Research reveals errors in payment data could undermine SEPA
Research from Experian, the global information services and analytics company, has revealed that European businesses might lose billions of Euros as a result of errors that will slow payments when the Single European Payments Area (SEPA) system comes fully into force in 2014.
The aim of SEPA is to allow individuals and companies to make cashless payments in Euros throughout the EU, the European Economic Area and Switzerland from a single payment account using a single set of payment instruments as easily, efficiently and safely as they can make them today at the national level.
Experian’s analysis of more than half a million bank account records, however, reveals that not everyone is ready for the change:
- 12% of electronic payments made by businesses in the Euro region have data errors
- Only 65% of Euro transactions are underpinned by fully accurate destination account data.
- 45% of SEPA-compliant International Bank Account Numbers stored by large European businesses do not have the valid corresponding Bank Identifier Codes required.
All of these results will slow payments in the system designed to speed things up and nullify the expected cost savings.
Jonathan Williams, Director of Payment Strategy at Experian, said of the findings, “These same error types will lead to payment failure when made through SEPA, costing businesses approximately €50 for each failed transaction and leaving a total bill of more than €20bn a year. An average error rate of around one in eight equates to a potential cost of €600,000 for an organisation transacting with 100,000 bank accounts”.
“While SEPA will undoubtedly benefit organisations trading in Euros, errors in bank account details held by European businesses risk causing significant teething problems as locally implemented fixes – which have largely worked so far – are made redundant by the new common payments system”, he continued.
So what can be done to enable businesses to take advantage of SEPA? Williams suggested, “European businesses need to analyse their account data, fix any errors and convert this information to the correct SEPA standard, to ensure suppliers, partners and staff continue to get paid on time when the new rules come into place. Early adoption is crucial. If left to the last minute, the SEPA requirements have the potential to be both disruptive and costly”
Furthermore, although the UK does not use the euro, businesses with a presence in the Eurozone will need to change their processing systems if they want to make lower cost SEPA transactions, and UK banks will need to upgrade systems to support it.