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Product Strategy

S€PA as of February 2014: Are you ready for change?

Pierre Peutin
Pierre Peutin
Chief Data Officer and Accounting / Financial IT Systems Consultant

Believe it or not, recent studies show most SMEs have never heard about SEPA! This clearly indicates how little has been said about this topic, not to mention the obvious lack of concern of some companies. But what makes them so resistant to change? This project is remarkable from so many points of view and brings real progress at both technical and functional level.

What does SEPA mean?

SEPA (“Single Euro Payments Area”) is a European project dedicated to the changeover to euro coins and banknotes. The main purpose is to homogenize the means of payment in the Euro Area: the same protocols and formats.

As of February 1, 2014, this new format – available since 2008 and based on EBICS (IP protocol using XML messages through the HTTPS standard) protocols – will be mandatory for all companies.

What are the SEPA advantages?

From a functional point of view, the main advantage of the new SEPA format remains the end-to-end transmission of the transaction reason provided by the payer. The purpose of this text containing 140 characters is to facilitate automatic accounting reconciliations for companies. Although this might seem out of reach, for a company working with several banks and hundreds of transactions for each account, the automatic reconciliation can be a real time saver.

There is, of course, software which might provide this service but it is mostly limited to a reconciliation based on the amount, a date and, at best, a check number. Thanks to this new format, the reconciliation will be performed based on the information sent by the unique payer. This will severely limit rejections and approximations.

The second advantage – which is obvious in a Europe that is being built – is represented by the unique tariffs for transfers, regardless of the country of destination and the amount in the Euro Area.

From a technical point of view, the passage from the proprietary format to the IP protocol, the use of XML for the file format or of HTTPS for secure transfers remain the greatest benefits. Based on my previous experience, SEPA’s only downside would be the daily availability of files. The automation of different banks is rather random (thus requiring, more often than not, manual intervention) as far as the recovery of the record files, which are not the main SEPA beneficiaries, is concerned (in case recovery doesn’t imply the adaptation of the length of the above-mentioned transaction reason).

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