Migrating to the Single Euro Payments Area: key facts

What is the SEPA migration end-date regulation?

Payments in euro throughout Europe need to work in a safe and efficient manner. For that reason, in March 2012 the European legislator adopted Regulation No 260/2012, which is also commonly referred to as the "SEPA migration end-date regulation". The regulation lays down rules for the initiation and processing of credit transfer and direct debit transactions denominated in euro within the European Union.

The regulation defines a clear timeline by when these rules need to be implemented in all Member States. For the euro area, the final deadline is 1 February 2014. The deadline for euro-denominated payments in non-euro area countries will be 31 October 2016. As of these dates, existing national euro credit transfer and direct debit schemes will have to be phased out and replaced by SEPA alternatives.

Each country must ensure that the migration from national payment products and services to the new SEPA instruments is conducted in accordance with the regulation. However, the market situation and the migration speed may vary greatly from country to country. Therefore, country-specific requirements may differ from the requirements set by the regulation. Individual national timelines may be longer or shorter than the general European level.

On 9 January 2014 the European Commission published a proposal for a Regulation amending Regulation No 260/2012, proposing an additional transition period of six months for the euro area. The ECB published a press statement and a legal opinion on the proposal. On 26 February 2014 Regulation (EU) No 248/2014 of the European Parliament and of the Council amending Regulation (EU) No 260/2012 concerning the migration to Union-wide credit transfers and direct debits was officially adopted.

Key dates

Specific requirements for businesses and consumers

• Rules and standards for all credit transfers and direct debits denominated in euro
  The regulation stipulates rules and sets standards for all credit transfers and direct debits denominated in euro within the EU where the payment service provider (a PSP is a bank or other supplier that offers payment services) is located in the EU.
• International Bank Account Number
  The International Bank Account Number (IBAN) is the standard governing European bank account numbers. By February 2014, the IBAN will be the sole payment account identifier for national and cross-border credit transfers and direct debits in euro within the EU.
• Business Identifier Code
  The Business Identifier Code (BIC) may still be required until 1 February 2014 for domestic payments and 1 February 2016 for cross-border payments. Member States may defer the requirement relating to the provision of the BIC for national payment transactions until 1 February 2016.
• Pan-European reachability
  Payment service providers cannot reject a SEPA credit transfer or SEPA direct debit transaction if they currently accept equivalent transactions carried out by national schemes.
• Free choice of payment locations
  Payers cannot be restricted in choosing from which account in Europe they would like to make credit transfers or direct debits in euro. Neither can payees be forced to receive credit transfers or direct debits in euro in an account held in a specific country.
• Additional debtor protection measures for direct debits
  Consumers may instruct their payment service provider on how to handle incoming collections by specific billers. They may draw up black lists or white lists of billers, set maximum amounts, or specify payment intervals. Additionally, they can block any direct debit collections from their payment account. In cases where a mandate does not provide for the right to a refund, consumers may instruct their PSPs to check whether the amount and periodicity of each incoming direct debit transaction is equal to the amount and periodicity agreed on the mandate.
• Principle of equal charges
  Payment service providers must apply equal charges to comparable cross-border and domestic payments in euro within the European Union (Regulation No 924/2009). This principle of equal charges has been reinforced by the end-date regulation (Regulation No 260/2012), which has eliminated the € 50,000 ceiling under which equal charges could previously only be applied.
• Resolution of conflicts and complaints
  Member States are to designate the competent authorities responsible for ensuring compliance with the regulation and establish bodies for the resolution of conflicts and complaints during the migration period.

Specific requirements for businesses only

• ISO20022 XML message standard
  The use of the ISO20022 XML message standard is mandatory: i) between payment service providers; and ii) for the bundled transmission of credit transfers and direct debits in euro by business users that are not microenterprises (microenterprises have less than ten staff members and a turnover or a balance sheet total of up to €2 million).
• Multilateral interchange fees eliminated for direct debits in euro
  Multilateral interchange fees (MIFs are fees applied between payment service providers in some Member States when passing on individual direct debits) are being eliminated for direct debits in euro. Such fees will be eliminated by 1 February 2017 for national payments and were eliminated on 1 November 2012 for cross-border payments. This could also lower the visible transaction fees for payees, to whom the costs of such MIFs are often passed on by their service providers.