The impact of SEPA on companies
Benefits
Saving time and costs
Using the SEPA payment instruments, companies will be able to perform
all euro-denominated payments centrally, from a single account. After
1 February 2014, the handling of payments in euro will be easier, as
all incoming and outgoing payments will take the same format. This
will enable companies to consolidate their payments and liquidity
management in one location. The Payment Services Directive obliges payment
service providers to process payments within certain time limits (one
business day for electronic payment orders). For European-wide
business, SEPA will save money and time.
Electronic services
SEPA payments will be combined with eSEPA services, such as e-invoicing or
e-reconciliation. They will help companies to further optimise the
handling of payments. Today these services are often offered only
nationally, as different formats and rules make cross-border use
difficult. Standardised SEPA schemes will make it easier to overcome
these obstacles.
Key elements of SEPA migration end-date regulation (Regulation No
260/2012) and impact on companies
By 1 February 2014, the IBAN will
be the payment account identifier for carrying out national and
cross-border credit transfers and direct debits in euro within the
euro area Member States. For non-euro area Member States, the IBAN
will be the account identifier for payment accounts in euro from 31
October 2016.
By 1 February 2014, ISO 20022 XML will be the message format used
for sending or receiving credit transfers and direct debits in euro
which are bundled together for transmission. Member States may opt
to defer this requirement until 1 February 2016. Microenterprises
are exempted from this requirement, unless they request the use of
these message formats. Notwithstanding a possible waiver, payment
service providers (PSPs) must use the ISO 20022 XML message format
if requested by a payment service user (PSU).
Specified
data elements will become mandatory in all
domains of the payment chain (i.e. PSU-to-PSP, PSP-to-PSP and
PSP-to-PSU).
The SEPA migration end-date
regulation ensures that businesses are able to send credit transfers
and/or direct debits in euro to payment accounts held by payees
and/or payers with PSPs which are located in other Member States and
which are reachable in accordance with the regulation. The
regulation stipulates that all payees’ and/or payers’ payment
accounts reachable for a national credit transfer and/or direct
debit in euro should also be reachable via a SEPA credit transfer
and/or direct debit scheme.
After 1 February 2014 for national
payment transactions and after 1 February 2016 for cross-border
payment transactions, PSUs will not be required to indicate the BIC
of the PSP of a payer or a payee. Member States may defer the
requirement relating to the provision of the BIC for national
payment transactions until 1 February 2016 (link to the overview
table with national key facts).
Mandates for recurring direct
debits in legacy schemes will remain valid after 1 February 2014 and
will be considered as representing the payer’s consent to his/her
PSP to execute direct debits.
As of 31 March 2012 charges levied
by a PSP on a PSU in respect of cross-border payments are the same
as those levied for corresponding national payments of the same
value and in the same currency irrespective of the transaction’s
amount.
Related links and documents
The impact of SEPA on merchants
Harmonisation
Payment cards are a very popular way of
paying retailers. They are increasingly replacing cheques and cash.
To accept card payments in a shop, merchants need to have an
agreement with an acquiring entity. The acquirer processes card
payments on behalf of the merchant: it handles the information on the
payment and cardholder and forwards it to the cardholder’s payment
service provider via a clearing infrastructure.
SEPA will bring harmonisation and will increase competition among
the providers of card payment services. This means more choice, lower
costs and better service.
More choice of acquirers
With SEPA, acquirers will be able to process all SEPA-compliant
card payments – including across national borders. Therefore,
merchants will be able to choose any acquirer in SEPA. This will
increase competition among acquirers and bring down costs.
Lower cost
Point-of-sale terminals will become increasingly standardised with
SEPA. As a result, their production and certification costs will
diminish and competition among providers will increase. All this
should bring fees down for merchants. In addition, merchants will be
able to accept a wider range of cards from a single terminal. The
increased competition among card schemes should also drive down the
cost for merchants.
Easier remote business
Merchants with a remote customer base often do business via
e-commerce, mail or telephone orders. These channels are used for
offers and orders, but also for submitting invoices and sometimes
even for directly initiating payments. In SEPA, these merchants need
no longer worry about varying payment instruments when operating in
different countries. They benefit from the harmonised cards market,
but can also use SEPA credit transfers and SEPA direct debits as
payment options. This may be particularly beneficial for them if a
variety of eSEPA services also evolves, tailored to their specific
distribution channels.
Card fraud prevention
Improvements in the security of cards and the underlying payment
infrastructure are the main reason that fraud at automated teller
machines and point-of-sale terminals was lower in 2010 than in 2007.
The most important enhancement was the wider adoption of EMV, a
chip-based standard. This offers stronger security features than
conventional magnetic stripes both for the physical card (since,
unlike the stripes, the chip cannot easily be duplicated) and for the
technological infrastructure behind the transaction. The adoption of
these safety features is recommended by the ECB and forms part of the
SEPA migration (press release).
Related links
The impact of SEPA on consumers
Benefits
A single account
A growing number of people in Europe live outside their home
country or make regular payments to beneficiaries located abroad.
Before SEPA, this implied having an account in each country or having
to face the difficulties that a cross-border transaction entailed. In
the case of direct debits, it was not even possible to use this
instrument across countries.
Thanks to SEPA, consumers will no longer need one account at home
and another one abroad. In addition, electronic payments in euro to
anywhere in the SEPA area will finally be as easy as national
payments are today. This concerns both credit transfers and direct
debits. Examples include:
- paying rent for children studying abroad;
- paying for a holiday home; and
- paying for services provided by European companies (such as
telephone, insurance, and utilities).
A single payment card
In SEPA, payment cards will be widely accepted for all euro
payments. This will also reduce the need to carry cash, for instance
when travelling. New standards are helping to increase customer
safety and security.
Faster and simpler payments
The Payment Services
Directive obliges payment service providers to process payments
within certain time limits (one business day for electronic payment
orders, two business days for paper-based payment orders). A
long-term goal of SEPA is to eliminate paper and use electronic
payments only. Payments can then be combined with innovative services
that make the process of paying even simpler and more convenient.
These services already exist in some countries, but they do not
necessarily work across borders. SEPA will enable this. In short,
with SEPA managing your payments will be faster and simpler.
Key elements of SEPA migration end-date regulation (Regulation No
260/2012) and impact on consumers
By 1 February 2014, the IBAN will be the payment account identifier
for carrying out national and cross-border credit transfers and
direct debits in euro within euro area Member States. For a
transitional period (until 1 February 2016), Payment Service
Providers (PSPs), for example banks, are allowed to provide
consumers with conversion services for national payment
transactions, if opted for by the respective
SEPA Member State.
PSPs should not levy any direct or indirect charges or other fees
linked to these conversion services. For non-euro area Member
States, the IBAN will be the account identifier for payment accounts
in euro from 31 October 2016.
Specified
data elements become mandatory in all
domains of the payment chain
The SEPA migration end-date regulation ensures that consumers are
able to send credit transfers in euro with payment service providers
(such as banks) which are located in other Member States of the
European Union. The regulation stipulates that all payees’ payment
accounts reachable for a national credit transfer in euro should
also be reachable via a SEPA credit transfer scheme.
Regarding
direct debits: if a consumer’s account allows for national direct
debits in euro, it should also allow for cross-border direct debits
in euro within the EU. All payers’ accounts reachable for a national
direct debit in euro should also be reachable via a SEPA direct
debit scheme.
The regulation grants payers the right to instruct their payment
service providers (PSPs):
- to limit a direct debit collection to a certain amount and/or
periodicity;
- in cases where a mandate does not provide for the right to a
refund, to verify each direct debit transaction before debiting
the payer’s payment account, by checking whether the amount and
periodicity of the submitted transaction is equal to the amount
and periodicity agreed in the mandate;
- to block any direct debit to the payer’s payment account, or
specify a “black list” or “white list” of payees whose direct
debits are to be blocked from or accepted into, respectively, a
payer’s payment account.
The payer under a direct debit in
euro should give his/her consent both to the recipient of a payment
and to the payer’s payment service provider (directly or indirectly
via the recipient of a payment).
Mandates for recurring direct
debits in legacy schemes will remain valid after 1 February 2014 and
shall be considered as representing the payer’s consent to his/her
PSP to execute direct debits.
After 1 February 2014 for national payment transactions and after 1
February 2016 for cross-border payment transactions, payment service
users shall not be required to indicate the BIC of the payer’s or
the recipient’s payment service provider.
SEPA Member States may defer the requirement relating to the provision of the BIC for
national payment transactions until 1 February 2016.
Related documents and links
- European Commission: Cross-border payments in euro:
Regulation on equality of charges
- FAQ
- lists of national competent authorities
- lists of national out-of-court redress bodiesfor
Regulation on equality of charges
- European Commission: The Payment Services
Directive: what it means for consumers
- European Payments Council brochure: SEPA for
consumers
- European Payments Council video: The IBAN - Your
new best friend
- FIN-NET: a financial dispute resolution network
consisting of national out-of-court complaint schemes in the EU
Member States, Iceland, Liechtenstein and Norway that are
responsible for handling disputes between consumers and financial
services providers, i.e. banks, insurance companies, investment
firms and others.
- SOLVIT: an alternative dispute resolution mechanism
coordinated by the European Commission and operated by the Member
States. It deals with cross-border problems between a business or a
citizen, on the one hand, and a national public authority on the
other, where there is possible misapplication of EU law.
- Your
Europe Advice: a service for the public. A team of independent
legal experts, based in the Member States, provides free,
personalised advice on citizens’ rights in the EU.
The impact of SEPA on public administrations
Modern payment applications
In principle, SEPA offers similar advantages to the public sector
as it does to private companies. The public sector in the euro area
generates around 15-20 % of all credit transfers. Moving the volume
of payments made by public administrations to SEPA instruments will
contribute significantly to improving end users′ experience with
those instruments, and is an opportunity to modernise payment
applications.
Related links
The impact of SEPA on payment service providers
In the Single Euro Payments Area (SEPA) banks and other payment
service providers (PSPs) have had to harmonise the way euro retail
payments are made and processed. This has entailed substantial costs,
but benefits will materialise in the medium to long term.
Benefits
Harmonisation throughout SEPA means that payment service providers
will be able to offer their services more easily to customers,
regardless of location.. In addition, PSPs will be able to expand
their business and meet their customers’ needs by offering eSEPA
services (such as e and m-payments and e-invoicing) in addition to
the core SEPA products.
Increased market efficiency
The full implementation of SEPA will align the conditions under
which payments are made. The benefits will be:
- a single set of rules;
- equal and open access to the European market;
- reachability;
- transparency; and
- interoperability.
This will encourage competition and enable PSPs to negotiate better
conditions with their own service providers.
Cost-efficient processing
Financial intermediaries must apply equal charges to comparable
cross-border and domestic payments in euro within the European Union
(see Regulation 924/2009). This principle of
equal charges has been reinforced by the end-date regulation (Regulation 260/2012), which has eliminated
the € 50,000 ceiling under which equal charges could previously only
be applied. Cross-border payments are traditionally more expensive
and complex to process. SEPA will overcome this imbalance by making
cross-border payments as simple, efficient and inexpensive as
national payments.
Main effects of the SEPA end-date regulation (Regulation No
260/2012) on payment service providers
Regulation No 260/2012 establishes
1 February 2014 as the end date for migration to SEPA credit
transfers and direct debits for euro payments made in the euro area.
It also includes several transitional provisions with the aim of
smoothening the migration to SEPA (for instance the so-called “niche
products”).
The regulation covers all credit
transfer and direct debit transactions where an end user is
involved. It also lists transactions that are excluded from its
scope, such as payment transactions carried out by PSPs for their
own account, card transactions and payment transactions made via
mobile phone or any other means of telecommunication or digital or
IT device.
The International Bank Account
Number (IBAN) will be the single account identifier for any payment
account throughout SEPA, replacing the existing national payment
account identifiers (BBANs).
PSPs may request end users to
indicate the BIC if necessary, but only before 1 February 2014 for
national transactions and before 1 February 2016 for cross-border
transactions. After that, the IBAN will be the sole account
identifier needed to carry out (and process) SEPA transactions end
to end.
The regulation introduces several
technical requirements and compulsory data elements to be considered
by PSPs when carrying out SEPA credit transfer and direct debit
transactions, in both the interbank and bank-customer domains. For
example, PSPs must use the message format ISO 20022 XML, PSPs must
further provide the data elements specified in the annex to the
regulation, and the remittance data field must allow for 140
characters.
In order to encourage the
successful take-up of SEPA-wide credit transfer and direct debit
services, a reachability obligation has been established across the
Union. PSPs should ensure that all payee payment accounts reachable
for national credit transfers and all payer accounts reachable for
national direct debits are also reachable via a Union-wide credit
transfer or direct debit scheme. This should apply whether or not a
PSP decides to participate in a particular credit transfer or direct
debit scheme.
Regulation No 260/2012 has acknowledged the need to take measures in
order to strengthen customer confidence in the use of such services,
especially for direct debits. Such measures should allow payers to
instruct their PSPs to limit direct debit collection to a certain
amount or a certain periodicity and to establish specific positive
or negative lists of payees.
In addition, when the collection
of direct debit is based on a framework agreement with no refund
right between the payer and his/her PSP, the payer’s PSP will verify
each direct debit transaction to check whether the amount of the
submitted direct debit transaction is equal to the amount and
periodicity agreed in the mandate before debiting the payer’s
payment account. PSPs will perform these checks at the request of
their customers where a mandate under a payment scheme does not
provide for the right to a refund.
The payer under a direct debit in
euro should give his/her consent both to the payee and to the
payer’s PSP (directly or indirectly via the payee).
Mandates for recurring direct
debits in legacy schemes will remain valid after 1 February 2014 and
will be considered as representing the payer’s consent to his/her
PSP to execute direct debits.
Regulation No 260/2012 limits the
possibility to apply per-transaction MIFs to direct debits in euro.
Multilateral interchange fees are fees applied between payment
service providers in some Member States when passing on individual
direct debits. Such MIFs will be phased out by 1 February 2017 for
national payments and by 1 November 2012 for cross-border payments.
However, MIFs for transactions which are rejected, refused, returned
or reversed because they cannot be properly executed and result in
exception processing (so-called “R-transactions”) will continue to
be allowed, provided that they comply with certain conditions
specified in the regulation.
Charges levied by a PSP on a PSU in
respect of cross-border payments in euro will be the same as the
charges levied by that PSP for corresponding national payments of
the same value and in the same currency. With the adoption of the
end-date regulation, the upper ceiling of €50,000 for the
application of equal charges, as laid down in Regulation No 924/2009
on cross-border payments in the Community, has been eliminated.
It is essential that all actors,
and particularly EU citizens, are properly informed, in a timely
manner, so that they are fully prepared for the changes brought
about by SEPA. All the various key stakeholders (and PSPs are among
them) should therefore carry out specific and extensive information
campaigns, proportionate to the need and tailored to their audience
if necessary, in order to raise public awareness and prepare PSUs
for SEPA migration. In particular, there is a need to familiarise
citizens with migration from BBAN to IBAN, which has varying degrees
of impact across countries. National SEPA coordination committees
are best placed to coordinate such information campaigns.
Related links and documents