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SEPA: Friend or foe of innovation in Europe?




Alex-MifsudAlex Mifsud is CEO at Ixaris

Europe is firmly on the map as a hub of payments innovation, as a host of new finance companies start to emerge from within the continents burgeoning economies. Take Finovate Europe as an example – initially designed as a small event to showcase the most ground-breaking start-ups in the financial technology space, it has now thrived in just three years to a two-day conference with over sixty companies in attendance, many of which are in the payments sphere.

The Nordics in particular are at the forefront of this movement, with Holvi just one payments success story to come from the region. Holvi is a banking service that uses a single interface to allow its users to manage multiple accounts at once, giving them a clearer picture of their finances. UK-based start up The Currency Cloud is another example of the type of challengers emerging against the traditional landscape. In making international payments cheaper for businesses by offering significantly reduced currency exchange and conversion charges, businesses no longer have to rely on the extortionate rates of the banks.

Regulation: the bigger picture
A joint initiative by the European Commission, European Central Bank and European Payments Council, the Single Euro Payments Area (SEPA) framework was first launched in January 2008. It effectively means that all individuals and businesses falling within the SEPA area (all EU countries including Norway, Iceland and Liechtenstein) will be able to make and receive card and electronic payments in Euro. In creating an integrated euro payments market, SEPA will enable the market to move to a set of common, standardised payment schemes, simplifying how payments are processed across Europe. The SEPA Transfer Credit Scheme was the first aspect of the new regulation to be implemented, enabling service providers to offer a basic credit transfer service in Euros for both single and bulk payments. The SEPA Direct Debit Scheme, launched in November 2009, was next. This created the first payment instrument that could be used for both domestic and cross-border collections in Euros. By this time next year, all non-urgent euro payment schemes will be operating through SEPA in Euro countries, and by October 2016 national migration to SEPA will be initiated for non-euro countries.

Under a general drive to create a uniform European payments market, SEPA has created a fundamentally changed landscape for banks and payments companies in the region. By allowing payment service providers to offer their services across the EU’s borders, SEPA fosters competition, and in turn spurs innovation, in the payment sector. Many believe that the real home-grown factor for innovation on the European payments scene is regulatory change such as SEPA.

The recent MasterCard ruling is another example of how the EU is trying to create a more competitive payments market. Last year the provider was banned from imposing its cross-border multilateral interchange fee (MIF) on the grounds that it breached EU antitrust rules and was unfair to competitors. The ban was in line with the wider EU initiative to create a more unified European Union, and break down barriers to e-commerce, cutting costs for businesses in the EU. Visa and MasterCard, the two largest operators, have since been invited to consider how best to bring the European multilateral interchanges fees in line with competition. In this case, regulation has played a key role in encouraging competition and fostering innovation.

SEPAThere are benefits, but businesses must act quickly
However, regulation is rarely greeted with open arms, and SEPA is no different. Most parties view SEPA as yet another burdensome process, bringing with it costly implementation, a potential drain on company resources, and fears that it will place insurmountable pressure on secure business models – surely this would hinder innovation, not encourage it. However, the most recent World Payments Report found that the opposite was true. Out of the thirty two regulatory initiatives analysed, the report found that sixteen of those imposed had a predominantly positive effect. Those designed to promote competition – by levelling the playing field or boosting social inclusion, were those most likely to drive innovation.

SEPA is in part being implemented to try and foster this EU competition, and in turn, innovation. Not only will it help European businesses to compete by making it simpler and cheaper to send and receive Euro payments, but for larger businesses in particular it will make it much easier to operate on a pan-European basis. Additionally, the foundations laid by SEPA should provide the support needed for new ways of processing payments to emerge, such as electronic and mobile payments. For instance, a report by RBS this year argues that one of the leading innovations to come out of SEPA could be e-invoicing. Cheaper and faster than traditional paper invoicing, such a service would bring greater efficiency to clients and providers.

What next? SEPA and the future of payments
For SEPA to provide the foundation for innovative payment services in Europe, businesses must embrace it. A report released by Steria, the leading provider of IT-enabled business services, concluded that over half of European businesses agree that the SEPA Direct Debit scheme will bring greater benefit to organisations, but if they fail to implement it in time it could become a mammoth task. In failing to allow enough time for implementation companies are running the risk of making potentially costly errors. SEPA will allow businesses to plan ahead and harness greater co-operation between business units – a key benefit in today’s economy. However the Steria report also revealed that as many as a fifth of European businesses were unaware of SEPA direct debit, and just a third of organisations had, or were in the process of migrating – including only 3% in the UK. More than 60% of those UK businesses hadn’t even started to work on migration (December 2012). Additionally, Experian research this week estimated that the potential costs from failing to address data errors in Europe could cost as much as €20bn.

Compliance with ever changing regulation might be an inevitable pain. But implementation doesn’t just have to be about ticking the boxes – it can also offer opportunities for innovation and for gaining competitive advantage. Planning thoroughly and migrating properly will ensure that the benefits available will ultimately outweigh the costs.

About Ixaris
Founded in 2002, Ixaris develops innovative global payment applications based on open-loop (Visa and MasterCard) prepaid card schemes. Headquartered in London, Ixaris has technology and customer operations divisions in Malta. Ixaris is a privately-held company, funded by leading UK institutional investors.

The company makes complex global payments fast, easy and accessible, and its technology enables enterprises within the incentive, travel, market research and financial services industries to send prepaid global payments instantly. The Ixaris brands; Opn and EntroPay, allows companies and third-party developers to create and run their own global payment applications using open-loop virtual or physical cards under the Visa and MasterCard schemes. Opn shields developers from the complexities of global financial services, allowing them to bring solutions to market quickly and cost effectively.

About Alex Mifsud, CEO and co-founder of Ixaris
Alex Mifsud founded Ixaris with colleagues William Lorenz and Damon Hart in 2002. Before Ixaris, Alex worked as a senior consultant in the Cambridge-based technology practice of Arthur D. Little, a global management consultancy. He has lectured in the University of Malta’s Department of Computer Science and Artificial Intelligence.

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OPEC+ to weigh modest oil output boost at meeting – sources



OPEC+ to weigh modest oil output boost at meeting - sources 1

By Ahmad Ghaddar, Alex Lawler and Olesya Astakhova

LONDON/MOSCOW (Reuters) – OPEC+ oil producers will discuss a modest easing of oil supply curbs from April given a recovery in prices, OPEC+ sources said, although some suggest holding steady for now given the risk of new setbacks in the battle against the pandemic.

The Organization of the Petroleum Exporting Countries and allies, known as OPEC+, cut output by a record 9.7 million bpd last year as demand collapsed due to the pandemic. As of February, it is still withholding 7.125 million bpd, about 7% of world demand.

In January OPEC+ slowed the pace of a planned output increase to match weaker-than-expected demand due to continued coronavirus lockdowns. Saudi Arabia made extra voluntary cuts for February and March.

Three OPEC+ sources said an output increase of 500,000 barrels per day from April looked possible without building up inventories, although updated supply and demand balances that ministers will consider at their March 4 meeting will determine their decision.

“The oil price is definitely high and the market needs more oil to cool the prices down,” one of the OPEC+ sources said. “A 500,000 bpd increase from April is an option – looks like a good one.”

A rally in prices towards $67 a barrel, the highest since January 2020, the rollout of vaccines and economic recovery hopes have boosted confidence the market could take more oil. India, the world’s third biggest oil importer, has urged OPEC+ to ease production cuts.

Saudi Arabia’s voluntary cut of 1 million barrels per day (bpd) ends next month. While Riyadh hasn’t shared its plans beyond March, expectations in the group are growing that Saudi Arabia will bring back the supply from April, perhaps gradually.

Some OPEC+ members also anticipate that the Saudis will be willing to ease cuts further, but it was not clear if they had had direct communication with Riyadh.

Saudi Arabia has warned producers to be “extremely cautious” and some OPEC members are wary of renewed demand setbacks. One OPEC country source said a full return of the Saudi barrels in April would mean the rest of OPEC+ should not pump more yet.

“The Saudi voluntary cut will be back to the market,” the source said. “I’m personally with no more relaxation, not until June.”

Russia, one of the OPEC+ countries which was allowed to boost output in February, is keen to raise supply and a source last week said Moscow would propose adding more oil if nothing changed before the March 4 virtual meeting.

(Additional reporting by Rania El Gamal and Nidhi Verma; Editing by Elaine Hardcastle)


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UK’s Sunak to build bridge to recovery with more spending



UK's Sunak to build bridge to recovery with more spending 2

By William Schomberg

LONDON (Reuters) – British finance minister Rishi Sunak will next week promise yet more spending to prop up the economy during what he hopes will be the last phase of lockdown, but he will also probably signal tax rises ahead to plug the huge hole in the public finances.

Sunak, who is due to announce a new budget plan on March 3, has already racked up more than 280 billion pounds ($397 billion) in coronavirus spending and tax cuts, pushing Britain’s borrowing to a peacetime record.

Prime Minister Boris Johnson plans to lift England’s current lockdown entirely only in late June so Sunak is expected to rely heavily on the debt markets again.

His job retention scheme, paying 80% of employees’ wages, will probably be extended beyond a scheduled April 30 expiry date, further inflating its estimated cost of 70 billion pounds. Support for the self-employed looks set to stay too.

Businesses are demanding Sunak keep other lifelines, such as exempting the firms hardest hit by the lockdown from property taxes and giving them a value-added tax cut.

And calls are growing for an extension of a 20 pounds-a-week emergency welfare increase due to expire in April.

The Times newspaper said Sunak would prolong his stamp duty property tax break for three months until the end of June.

Sunak hopes that by then Britain will be emerging from its deep freeze thanks to Europe’s fastest vaccination programme.

Bank of England Chief Economist Andy Haldane likens the economy to a “coiled spring” primed with the savings that households have built up after being stuck at home.

A strong recovery would mean a jump in tax revenues, doing some of the Treasury’s job of fixing the public finances.

Rupert Harrison, an aide to former finance minister George Osborne, said Sunak should not try to slash Britain’s 2.1 trillion-pound debt mountain, equivalent to 98% of GDP – a ratio unthinkable for decades.

Instead he should write new budget rules tied to the cost of debt servicing, which is close to record lows.

“We can safely carry higher levels of debt than before,” Harrison told a webinar organised by Onward, a think-tank.

But the scale of Britain’s borrowing is raising questions about how long Sunak and Johnson can stick to their promises not to raise key taxes, made to voters before the 2019 election.


The huge costs of tackling the worst of the coronavirus pandemic are likely to ease in the months ahead, meaning this year’s 400 billion pound budget deficit should narrow.

But Britain is probably on course to be stuck with a gap of 60 billion pounds between revenues and day-to-day spending by the mid-2020s, the Institute for Fiscal Studies think-tank says.

In a nod to that, Sunak is expected to start raising Britain’s low corporation tax rate.

The Sunday Times said the rate would rise steadily to bring in an extra 12 billion pounds a year by the time of the next election, due in 2024.

Other options include ending a freeze on fuel duty increases which has been in place since 2012 and looks at odds with Britain’s plans to be carbon net zero by 2050.

But higher fuel prices now would hurt the haulage industry, already struggling with Brexit-related disruption, and could alienate working-class voters who backed Johnson in 2019.

Higher capital gains tax or lower pension incentives would anger lawmakers in Johnson’s Conservative Party.

David Gauke, a former deputy finance minister, said the only big revenue-raising options were the ones that Johnson has promised not to touch – income tax, VAT and national insurance contributions.

“In the end, they are going to have to say, sorry we just can’t responsibly maintain that manifesto commitment,” Gauke told the Onward webinar.

($1 = 0.7046 pounds)

(Writing by William Schomberg; Editing by Catherine Evans)


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Women inch towards equal legal rights despite COVID-19 risks, World Bank says



Women inch towards equal legal rights despite COVID-19 risks, World Bank says 3

By Sonia Elks

(Thomson Reuters Foundation) – Women gained legal rights in nearly 30 countries last year despite disruption due to COVID-19, but governments must do more to ease the disproportionate burden shouldered by women during the pandemic, the World Bank said on Tuesday.

Nations should prioritise gender equality in economic recovery efforts, the bank said, warning that progress on equal rights was threatened by heavier job losses in female-dominated sectors, increased childcare and a surge in domestic violence.

“This pandemic has exacerbated existing inequalities that disadvantage girls and women,” David Malpass, World Bank Group president, said in a statement accompanying the annual “Women, Business and the Law” report.

“Women should have the same access to finance and the same rights to inheritance as men and must be at the centre of our efforts toward an inclusive and resilient recovery from the COVID-19 pandemic.”

A total of 27 countries reformed laws or regulations to give women more economic equality with men in 2019-20, said the report, which grades 190 nations on laws and regulations that affect women’s economic opportunities.

While countries in all of the world’s regions made improvements in the new index – with most reforms addressing pay and parenthood, women on average still have only about three quarters of the rights granted to men, the report found.

Notably, nearly 40 countries brought in extra benefit or leave policies to help employees balance their jobs with the extra childcare needs created by coronavirus restrictions.

But such measures were “few and far between” worldwide and will probably not go far enough to tackle the “motherhood penalty” many women face in the workplace, it said.

The report also noted separate data from a United Nations tool tracking gender-sensitive pandemic responses which found 70% of such measures addressed violence, with just 10% targeting women’s economic security.

The pandemic could result in “a backslide on various hard-won advances in women’s rights achieved in recent years”, said Antonia Kirkland, the global lead on legal equality at women’s rights organisation Equality Now.

“This disruption is a unique opportunity for countries to rebuild more resilient, inclusive and prosperous economies,” she told the Thomson Reuters Foundation by email.

“But this can only be achieved alongside the removal of sex discriminatory laws that prevent women from participating fully and equally in economic, social and family life.”

(Reporting by Sonia Elks @soniaelks; Editing by Helen Popper. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers the lives of people around the world who struggle to live freely or fairly. Visit

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