
Process failings cost Europe €21 billion
Daily news headlines
LONDON – Failures in cross-border payments, hoped to be simplified by the launch of the Single Euro Payments Area (Sepa), are costing Europe €21 billion a year, according to banking software firm Misys.
Sepa’s launch, legislated into European Union law by the Payment Services Directive (PSD), was designed to cut through the costs and inefficiencies of international payments by using end-to-end straight-through processing (STP) across 31 European states.
The European Commission estimated Sepa would provide €123 billion of savings to businesses and consumers across Europe over six years. However, the banking industry estimates that 574 million cross-border commercial payments (41% of the total) fail each year. With around two million failing each day, costing an average of €36 a transaction, the total loss is valued at €21 billion a year.
Barry Kislingbury, global product manager for payments and financial messaging at Misys, says: “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.”
Common failures include weak payment initiation controls, poor process monitoring, and clearing and settlement errors. Missing or incorrect reference data is responsible for 30% of all failures, according to the financial trade body Swift.
“Significant gains in STP rates can be achieved by using reference data within existing payment infrastructures without having to re-engineer a bank’s entire system. Through targeted improvements in specific processes such as payments acquisition, validation and enrichment, we can help banks become more efficient and innovative, and to rise to the challenge of the new payments environment without undertaking major risk,” says Kislingbury.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
More on Regulation
Eurozone needs harmonised resolution tools, officials say
Commission proposals could bolster stability and common deposit insurance plans, say supervisors
Risk managers mull Basel-style climate standards
Risk Live: Splintered approach to stress-testing across jurisdictions “very, very worrying”, says risk expert
Forced CS merger casts doubt on use of resolution regimes
Risk Live: Spreads on European AT1 bonds still wider than before March bail-in
Regulators’ remorse: SVB and the case for IRRBB capital charges
Basel Committee chair among those who say Pillar 1 capital requirement could have helped control SVB risks
Improving efficiency and your financial crime compliance programme
The financial crime landscape is constantly evolving, and organisations are facing increasing pressure to stay compliant with rapidly changing regulations and combat financial crime effectively. At the same time, organisations must balance the need for…
Basel’s IRRBB shock scenario update hit by US crisis
Recalibration of shocks had been touted for Q3, but wider rethink may now cause delay
HKMA launches consultation on green taxonomy
Regulator could use proposal to assess progress of banks towards climate goals
After SVB downfall, EBA stress test seeks out unrealised losses
European regulator asks for data on the fair value and sensitivity of bonds and their hedges