CGI and Experian partner for SEPA validation services
Williams: validation tools can help safeguard SEPA
Technology and information companies CGI and Experian have partnered to help Europe’s banks and corporates meet the requirements of SEPA, the Single Euro Payments Area, on direct debits.
SEPA is intended to simplify and harmonise bank transfers in the European Union, and as one of the pillars of European integration, is meant to help underpin the use of the single currency.
The move to a single SEPA payment system imposes a mandatory duty to switch existing payments applications and databases in favour of the new payment schemes and corresponding formats, specifically XML-formatted ISO 20022. This comes into force in February 2014 for eurozone countries, and October 2016 for businesses in non-eurozone territories that make and receive payments in Euros, and affects more than 4 billion direct debit mandates, according to CGI and Experian estimates.
Under the deal, CGI will offer Experian’s pan-European bank account data validation services, so that corporates migrating to SEPA direct debit will get the highest levels of straight-through processing possible. In addition, research from Experian suggests that under SEPA, many banks will not provide exception handling free of charge. Instead, firms may have to pay for up to 12% of all transactions, with a cost of payment failure at €50 per transaction. That would mean a corporate with 100,000 records could expect to see a cost of failure of €600,000 per monthly transaction cycle.
“Effective direct debit management services are vital in helping customers ensure that their SEPA payments go straight through, first time,” said Jonathan Williams, director of payments strategy at Experian and leader of the SEPA programme. “Offering CGI customers the ability to validate bank account data helps them avoid the issues associated with poor quality data which has the potential to derail the SEPA programme by undermining consumer confidence and imposing additional costs on businesses. Time is running out and we urge businesses to choose SEPA direct debit mandate management services soon while there is still resource and time available to migrate.”
Despite the impending deadline, Europe’s businesses are still largely unprepared for SEPA, according to research by IT business services provider Steria published in December, which found that 65% of businesses in France and 58% in Germany have not even started migrating to SEPA direct debits. In the UK, which is not a member of the Eurozone, the figure is 97%.
Furthermore, research by Experian in February found that only 65% of euro transactions have fully accurate destination routing data and 12% of electronic payments made to and from businesses in euros currently contain data errors. If that remains the case in a year, it would cost European businesses up to €20 billion just to correct the errors – and the possibility of being penalised by regulators could increase that figure.
