transaction costing around €50 ($67.80), the errors could cost the industry up to €20 billion ($27 billion) according to Experian.
“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, due to the error levels inherent in the data which the SEPA system is liable to expose,” continues Williams.
Although meeting the SEPA standards is a headache, with Eurozone members all operating on one payment platform, it will make conducting business in and around Europe much easier for those in the European and international payments industries in general.
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