The research mentioned above found that while the use of ‘SEPA-type’ (some form of direct debit, credit transfer, or card payment) instruments differed widely across the countries studied, overall, 85% of all non-cash payments are already made using these instruments. But of those payments, 42% currently fall “significantly short” of SEPA standards, while just 13% are already compliant. There’s a lot of work to be done here.
It looks, actually, as if there’s more to be done than is possible in the timescale. Experience from the market place is that getting SEPA compliance is costing more than it should and taking longer than it should. Accenture reckons (hopes?) that the total spend on payments capabilities over the next five years by Europe’s 90 largest banks will be more than 3 billion euros making it possible that the previous high estimates from Tower (8 billion euros for the whole of Europe) are an underestimate.
As many people have observed, the banks’ fundamental strategy in the face of these figures should be to grow the SEPA-compliant payments pie at the expense of non-SEPA, less profitable instruments (ie, cash and cheques). At the simplest level, this means replacing cash transactions with debit card transactions. To some extent this is already happening as a natural process as debit cards are accepted for lower-value transactions (look at the Dutch market, where one in ten debit payments are below 5 euros and one in four are between 5 and 10 euros) but one that will accelerate as the deployment of contactless makes small payments quicker and easier with cards than with cash.
Surely, though, the way for the Commission to ensure that SEPA instruments replace non-SEPA instruments is to encourage cost-based pricing for all payment instruments and starting treating payments as more of a utility. How long would cash and cheques survive on that basis?