[Aritcle] Ireland Will Be Last EU Country To Link To Payment System

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FRANKFURT -- Ireland will be the only European Union country to miss a year-end deadline to connect its banks to a computer system that streamlines cross-border retail payments, industry sources said Wednesday.

The delay in directly linking Irish commercial banks to the Pan-European Automated Clearing House will be part of a report due out later this month by the European Payments Council, a banking industry group.

The PE-ACH system was rolled out last April to speed up and lower the costs of retail payments made by citizens of one European country when buying something in euros in another country.

Shortly after the rollout of PE-ACH, trade associations, backed by the European Central Bank, pushed their country's commercial banks to hook themselves up to it. The European Payments Council report will be going straight to the ECB when it comes out sometime this month.

Ireland will miss the deadline for purely technical reasons, said Tom Conlon, senior manager for European retail strategies for the Irish Payments Services Organisation, an industry group in Dublin.

The problem, he said, is that Ireland still lacks a connection to SWIFTNet FIN, an upgraded financial messaging system of Brussels-based SWIFT, an abbreviation for the Society for Worldwide Interbank Financial Telecommunication.

"It's a legacy of historical things," Condon said. "There is a (SWIFTNet FIN) timetable across Europe for all the banks, and we happened to be (scheduled for installation) in the spring of 2004."

Irish banks are gearing up to connect by March, 2004. In the meantime, they will offer their customers indirect access through banks in other countries.

Though it's somewhat of a surprise that technologically advanced Ireland finds itself at the back of the queue, industry groups emphasized there's no bigger systemic problem involved.

"No entry point was designated in Ireland during the time frame in which we asked them to do it," said Daniel Szmukler, spokesman for the Euro Banking Association, a Paris-based group that is promoting the use of PE-ACH.

"The explanation that we got is that it was a timing issue," he said, adding that the problem was "a pure IT resourcing issue."

However, he said that within the next few days, at least 80% of Ireland's clearing banks will offer indirect access to PE-ACH through banks outside of Ireland.

While waiting to connect Irish banks to PE-ACH, the European Payments Council is also trying to bring future E.U. members into the network.

It has set a deadline of December 2004 for the 10 E.U. accession countries to connect to the platform.

"The onus will be on the banking communities of the acceding countries to make sure they organize themselves to receive euros" via the central clearinghouse system, Szmukler said.

Although the acceding countries will not be members of the euro zone in 2004, "they still have euro business," he added.

"They used to do business is Deutsche marks, and now it's in euros," Szmukler said. "That's one reason to push for (PE-ACH access) at an early stage."

By AVIVA FREUDMANN

Wall Street Journal

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