Get ready for SEPA as soon as possible !

Having been successfully launched on 28 January 2008, the SEPA […]

January 7, 2013

Having been successfully launched on 28 January 2008, the SEPA project is about to celebrate its fifth birthday.

As a reminder, in January 2008, more than 4300 banks in 31 countries representing roughly 95 percent of payment volume in Europe took a historical first step to starting SEPA by launching the SEPA Credit Transfer Scheme (SCT) for euro payments.

It is now time to accompany the banking community and, more importantly, companies in their migration from the current domiciliation system to SEPA Direct Debit. The role of the ABBL as NASO (National Adherence Support Organisation) is to coordinate the SEPA migration in Luxembourg and the challenges that lie ahead.

Luxembourg has a headstart compared to other European countries:

One of the most important features of the new SEPA instruments is the common use of IBAN and BIC as single account identifier. However, in Luxembourg, customers got into the habit of using such IBAN and BIC ever since 2002, which is not the case in other SEPA countries.

Moreover, Luxembourg banks have always tried to look to the future when updating existing systems; in fact the old legacy clearing and settlement mechanism (LIPS-Net) was replaced on October 2006 by a European wide solution (EBA STEP2), which was designed to smoothly provide SEPA Credit Transfer to the Luxembourg banking community.

So, it was a progressive migration over many years, whereas most other European countries now need to migrate quickly since they don’t have the same headstart.

The main challenge in 2013 will be the migration to SEPA Direct Debit. On 1 February 2014, the current legacy direct debit system (DOM-2009) will stop and the only way to collect direct debit will be to use the SEPA direct debit scheme. The migration from old one to new one requires active participation from companies – the banks are ready since October 2012. Together with banks, the ABBL has developed a migration scenario in order to simplify migration as much as possible for companies – the migration of existing mandates will be “soft”.

“We have tried to simplify a complex process, but companies should not underestimate the impacts and the scope of the migration process. It will require substantial changes to existing systems.”

The ABBL and Luxembourg banks have also communicated well with clients and companies on these issues to prepare them. A large set of documents has been prepared for banks, companies and end-users in order to explain the migration and the new SEPA topics. The ABBL is accompanying and informing companies in migrating via monthly info sessions, which are set up in different languages at the Chambre de Commerce. As the migration to SEPA is an important European project, a close monitoring will be put in place. In Luxembourg, progress will be monitored by the Luxembourg Central Bank.

Our key message to companies is: “Get ready for SEPA as soon as possible. Don’t wait until 1 February 2014, otherwise it will be too late”.

By Jean-Pierre Borsa, ABBL Adviser – Payments, ICT, Security & Standards

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