Malta is one of the four eurozone countries that are lagging far behind in the switch to the IBAN, a harmonised account identification code across the Single Euro Payments Area (Sepa), which will make all electronic payments as simple and straightforward as domestic ones.
So far, four countries – Luxembourg, Slovakia, Slovenia and Finland – have practically completed migration to Sepa. But in Malta, Germany, Ireland and Estonia, fewer than 20 per cent of credit transfers have migrated.
The deadline for migration to Sepa credit transfers and direct debits made in euro is February 1, 2014.
The European Central Bank (ECB) carried out its first assessment of the migration process in March 2013, repeating it at the end of September to monitor progress made.
The ECB found that only 56 per cent of credit transfers in the eurozone made in September were Sepa compliant – although this is considerably better than in March thanks to the changeover to Sepa systems by public administrations.
When it comes to direct debits, the picture is even worse, with only seven per cent of direct debits in the eurozone having migrated – and negligible amounts in Malta.
“Many stakeholders decided to migrate only in the last quarter of 2013 or even later. This approach gives rise to operational risks and limits the possibilities of tackling any setbacks or unexpected developments during the changeover,” the ECB report warns.
The ECB is concerned that many of the conversions to Sepa will take place after the migration deadline, particularly by SMEs.
“While these conversion services may be useful in managing the operational risks arising from late preparations in the short term, relying on them in the long term will prevent the stakeholders from reaping the full benefits of Sepa.
“Payment service users need to remember that relying on conversion services is only a partial solution which still requires thorough preparation on their part,” it said.
The ECB said that late migration posed serious risks, because of the limited capacity and bottlenecks at payment service providers and software vendors as the deadline approached. Users that waited for payment service providers to roll out their services would only have limited time to adapt to them, while there would also be very little time for end-to-end testing.
“The experiences of those stakeholders that have already completed migration to the direct debit or credit transfer scheme show that there is a real need for a fine-tuning period after changeover.
“The risks due to late migration – even though being of an operational nature – could eventually impact the wider supply chain and even jeopardise the public’s confidence in payment services in general,” it said.
Credit transfers and direct debits are the first deliverables of the wider Sepa agency, which will eventually encompass card payments and innovative payment solutions.