Roderick Kroon, Enigma Payments Consulting - woensdag 5 oktober 2011

SEPA and Non-banking Institutions

logo-enigmaAfter five years of single euro payments area (SEPA) discussions with banks, the focus has shifted to non-bank institutions. This brings a whole new set of payment related topics to the table that are driven by the need for investments to become SEPA-compliant.

Various market studies, such as the PricewaterhouseCoopers (PwC) and Enigma Payments Consulting's 'SEPA Barometer', have indicated that awareness of the single euro payments area (SEPA) is rising. Organisations outside the banking industry are increasingly aware of the characteristics and impact of the new SEPA payment schemes, the process implications and cash management opportunities.

In our discussions on SEPA with corporates, non-bank financial institutions and public sector organisations, Enigma Payments Consulting sees a number of related topics being added to the mix. The reason for this is that in many cases it remains difficult to create a business case to invest fully in SEPA, unless other benefits exist.

These benefits are related to:

  • Primary bank selection
  • Payment hub
  • In-house bank
  • Payment institution
  • Electronic invoicing (e-invoicing)
  • Primary Bank Selection

SEPA brings necessary changes to existing bank relationships. Organisations are also required to adjust their correspondence (IBAN/BIC), and to communicate the specifics of the new payment schemes to their customers. In addition, SEPA pricing is still quite diverse, which provides opportunities to negotiate better future rates with banks. Furthermore, there are significant differences in the migration services (e.g. cut-off times, reporting, value-added services, etc) that banks offer to relieve organisations from making their own (internal) investments outside their natural investment cycle.

After taking all this into account and adding the growing interest in bank independence, it becomes clear that the migration to SEPA offers the perfect moment to review current primary bank relationships.

Payment Hub

As many providers of enterprise resource planning (ERP) solutions have a conservative approach towards SEPA, there is room for vendors of payment hubs to position their product as a tactical, or even structural, solution, to ensure SEPA readiness. A payment hub can help organisations avoid, reduce or delay investments for SEPA payment schemes in their legacy applications and at the same time streamline their payment processes. Examples of the latter are:

  • Simplification of the complex payment processes for organisations with multiple labels/business units and related processing systems (after mergers and acquisitions).
  • Decoupling of the payments infrastructure from the primary processes to (temporary or permanently) avoid investments in applications where 'payments are not a core business'.
  • Channelling of the new SEPA transaction and reporting streams via a central hub instead of multiple individual interfaces.
  • Introducing a single internal payment format, independent from developments in the external world.
  • Adding more flexibility to migrate 'once' instead of 'twice' to the new SEPA Credit Transfer (SCT) and SEPA Direct Debit (SDD) payment schemes.
  • Offering a central solution for SDD mandate management.

In-house Bank

SEPA offers existing in-house banks the opportunity to increase their added value by becoming the 'SEPA advisor within the group', offering value-added SEPA services to the various business units and capitalising on the cash management opportunities that SEPA brings. This development helps the in-house bank to better position itself and to increasingly take over the role of the external house bank and/or external advisors. For organisations where no in-house bank yet exists, SEPA may just add the final arguments towards a positive business case for an in-house bank capability.

Payment Institution

Taking the in-house bank discussion one step further is to evaluate whether it is beneficial to become a so-called 'payment institution'. With the implementation of the Payment Services Directive (PSD) in November 2009, non-bank institutions have the possibility to connect to the interbank clearing systems without any involvement of a bank (apart from the actual settlement). More and more organisations are exploring this route and are preparing the business case to change their payment operating model by partially removing banks from the process.

        Payments within non-bank institutions

  • Unlike within banks, the payments domain is seldom a separate domain and payment-specific product managers do not exist.
  • Affinity with new developments within the payments domain is scarce.
  • The responsibility for payments is split between various departments. Treasury, operations and accounting cover elements, but always as secondary area of expertise (there is often a view that "payments just ought to work well").
  • The required SEPA activities are, most of the time, combined with regular operational activities rather than fully dedicating staff to a SEPA project.
  • For a non-bank institution, payments are often "something that the ERP system solves". Detailed expertise of product characteristics and processes is limited.


While in Finland SDDs are already being replaced by an e-invoicing variant based on SCT, other countries are still discussing both products in parallel. However, SDDs and e-invoicing have similarities which make it logical to combine discussions about their implementation:

  • For both, European standardisation is necessary, and with the introduction of the SCT, an European e-invoicing standard will be much easier to accomplish.
  • E-invoicing is often seen as a value-added service on top of the SEPA instruments.
  • The promotion of both SEPA and e-invoicing strengthens each other, given the strong relationship between invoices and payments.
  • E-invoicing, electronic payments (e-payments) and electronic mandates (e-mandates) together form the basis of 'e-SEPA'.

With an average saving between €2 and €4 per invoice for the sender, and up to €30 for the recipient, the savings potential of e-invoicing for the EU as a whole is estimated at €234bn. By adding this savings potential to the SEPA business case, management can be convinced that it is favourable to invest in a project covering both items.


The overall business case to start a SEPA project that includes a review of the entire payments value chain improves significantly, when other payments related factors are discussed alongside. While some companies still see SEPA still as an (often regulation-driven) necessity, many are now seizing the momentum to widen the scope of their SEPA projects to 'SEPA-plus'. The entire payments spectrum of their organisation is analysed against the various opportunities that arise from the need to migrate to SEPA. Combining the need to invest in SEPA with the topics discussed in this article will improve the business case of many companies. This might just be the catalyst to convince management that now is the time to scale up investments in SEPA-plus.


Bron: Enigma Payments Consulting

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