Getting payment cards operating under a Single Euro Payments Area framework is the next big hurdle facing those seeking a common system in Europe.

Banks and businesses faced a Feb. 1, 2014 deadline to comply with SEPA standards for direct debit and money transfers for single or bulk payments, but in January the European Commission granted a six-month extension. Two weeks past that deadline, the commission and payments observers say that portion of compliance is pretty much complete—but plastic cards are not quite ready to operate under SEPA technology.

Payment cards must be in full compliance within two years, enabling consumers and businesses in SEPA regions to complete all local and cross-border transactions with the euro currency.

The project, regulated by the European Commission and involving various other governing bodies, has been known to frustrate European acquirers, which have generally been reluctant to invest in SEPA protocols that they fear other countries may not fully adopt.

Some of those fears may come into play with the slow progress unfolding in preparing card payments for SEPA, while planners also seek answers for how e-commerce transactions and mobile payments will be handled under SEPA guidelines. Two years ago, the European Commission called for the creation of e-commerce and mobile payments frameworks to operate in unison with SEPA.

Still, the lingering uncertainty over payment cards is bogging down compliance efforts, said Richard Sanders, ACI Worldwide's principal solution consultant for Europe, the Middle East and Africa.

ACI, an active SEPA planner, established a money transfer system that was one of the first to achieve SEPA compliance under the Payment Services Directives issued through the European Commission.

"Clarity is needed on what is actually required across the various pieces of [payment card] legislation that are at some stage from planning to implementation," Sanders said. "The first SEPA cards regulation was vague and open to interpretation."

The European Payment Council's SEPA Cards Framework essentially called for free and open standards to establish EMV "chip and PIN"-based, general purpose cards for use in the euro zone, while also allowing merchants to choose their brands and acquirers. It sounded simple enough, but various governing bodies and payments players have differing understandings of the framework, Sanders said.

It is also unclear who will determine compliance for payment cards, Sanders added.

The European Commission, European Parliament, European Central Bank, the international payment schemes, banks, processors, retailers and corporations all "see the game differently," Sanders said.

In addition, much work remains at the merchant point of sale level for the Electronic Protocols Application Software initiative, which develops data protocols for the point of sale and other connections between the retailer and the payment network.

SEPA planners also debate how proposed regulations on card interchange would affect card brands using independent issuers.

In addition, the European Payments Council has created what Sanders called "a strange initiative" by suggesting a fee of 75,000 euros ($99,700 U.S.) to vendors in SEPA to make up for a lack of central funding. As the SEPA card landscape evolves, the council wants the vendor contribution mandate to expand to those who provide loyalty programs, he said.

In what Sanders refers to as a "scope creep," or an attempt to bring security measures beyond their original scope, some European leaders are considering building a SEPA fraud reporting system from scratch rather than using the well-regarded reporting undertaken by the UK Cards Association to establish a European reporting model.

As the SEPA card landscape evolves, the European countries involved will likely see increased regulation because "self regulation will not deliver results fast enough," Sanders said.

As card payments become unified in SEPA, many national processing companies will likely lose money and cease to exist in their current forms, while card schemes that also provide payment processing will be forced to change business models and "have to choose what they want to be," Sanders added.

The European Commission did not respond to inquiries about the payment card landscape, citing its current complexities. But it expressed pleasure with SEPA progress to this point.

The commission points to Belgium as a prime example, saying the country is fully SEPA compliant as of April of this year. The other countries have plenty of work to do, said Javier Santamaria, chairman of the European Payments Council, after assessing compliance with the August deadline.

"Meeting the next SEPA deadlines established by the European Union lawmakers applicable in 2016 requires continued and coordinated efforts by public authorities driving the SEPA process, the representatives of payment service users as well as banks and other service providers," Santamaria said in a prepared statement.

As for when those entities should begin to collaborate, Santamaria simply added, "Act now."

As of this month, the European Commission views key SEPA ingredients as being in place. In all euro countries, citizens now have "a common and simple way to pay" in their home countries or across borders through SEPA credit transfers and SEPA direct debit, the commission said in its statement.

The commission reported SEPA credit transfers account for 97.6% of total credit transfers in the SEPA zone, while SEPA direct debit accounts for 95% of total debit transactions.

There is no doubt that much has been done to prepare for SEPA since the commission extended the 2014 bank compliance deadline, representing "a significant increase in where we were six months ago," said Gareth Lodge, a London-based industry analyst with Celent who has monitored SEPA since its inception in 2008.

"For a variety of reasons, each country may not be 100% compliant," Lodge said. "There will always be a long tail of smaller businesses that have yet to cross the line."

Also, some niche payment products may not be required to migrate to SEPA, or will have a longer deadline, which accounts for countries like Austria and Greece having lower percentages of compliance, Lodge said.

As for payment card compliance, Lodge agrees progress "has plateaued" at this time.

Even countries generally considered "card friendly," such as Italy and Poland, have low SEPA migration figures, Lodge added.

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