STP Process
As part of the introduction of the Single Euro Payments Area (SEPA) and the associated switch to standardized pan-European payment procedures such as the SEPA credit transfer and the SEPA direct debit, the term STP (Straight Through Processing) has become established. This refers to the interoperability of transactions, i.e., the automated processing of payment orders from the beginning to the end of the process chain. In order to be able to guarantee this, standardization of payment procedures at European level was essential. The SEPA migration took account of this requirement to create new European standard procedures. In Germany, this standardization was achieved through the work of the German banking industry and the resulting payment traffic agreements. With the use of the international account number IBAN (International Bank Account Number) and the international bank code BIC (Business Identifier Code) for account identification, the basic requirements for STP transactions were created.
Obstacles to STP processes
In the previous national payment procedures, ordering parties could specify the purpose of the transaction to a total of 378 characters, thus sufficiently specifying the reason for the transaction. Among other things, the invoice date and the invoice number were indicated at this point to enable the payee to clearly allocate items in the accounts. In the SEPA procedures, the number of characters in the payment reference is limited to 140 digits. However, this poses the risk of disrupting current STP processes during automated posting because manual post processing may be required. Particularly for incoming payments, companies rely on the payer to enter all relevant data in the 140 characters of the payment reference. If certain information, such as the invoice number, is missing or incomplete, manual post-processing is essential to be able to allocate the payment accordingly.
STP Rate
If a payment, after it has been generated and forwarded, can be delivered to the payee’s bank by all the payment systems involved without the need for manual intervention, this is known as an STP transaction. The STP rate is the proportion of transactions that can be processed fully automatically from start to finish in a process.
