31 October 2007

Corporates facing Sepa account conversion nightmare

The conversion of millions of direct debit mandates to comply with Single Euro Payments Area regulations is emerging as the biggest stumbling block to the implementation of the pan-European scheme.

This is due to the requirement for all domestic account details to be converted to the BIC (Bank Identifier Code) and Iban (International Bank Account Number) formats to comply with the Sepa 2010 deadline, warns Experian subsidiary Eiger Systems.

The largest B2C businesses with extensive customer and supplier bases will be the most impacted by the requirement, says the vendor, and the problem is further compounded as banks are not allowed to provide a conversion service for accounts they do not hold.

"Either companies assign internal resource to contact each customer to obtain their BIC and Iban details, which could potentially run into millions of individuals, making the task virtually impossible. Or they need to source a vendor solution, which will perform a conversion to BIC and Iban and ensure the details are verified as part of the process," says Jonathan Williams, director of communications and strategy at Eiger Systems.

Williams says converting from domestic details to BIC and Iban is only one aspect for organisations to consider as part of their move to Sepa. It is also imperative that firms ensure that their BIC and Iban data is correct on an ongoing basis, as errors in details could prove costly to correct.

"Organisations should be looking for a solution that can not only perform the immediate data conversion of domestic details but will also validate BIC and Iban data on an ongoing basis," ssays Williams. "Errors in payment details can cost organisations around 45-75 euros each to rectify and these can be easily avoided."

Research released by CapGemini, ABN Amro and The European Financial Management & Marketing Association (Efma) earlier this year warned that the Sepa project will fail unless regulators provide incentives to public administrations and corporations to adopt the new payments instruments.

© Graham Bishop