The Change-over to SEPA
Michiel van Doeveren
Sixth Macedonian Financial Sector Conference on
Payments and Securities Settlement Systems
Ohrid, 1-3 July 2013
Agenda
•
•
•
•
Background of Single Euro Payments Area (SEPA)
SEPA products
SEPA Migration
National Forum on SEPA migration SEPA
communication
• Concluding remarks
What is SEPA?
One single market for retail
payments in euro in 33 countries
3
Why SEPA?
• Logic completion Internal Market
• To enforce European economy
• Mandatory by European Regulation
• End date: 1st February 2014
4
SEPA, what is it?
• Political vision:
One internal “domestic” market for euro retail payments,
generating economies of scale and promoting competition
• Aim:
Consumers and businesses will be able to make and receive
payments in euro within Europe under the same basic
conditions, rights and obligations, regardless of their location
• Concretely:
European payment instruments for both cross-border and
domestic payments in euro: credit transfers, direct debit and
cards. This also means the end of all domestic payment
instruments.
SEPA: before…
• The euro is the common currency of 17
countries today
• But retail payments
are still organised nationally €
€
€
€
€ €
€
€
€
€
€
€
€
€
€
€
€
… and after
• A uniform Euro Payments Market
• With common
standards for bank
account numbers,
€
€
credit transfers,
€ €
€
direct debits,
€
€
and more…
€
€
€
€
€
€
€
€
€
€
SEPA, how?
• Self-regulation by European banks in European Payments Council:
 Common rules and standards for euro payments in Europe
• Legal harmonisation of all European legislation:
 Payment Services Directive for euro and non-euro payments
 End date(s) for national payment instruments
What specifically will change?
• Account number becomes International Bank
Account Numbers (IBAN)
• SCT becomes standard for credit transfers
• SDD becomes standard for direct debits
• XML becomes technical standard
(ISO 20022)
Clear but with a major impact
Pros and cons
Internal (euro) market for retail payments
In the long run
•
•
•
•
More choice processors and providers payment services
Scale effects in processing
Increased competition and innovation
Decreasing costs of payments
In the short run
•
•
•
More efficient cross border paying and collecting
Cross border collecting by direct debit
Centralisation of accounts
But........
•
•
•
•
Nothing ventured, nothing gained
Cross border euro payments < 2% of total payments
Migration mainly domestic process
Difference in current levels of efficiency
10
ECB: SCT indicator Q1 2013
National SCT indicators
12
National SDD indicators
There is no breakthrough in a majority of countries
13
Traffic lights: SCT
‘’Traffic Lights’’ SCT
AT
BE
CY
DE
EE
ES
FI
FR
GR
IE
IT
LU
MT
NL
PT
SI
SK
Banks
Big billers
PA
SMEs
SEPA migration has been successfully completed by all representatives
SEPA migration is in progress
SEPA migration has not started yet
14
Traffic lights: SDD
‘’Traffic Lights’’ SDD
AT
BE
CY
DE
EE
ES
FI
FR
GR
IE
IT
LU
MT
NL
PT
SI
SK
Banks
Big billers
PA
SMEs
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
SEPA migration has been successfully completed by all representatives
SEPA migration is in progress
SEPA migration has not started yet
15
Status SEPA Migration Belgium
Banks
Big billers
PA
SMEs
Banks
Big billers
PA
SMEs
16
Germany
Banks
Big billers
PA
SMEs
Status SEPA Migration Germany
Banks
Big billers
PA
SMEs
17
Spain
Banks
Big billers
PA
SMEs
Status SEPA Migration Spain
Banks
Big billers
PA
SMEs
18
The Netherlands
Status SEPA Migration The Netherlands
Banks
Big billers
PA
SMEs
Banks
Big billers
PA
SMEs
19
IBAN
• IBAN : International Bank Account Number
• Administrator of national IBAN registers (ISO): SWIFT
Country
code (ISO)
Check
digit
Bank identifier
Domestic account
number
• Notes:
- The bank identifier is country-specific
-
The length of the bank identifier differs from country to country
-
Each country has its own Basic Bank Account Number system
-
The Netherlands has an 18-digit IBAN
SEPA Credit Transfer
• EPC Interbank standard for credit transfers in euro 2008
• Main characteristics:
• Payments are made for full original amount
• IBAN and BIC
• ISO 20022 UNIFI standards
• 140 characters of remittance information are delivered to
beneficiary
• Unstructured or restructured remittance information as
agreed between partners
• End dates:
• 1 February 2014 (31 October 2016 for non-euro countries)
SEPA Direct Debit
• EPC Interbank standard for direct debits in euro - introduced in 2009
• Main characteristics:
• Payments are made for full original amount
• IBAN and BIC
• ISO 20022 UNIFI standards
• One-off or recurrent
• A mandate is signed by debtor (option: e-mandate)
• Pre-notification (14 calendar days in advance)
• Refunds (PSD: 56 days) and returns
• End dates:
• 1 February 2014 (31-10-2016 for non-euro countries)
• No domestic MIF after 1 February 2017
Information flows and choice of channel
•
•
Clearing &
Settlement
Report
•
Report
Payment instruction
•
Basis: business-to-consumer
relationship with business as initiator
Business delivers payment instructions
to bank and receives reports back
Customer’s choice of channel driven
by various considerations:
•
•
•
Timing: carefully determine when
instructions are executed and fast
account reporting;
Functionality: payment products and
formats (from back office) as desired;
Completeness: correct reference
information in instructions (end-to-end)
and reports (for automated
reconciliation);
Secure: payment files cannot be
manipulated.
Channels
• Banks offer their customers various channels for
exchanging payment instructions and account
information
• Choice of channel depends in part on type of
customer (retail, wholesale), products used and
volumes
• Main channels
1. Paper
2. Internet banking
3. Client application
4. Bulk channel
Report
Clearing &
Settlement
Report
Payment instruction
1. Paper
Features
•
Forms (based on BBAN) for initiation
•
Account statements for reporting
•
Only for very low volumes
•
High cost per transaction
•
Generation and processing by customer not
computerised
Impact of SEPA
•
Adjust forms to IBAN
•
Report must include mandatory information
(rule books), including IBAN, reference,
(original) initiator
Examples
•
Supported by most banks, used by
customers with little computerisation or nonstandard instructions (e.g. urgent payments)
2. Internet banking
Report
Report
Payment instruction
Clearing &
Settlement
Features
•
Automation by banks
•
Manual input of payments or upload
•
Reporting on screen or downloaded
•
Limited volumes (100-1,000 tx/day)
•
Limited integration possible with back office
systems
Impact of SEPA
•
Adjust screens (IBAN) and upload and
download format (to XML)
•
Bank decides migration date
•
Bank can offer central migration support
services
Examples
•
Almost all banks have extensive websites
File formats will change under SEPA
• Current situation: national formats for payment
instructions and reporting
• Additional information in SEPA messages, does not fit
current formats:
• IBAN (SCT, SDD)
• Creditor scheme identifier (SDD)
• Mandate information (SDD)
• Therefore, change to ISO 20022 XML for SEPA
products:
• Payment instructions: mandatory via PAIN messages
• Reporting: CAMT messages (not mandatory)
• Banks’ own reporting formats permitted provided they
meet SEPA requirements
SEPA for Cards
•
EPC Cards Framework
•
Ideal situation: ‘Any card at any terminal’
• Schemes which are accepted throughout Europe
• Open non-discriminatory card scheme membership
• Uniform pan European processing for all schemes and processors
•
Options for SEPA Compliancy
• Make national schemes SCF-compliant
• Replace national by international schemes
• Co-branding
•
Initiatives for additional European Card Scheme
•
Safety
• EMV-implementation: Chip and PIN code
SEPA for cards: policy issues
(Green Paper)
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•
•
•
•
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•
•
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Multilateral interchange fees (see following slides)
Transparency on fees
Co-branding
Central licensing, issuing or acquiring
European POS-terminal
Honour all cards rule
Blending
Chip-only cards
Mobile payments
Access to Bank Accounts (Dual Consent-approach)
How do Dutch consumers pay when
abroad?
How do Dutch consumers make
cross-border payments?
Cross-border payments by Dutch
consumers: trends and attitudes
• Differences in the use of debit cards at home or abroad have
declined
• Growing satisfaction with debit card use abroad
• Debit cards are seen as safer and easier to use than cash
• Acceptance levels do leave some room for further improvement
• For cross-border payments, online banking is seen as the safest
option
• For ease of use, credit cards score highest
• PayPal is considered the cheapest and fastest means of payment
• Satisfaction with the costs of cross-border payment through online
banking has increased in recent years
Organisation of the NFS
National Forum
on SEPA
Migration (NFS)
High-level
consultations
Task Force SEPA
Netherlands
Programme
Agency
Umbrella
organisations
Providers
Users
Software
suppliers
Supporting
parties
Individual
parties
Stakeholders represented in national migration via umbrella organisations
Programme linked to migration activities of umbrella organisations
National Forum on SEPA-migration (NFS)
• All stakeholders involved
• Information-exchange and binding appointments
• Activities with respect of
• planning migration
• communication
• monitoring
• Signaling and solving of social migration
problems
• Three levels: Board, Technical and a Programme
Office
Activities NFS 2011-2014
•
•
•
•
Impact analysis SEPA Regulation (2011)
New National SEPA Migration Plan (2011)
Establishment of NFS (2011)
Projects and activities (2012-2014)
• Central communication campaign
• Stimulating the development of SEPA-proof software
• National governance
• Exchange of experiences
• Identifying and resolving migration issues and risks
• Monitoring SEPA change-over
National Migration Plan
Infrastructure
ready for mass
migration
Specifications for
basic product
range for
business users
SCT
2012
Banks
1 February: end date
for migration to SCT
and SDD
1-10
SDD meets
Regulation’s
consumer protection
requirements
SDD
2013
1-3
1-7
2014
Adjust infrastructure to European payment instrument requirements
Software suppliers
Adjust applications
Support user migration
Wholesale SCT users
Early movers
Small-business SCT users
Early movers
Wholesale SCT users
Early movers
Small-business SCT users
Early movers
Consumers
Increasing use of IBAN
Communication
Communication by umbrella organisations, intermediaries, banks
Mass migration
Mass migration
Mass migration
Public information campaign
Mass migration
Possible use of niche products beyond end date
Support user migration
SEPA – General remarks
• Full migration per 1-2-2014 remains the
common goal
• The Netherlands will not make use of
waiver possibilities
• Banks and software companies under
pressure to be ready in time, preparations
are in order; ultimately end of Q2 2013 the
basic payments infrastructure will be ready
for full mass migration.
• Major concern is congestion close to the
end-date.
37
dd Mmmm
Aim of the SEPA Migration Monitor
Insight into the status of SEPA migration of
corporates, public authorities and software
suppliers
1. Awareness of the meaning and implications of
SEPA
2. Stage of preparations
3. Actual use of SEPA payment instruments
4. Development of software packages
SEPA-preparations
SCT
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
MKB
Middelgrootbedrijf
Grootbedrijf
Nog niet begonnen
Uitzoeken/impactanalyse
Testen/implementatie
Volledig over
Gemeenten en
waterschappen
Publieke
instellingen
Requirements/uitvoering
SEPA Communication
campaign
• To improve knowledge on IBAN and products
• Three stage rocket:
- General public campaign
- Umbrella organisations with members
- Enterprises & organisations with clients
• Timing: milestones
40
SEPA communication
Public information campaign:
Iedereen krijgt
een langer rekeningnummer.
Uw bedrijf dus ook.
Houd er rekening mee.
Everyone will have a
longer account number.
Including your business.
Take it into account.
Campaign website
Toolkit
•
Banner
•
Factsheet/flyer
•
Animation(s)
•
Campaign logos
•
SEPA checklist for firms
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Source texts
•
Set of Q & A
•
Helpdesk
•
Radio and TV commercials
•
Template impact analyse
Information
More information via www.overopIBAN.nl & www.sepanl.nl
Concluding Remarks
The SEPA-migration is under way.The success of
SEPA depends on
• Timely implementation of the National Migration
Plans with respect to the end date for national
payment instruments (SEPA-Regulation)
• Well organised stakeholder involvement and
consultation
• SEPA for Cards means ‘Any card at any terminal’ this requires time
• Further European standardisation, which is not easy
• What is coming after 1 February 2014?
Discussion points
• What are the advantages of SEPA for different
market parties?
• What are possible barriers for the migration to
SEPA for market parties?
• How could SEPA governance be organised on
an European and national level?
• What could be the next wave of SEPA
products after 1 February 2014?
• How could countries outside Europe profit from
SEPA?