For months, media fretted that companieswould not be prepared to comply with the Single Euro PaymentsArea (SEPA) by the February 1, 2014, deadline—and many analystspredicted that the European Commission(EC) would delay the deadline. Today, less than a month beforeSEPA formally takes effect, unprepared companies have been granteda reprieve. Although the EC has not officially changed itscompliance deadline, it is proposing a transition period of sixadditional months during which credit transfers and direct debitsthat are not SEPA compliant will still be acceptable for payments within theEurozone.

Said Michel Barnier, internal market and services commissionerfor the EC: “As of today, migration rates for credit transfers anddirect debits are not high enough to ensure a smooth transition toSEPA despite the important work already carried out by allinvolved. Therefore, I am proposing an additional transition periodof six months for those payment services users who are yet tomigrate. In practice this means the deadline for migration remains1 February 2014, but payments that differ from a SEPA format couldcontinue to be accepted until 1 August 2014. I regret having to dothis, but it is a measure of prudence to counter the possible riskof disruption to payments and potential consequences for individualconsumers and SMEs [small to midsize enterprises] inparticular.”

The EC has been monitoring the implementation progress of SEPA stakeholders, from banks andgovernment entities to companies of all sizes, as well asconsumers. In November 2013, it found that 64.1 percent ofstakeholders were prepared for SEPA credit transfers (SCT) and only26 percent were ready for SEPA direct debits (SDD). If the EC hadnot taken action, banks and other payment institutions would havebeen required on Feburary 1 to stop processing any non-complianteuro-denominated payments. The change would have caused significantdisruptions for those businesses that had not finished their SEPAimplementation projects, potentially preventing them from making orreceiving any payments.