Now that the core of the Single Euro Payments Area (Sepa) is in place, the key issue is implementation and how it will work, providing unity and avoiding fragmentation. This latest report by Capgemini, EFMA (the European Financial Management and Marketing Association) and ABN AMRO addresses the challenges facing Sepa and the payments industry and reveals the following key findings:
- In the six eurozone countries studied in the report, 85% of all non-cash payments are already made using Sepa-like instruments (some form of direct debit, credit transfer or card payment). This suggests that Sepa ‘critical mass’ can be achieved rather easily. Of those volumes, 58% are, or could easily be, Sepa-compliant, while 42% fall significantly short of Sepa standards.
- The success of Sepa depends on the speed and quality of national migration and implementation plans.
- The Sepa objective of reducing cash has not yet been achieved; cash volumes are still increasing in Europe.
- Significant differences exist in non-cash usage between countries. The highest-usage group of countries is converging on 230 transactions per inhabitant per year, but several countries are lagging behind.
- After 2010, EU12 banks are likely to end up with €18bn-€29bn (38%-62%) less in direct payments revenue than they might have expected without Sepa. There is potential for eurozone banks to increase payments revenues by €8bn (18%) with new initiatives, in addition to natural growth rates in non-transaction volumes.
- To preserve payments revenues, banks in Europe must improve their pricing strategies.
EIU REPORT:
WORLD INVESTMENT PROSPECTS TO 2010: BOOM OR BACKLASH?
World foreign direct investment (FDI) inflows are expected to reach close to $1200bn in 2006, a 22% rise on the 2005 total of $955bn, and the first time FDI has surpassed $1000bn since 2000, according to a report from the Economist Intelligence Unit (EIU) and the Columbia Program on International Investment (CPII). The report, covering 82 countries, predicts that FDI flows will rise moderately to $1407bn in 2010 but also cites a range of risks to this growth.
“We foresee neither boom nor backlash, but a period of constrained globalisation. But there remain a range of potential risks – economic, political and geopolitical – which could undermine the globalisation process and, with it, FDI flows,” says the EIU’s Robin Bew.
The report suggests the pattern of 2004-05, when emerging markets drove the global FDI recovery, will be reversed in 2006 and beyond. The bulk of FDI growth will come in the developed countries (35.8% growth in 2006 to $754.3bn) versus slower growth in emerging markets (2.6% growth in 2006 to $410.6bn). Also, the bulk of inflows will be in the form of mergers and acquisitions between developed countries.
The US will attract almost 25% of the world’s FDI in 2006-2010, with the EU remaining the largest investor. The developed world will attract most investment but China, Brazil, Mexico, Russia and India will be in the top 20. China is expected to attract $87bn in 2006.
