Ignacio Echevarría: "SEPA affects not only financial entities but also companies and individuals" December 23, 2013
Ignacio Echevarría: "SEPA affects not only financial entities but also companies and individuals"
February 1, 2014 is the end date for SEPA. Within this Single Euro Payments Area, common financial instruments have been developed to eliminate differences between domestic and cross-border transactions. SEPA comprises the 28 EU member states as well as Iceland, Liechtenstein, Norway, Switzerland and Monaco.
Ignacio Echevarría, director of Europe Transaction Services, explains the key implications of SEPA.
Q: February 1, 2014 is the end date for SEPA. What impact will it have and who will be affected?
The end date is the deadline for migrating to SEPA. Current national credit transfers and direct debit procedures will expire on 1 February and must be settled using SEPA procedures.
However, here in Spain there is an exception, the so-called "niche products", i.e. advances on receivables and paper receipts drawn on Cuaderno 32. The deadline for migrating these products is February 2016.
This new regulation affects not only financial entities but also companies which will see transactions affected, and also individuals as accounts will be identified differently and they will have new rights as debtors.
Q: Are there many differences between current operations and transfers and SEPA direct debits?
Migrating transfers to SEPA essentially involves a new format, such as including the beneficiary's IBAN in all transfers. The format has also changed and more detailed information can be included.
For direct debits, on the other hand, not only has the new format been adopted but in Spain SEPA has also meant that companies must now work differently: the information field has been reduced from 640 to 140 positions, mandates must contain certain mandatory information, there are new deadlines and a pre-notification is now required before the first direct debit can be made.
Q: The mandate is what concerns clients the most. Are new mandates needed to be able to migrate to SEPA?
A mandate is the document whereby the debtor authorizes the creditor to debit their bank account.
If they are going to work with Core debits- which is the standard - consent is not needed to migrate to SEPA as, by law, all prior direct debits are valid.
Once clients have migrated, they will be responsible for adapting to the SEPA's new mandates.
In the case of B2B direct debits, new mandates will be required as this is a totally new way of operating where the debtor expressly renounces their reimbursement right in authorized transactions.
Q: What recommendations would you give clients as the end date draws near?
We recommend they carry out comprehensive tests beforehand so they have some room to maneuver. In this regard, our e-banking platform for companies and corporations (BBVA net cash) is offering clients a file validation tool so they can verify their SEPA formats are correct. We have also set up a help mailbox where clients can send any technical queries.
Q: And finally, what will happen if, on February 1, our clients have not fully migrated their processes?
BBVA will offer clients a contingency plan in the form of conversion services for both transfers and direct debits to ensure they can carry on operating after the end date. However, this does not exempt clients from migrating to SEPA instruments. They should do as soon as possible.