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October 04, 2012, 1:21 pm -- /EPR NETWORK/ -- A new report from Experian, the global information services company, has revealed European businesses risk losing billions of Euros as a result of failure to tackle simple payment errors.
The move to a single SEPA (Single Euro Payments Area) payment system - designed to simplify and streamline processing operations for domestic and international payments - will expose out-of-date account data and other errors that were previously overcome through a patchwork of locally implemented fixes. SEPA becomes mandatory in February 2014 for Eurozone countries and 2016 for businesses in non-Eurozone territories wishing to make and receive payments in Euros.
Experian analysis of over half a million records bank account records held by businesses around Europe has revealed that 12 per cent of electronic payments made to and from businesses in Euros currently contain data errors that could critically block the timely and cost-effective transfer of funds when new legislation for SEPA payments first comes into effect in February 2014. Only 65 per cent of Euro transactions are underpinned by fully accurate destination account data.
It has also found that 45 per cent of new SEPA-compliant International Bank Account Numbers (IBANs) stored by large European businesses do not have the valid corresponding Bank Identifier Codes (BICs) required to enable successful completion of transactions.
Experian has warned that these same error types will lead to payment failure when made through SEPA, costing businesses approximately €50 for each failed transaction, and leaving a total bill of more than €20 billion a year. An average error rate of around one in eight equates to a potential cost of €600,000 for an organisation transacting with 100,000 bank accounts.
Jonathan Williams, Director of Payment Strategy at Experian, commented: "The SEPA initiative is a key component to strengthening the financial foundations of the Eurozone with improved and more efficient end-to-end straight-through processing of payments. While SEPA will undoubtedly benefit organisations trading in Euros, errors in bank account details held by European businesses risk causing significant teething problems as locally implemented fixes - which have largely worked so far - are made redundant by the new common payments system.
"European businesses need to analyse their account data, fix any errors and convert this information to the correct SEPA standard, to ensure suppliers, partners and staff continue to get paid on time when the new rules come into place. Early adoption is crucial. If left to the last minute, the SEPA requirements have the potential to be both disruptive and costly."
Notes to Editors:
The findings revealed in this press release are based on analysis of more than
650,000 bank account details and a further 220,000 IBAN (International Bank Account
Numbers) records provided to Experian by businesses from around Europe. Insights
gleaned from this data were considered alongside figures from European Central Bank
indicating that 34 billion euro transactions are made every year within the Eurozone
relating to salary, supplier, collection and other business payments, as well as
European Commission findings that the end-to-end cost of each failed transaction
(including loss of revenue, extra customer service time and increased borrowing
requirement) is between €50 and €70.
About Experian
Experian is the leading global information services company, providing data and
analytical tools to clients in more than 80 countries. The company provides banking
software, helps businesses to manage credit risk, prevent fraud through its fraud
management system, target marketing offers and automate decision making. Experian
also helps individuals to check their credit report and credit score, and protect
against identity theft.
Experian plc is listed on the London Stock Exchange (EXPN) and is a constituent of
the FTSE 100 index. Experian employs approximately 15,000 people in 41 countries and
has its corporate headquarters in Dublin, Ireland, with operational headquarters in
Nottingham, UK; California, US, and São Paulo, Brazil.
PR Contact:
Chris Owen
Octopus Communications
Admiral House
St. Leonards Road
Windsor
Berkshire
SL4 3BL
08453 700655
www.experian.co.uk
