JCC at crossroads to the future

JCC Payment Systems Ltd., the bank owned point-of-sales network that processes card payments is at a crossroads looking ahead to a new role within the changing financial environment ahead of the adoption of the euro and new payment systems across the 27-nation block.

In an interview with the Financial Mirror, JCC’s General Manager Takis Fekkos, discussed a number of interesting developments which will impact our lives in the near future.

 

Single European Payment Area

 

The Single European Payment Area (SEPA) is an initiative that aims to create a single, uniform payment area for all 27 EU-member states, specifically for the euro.

The aim is to improve the efficiency of international payments in euros and also to develop common financial instruments, standards, procedures, and infrastructure to enable economies of scale. This in turn will increase competition in the financial sector, cut costs and increase choice for consumers. The European Commission, which proposed the measure, expects SEPA to save the EU economy 50-100 billion euros a year by making cross-border transactions as cheap as domestic ones.

A new pan-EU payment system based on common technical standards would end the current national patchwork, making it easy for new entrants to offer payment services competing with banks cross-border. The SEPA Directive comes into effect on January 1, 2008 with the universal launch throughout the EU of a new financial instrument allowing for pan-European credit transfers. This will enable low–cost euro transfers from one bank account to any other bank account whether in the same country or not. It will be followed by a similar instrument that will allow direct debit transfers across borders.

“National borders for payments will come down through these initiatives. This will bring tremendous efficiencies and will also mean that individual Europeans pay less for basic banking services,” said Fekkos.

“It’s like when CYTA decided to abandon charging differently for local and inter-city calls and adopted a single charge zone for the whole island,” he explained.

To give an example of what the immediate benefit of the Directive is, Fekkos said that if a Cypriot has property in another European country that uses the euro, say in Greece, currently the utility bill for that property cannot be settled through a standing order drawn on a Cyprus bank. With the new Directive, the settlement of the Greek utility bill from Cyprus will be as simple as settling a local utility bill in Cyprus and will cost the same.

Fekkos admits that the ruling will have a short-term negative impact on bank profitability in lost income from transfers, but added that banks will at the same time benefit from additional efficiencies, which will help the bottom line.

Within Cyprus, banks have mobilized to adapt to the new Directive. The effort is being coordinated by the Association of Cyprus Commercial Banks (ACCB) that issued an international tender in this respect.

“JCC is participating in the tender, in association with a Greek provider of transfer products, DIAS AE. We believe we have a competitive offer and hope to win the tender. Irrespective of who gets the contract, the ultimate winner will be the consumer, who will be able to transact in a cheaper and simpler manner throughout Europe,” Fekkos said.

 

Scrap cheques

 

Cyprus has a high reliance on cheques to settle payments, certainly one of the highest in the EU. Cheques, being paper-based, cost a lot of money to process, verify and store.

Although there are initiatives in place to truncate cheques and automate tedious tasks like verifying signatures and physically exchanging cheques between banks, cheques remain an old-fashioned instrument that is being slowly phased out within Europe.

A number of initiatives are underway in order to shift payments towards electronic means. SEPA is one of them, along with the wider use of plastic cards and payments over the Internet.

Fekkos points out that there are already pilot projects that allow electronic billing and payment (EBPS) both between Business-to-Consumer (B2C) and Business-to-Business (B2B).

These systems not only allow the actual presentation and settlement of a bill or invoice but can also automate the tedious and labour-intensive process of entering invoice and payment data in accounting systems. “This is the next frontier for us, which offers tremendous savings in time and cost to the economy. We want JCC to be one of the pioneers in this field and have already started preparations for the introduction of EBPS in Cyprus,” said Fekkos.

 

Internet pioneer

 

JCC Payment Systems has helped thousands of Cypriots avoid time consuming queues and lost productivity. At the same time it has helped in the development of e-business in Cyprus through the innovative launch of its JCCSmart service through which Cyprus residents may settle their motor vehicle road-tax renewals, pay utility bills including some municipality fees and top up their prepaid mobile phone cards from the comfort of their office or home.

More than 230,000 road tax renewals were made electronically, of which at least 100,000 were made individually through JCCSmart, showing that when the product is user-friendly and without additional charges, it will be warmly embraced by the public.

“Now we are trying to convince the authorities to allow the settlement of police traffic fines as simply and efficiently as the road-tax renewals,” said Fekkos.

Another time saving service offered by JCCSmart is the top-up of prepaid mobile cards both for Cytamobile-Vodafone and Areeba users. Teenagers – and their bill paying parents – have embraced this new service that allows consumers to buy top-up cards from the comfort of a home, any time of day or night.

“At JCC we see our role as being to help people save time by providing state of the art technologies to the public at an affordable price,” concluded Fekkos.