We left off last week's edition with the question of whether or not the migration from domestic payment systems to SEPA standards would ever come about without a firm "due date"...and that's right where we pick up this week's edition.

At the beginning of the month, the European Commission said that it may set a formal deadline for banks to migrate to a single European payments platform. Up to this point the Single Euro Payments Area (SEPA) project has been a voluntary exercise. However, due to what the European Commission sees as a slow uptake on the project that may change. Banks have been able to make SEPA products available since January 2008. But "being able to" and "actually doing" are often two very different things. So here again is our question — without some form of incentive, is it possible for the SEPA project to become a reality for all of Europe before the close of 2010? There is a somewhat parallel scenario happening in the interdiction screening arena for cross-border payments that could shed some light on this question.

On September 18, 2009, the International ACH Transaction (IAT) code is scheduled to replace the CBR and PBR codes for international ACH transactions. You can read more about IAT in this previous edition of Viewpoint. By setting a deadline, NACHA was able to provide momentum to the banking community and jump-start the migration to the new format. As of March of this year, the Federal Reserve Banks conducted a survey of financial institutions to determine their readiness to process IAT payments by September — approximately 93% of those surveyed indicated they would be ready. One can only imagine that without the deadline as impetus to get ready, that percentage would have been much, much lower. Unless the European community also engages in a similar process for adoption, it is unlikely SEPA will see a comparable acceptance in Europe anytime in the near future.