It is hard to find a country that has more Europe in its DNA than Belgium. Its capital Brussels is considered the de facto hub of the European Union, having a long history of hosting the institutions of the European Union within its European Quarter.
It should therefore not come as a surprise that Belgian companies and banks primarily see SEPA as an opportunity. Peter Lagaert, Head of Cashless Payments Division of the National Bank of Belgium: “Historically, a lot of companies are headquartered in our country. By being a frontrunner in SEPA, we want to attract organisations to centralise their cash management in Belgium.”
On a scale of 1 to 5, how would you rate the implementation pace in Belgium (1 = worrying, 2 = slow but we will get there, 3 = could be better, 4 = satisfactory, 5 = good)?
Axelle Waterkeyn, SEPA Manager Belgium at the National Bank of Belgium (NBB): “I would say more than satisfactory, so probably between 4 and 5. On the SEPA Credit Transfer (SCT) level, we are now at an implementation rate of over 60 per cent. The migration of SCT is evolving steadily. It really helped that the Federal Government first migrated as it made citizens quickly familiar with their IBAN. However, as we are approaching the deadline, the adoption rate seems to slow down. We find it more difficult to reach small and medium enterprises (SMEs).”
Most small and medium sized companies in Belgium tend to rely on their Enterprise Resource Planning (ERP) software providers to facilitate the migration. Peter Lagaert: “Therefore we have reached out to these software vendors to encourage them to adapt their systems and communicate to the end users about it. We are actually very hopeful that they will have their products ready in Q3, although some banks fear that ERP vendors might use SEPA as an opportunity to force users to implement new versions of the software – which could possibly impose a lot of costs.”
The migration to SEPA Direct Debit (SDD) is still a bit slow, but the NBB expects a significant improvement in the coming months. “We managed to reach a migration rate of 10 to 20 per cent quite early, thanks to the migration of Electrabel, a large utility company. We expect more large users to migrate in the coming months, probably before the end of the third quarter. We are now having meetings with the top one hundred of the big billers in Belgium, who account for 80 per cent of the transactions.”
Mandate is a hurdle
An additional hurdle towards the implementation of SDD is the mandate system in Belgium. Peter Lagaert: “In our current system, a mandate is signed by the creditor and sent to his bank that manages all mandates. Within SEPA, companies are required to manage mandates, which is quite a challenge.”
Axelle Waterkeyn: “We knew in advance that our mandate system would make the transition towards SDD more difficult for us. We experienced that banks were actually preparing quite early for SDD. What makes life a bit easier is that we can continue to use current mandates, so there is no need to sign new ones.”
No delay, no waivers
The NBB and the banks have a clear message for all parties involved in the payments industry: there will be no delay and no waivers in Belgium. Peter Lagaert: “We actually receive quite a lot questions about delaying the SEPA implementation, but we always confirm that there is absolutely no discussion about that. The same goes for waivers. We are dedicated to adopting the SEPA standards, without any exceptions. For SEPA to really work, it should be as similar as possible in all participating countries.”
This attitude is perhaps influenced by the tradition of the Belgian banking industry as a European payments capital. “I can honestly say that Belgian banks are really frontrunners when it comes to SEPA. They want to take advantage of a single European payments market. Historically, a lot of companies have their headquarters in our country. By being a frontrunner in SEPA, we want to attract organisations to centralise their cash management in Belgium. That is why they our banks are so keen to make use of their very well prepared status on SEPA.”
Summarising, both experts are confident that the SCT migration rate will be close to 100 per cent by February 1, 2014. But it will be difficult to get the same result for SDD. “The banking sector in Belgium has been preparing for years. Actually, all the internet banking applications are already SEPA-proof. All banks are planning to fully migrate later this year, to make it mandatory to use of SCT version of credit transfer. Besides, banks are also planning to invest in e-mandate, because the current system to manage paper mandates is very costly. Since more and more consumers are purchasing on the Internet, it would be great to have a common e-mandate solution in place. This will be our next big thing.”