These costs are in marked contrast to the stated aim of SEPA to reduce the complexity and cost of payments by facilitating straight-through processing (STP) or end-to-end automation of transactions. Earlier this year, the European Commission published a report that estimated the potential benefits of SEPA to Europe's banks, businesses and consumers at EUR123 billion over six years.
Barry Kislingbury, Global Product Manager, Payments and Financial Messaging at Misys, comments, "Little more than a third of cross-border commercial payments are completed using STP today. Banks are left with the cost of putting these payments back on track - costs they are unable to pass on to customers. With global trade volumes continuing to hit double-digit growth each year, the problem is only going to get worse. The only remedy is to reduce the incidence and cost of payment failures."
Cross-border payment failures are caused by a number of factors including weak payment initiation controls, poor monitoring of processes and problems during clearing and settlement. One of the prime causes is missing or incorrect reference data, responsible for 30% of all failures according to SWIFT.
Kislingbury concludes: "Significant gains in STP rates can be achieved by utilising reference data within existing payment infrastructures without having to re-engineer a bank's entire systems. Through targeted improvements in specific processes such as payments acquisition, validation and enrichment we can help banks to become more efficient and innovative and rise to the challenge of the new payments environment without undertaking major risk.
