Only 2% of SMEs have been able to test their system with their banks.
Lack of proper testing will mean greater error handling costs for business.
ISME, the Irish Small and Medium Enterprise Association launched their third survey of SME preparedness for SEPA[i], (Single Euro Payments Area), today (Monday 9th December) and called on the Irish banks in particular to put much more effort into preparing for the implementation of SEPA. The Association warned that on 1st February many SMEs will have cash flow difficulties if they are not fully compliant.
Speaking at the launch, ISME chief executive, Mark Fielding said: “It is encouraging to see SME owners prepare for the switch over, despite the fact that some banks have been dragging their feet on the issue. It is imperative that SME systems are adequately tested in the run up to implementation, otherwise small business will suffer cash flow difficulties, leading to problems with the very banks who are slow to engage but fast to charge penalties and surcharges on overdrafts”.
International statistics clearly demonstrate the need for validation as part of the data conversion process and as a cleansing process for both cross-border and domestic SEPA payments. Without significantly better data quality, error rates will rise and the confidence of consumers will be undermined. In addition, this will mean greater error handling costs for business, further affecting consumer confidence. It is therefore essential that banks and payment service providers deliver good validation tools and test facilities to ensure that payments are successful first time.
The survey was carried out in first week of December and received 984 replies, a response rate of 11%.
73% had received information; up from 69% in September and 36% in May.
89% are aware of the impact of SEPA on their organisations’ processes and systems; up from 58% in September and 27% in May.
Of the 73% who had received information, 58% was from their bank, 26% from a business group, 4% from a Government department and 15% from their software provider. Newspapers and radio accounted for less than 2%.
11% were unaware of the date of compliance of 1st February 2014, an improvement on the 29% in September and 63% in May.
On the question of implementation and readiness, 76% had started the process, up from 73% in September and 30% in May.
Twice as many enterprises were in early planning or implementation phase (54%) as was the finding in May.
22% stated that they were now SEPA compliant, a big increase on the 1% in May.
However, less than 2% had actually tested their procedures with their bank, mainly due to the fact that some of the banks were late in their own preparations.
Overall, the results of this survey are encouraging in that business is steadily preparing for the implementation date of 1st February 2014. However, we in business expect a greater effort from our Irish banks which are once more slow to react and allow testing of data.
ISME is recommending the following;
Irish banks be ordered to speed up their implementation and testing procedures.
An increase in national SEPA awareness advertising and promotion.
All SMEs to review their requirements and demand better service from their banks in the lead up to implementation.
The Association called on the Government, through the Central Bank to ensure that the banks change their ways and properly assist in the change-over to SEPA, through better promotion, cooperation and proper testing.