With little more than a year to go before domestic transactions must comply with the European banking industry’s Single Euro Payments Area (SEPA), nonprofits must prepare themselves and their supporter base for this shift or risk disengaging donors, says 'Günther Lutschinger', CEO of Fundraising Verband Austria.
The Single Euro Payments Area (SEPA) is an initiative of the European banking industry that will make all electronic payments across the euro area – whether by credit card, debit card, bank transfer or direct debit – as easy as domestic payments within one country.
For cross-border payments SEPA is already an established standard. But, for domestic transactions, the European Commission has set a deadline within the Eurozone of 1st February 2014 by which time all bank transfers and cross-country payments have to be made with IBAN and BIC. (Non EURO countries have the extended deadline of 1st October 2016). All debit transactions have to be transferred in the SEPA Direct Debit with a lot of new regulations and administration.
How does this affect fundraising? First of all, it affects our donors, because the new system will mean that their payments are processed in a different way and, indeed, the information required of them may be more. Some fundraising nations have already voiced concerns about disengaging donors by moving to a less donor-friendly payment scheme.
If NPOs shift too early to IBAN, donors may be put off from giving. Tests here in Austria have shown a 30% lower response rate to campaigns meeting SEPA’s requirement. Donors will adapt to this change, but fundraisers have to educate them and help them with the new format. Nonprofits must think carefully about when will be the right time to make the change.
Ahead of all this, organisations must change their appeals to include IBAN banking details – the website, letters, folders and so on. And now is the right time for starting this process.
Although there is some work to do before implementing the new system, SEPA brings many benefits. The main advantage s of course that cross-border direct debits will be possible throughout Europe which should increase cross-border giving.
The SEPA implementation process is not only a technical task, it affects all kind of internal processes, marketing and communication. Fundraisers have to take the lead, because it affects their business most. And it is important to share their experience with others.
Hopefully, at the end of the day SEPA will bring us all lower banking costs and a thriving market of international donors. And with a closing deadline, it must be on all our agendas now.