The expectations of the Eurosystem as regards the future of SEPA
The Eurosystem, which comprises the European Central Bank (ECB) and 16 national central banks of the euro area, is today publishing a set of expectations for different stakeholders regarding the future progress of the Single Euro Payments Area (SEPA) project. The expectations, developed as a response to requests for guidance received throughout 2008, provide support for banking communities and payment institutions. They should also provide users with guidance regarding the adjustment of their payment-related activities and what they can expect from their bank or payment institution. The Eurosystem’s expectations are not, however, intended to be formal requirements or legally binding.
Further progress of SEPA remains a top priority for the Eurosystem, even in turbulent times. Hence a “mini-SEPA”, i.e. a SEPA for cross-border payments only, is not acceptable. The current financial turmoil is making more banks focus on their retail business again, with payment services standing at the core thereof. A full migration to SEPA is now even more important since SEPA is the foundation for the future European retail payments business.
The Eurosystem expects SEPA providers (banks and payment institutions) to:
- ensure their operational capability to send and receive SEPA payments. Banks and payment institutions, which offer credit transfer and/or direct debit services in euro, should offer the respective SEPA instruments too. All relevant bank identifier codes (BICs) should be listed in the directory of at least one infrastructure with SEPA-wide reach. Business processes and software applications should be adapted to the SEPA requisites and SEPA standards should be introduced for communication with customers. If a conversion of the new SEPA formats into legacy, or national, formats, and vice versa, is offered until a migration end-date, it has to be assured that there is no loss of data; and
- offer users SEPA instruments that correspond to instruments otherwise offered with legacy euro payment instruments for both sending and receiving domestic and cross-border payments within SEPA. The active use of SEPA instruments by customers can be promoted by making SEPA instruments at least as attractive as current legacy instruments are, by actively informing customers about them and by observing the Eurosystem’s SEPA expectations and recommendations.
Regarding SEPA users, the Eurosystem expects:
- companies and public administrations, including commercial and central banks, to include a reference to both the SEPA criteria of the European Payments Council (EPC) and the Eurosystem’s expectations in the context of their tender procedures, and also to use a payment service provider that observes the SEPA rules and expectations. Companies and public administrations should support SEPA by providing customers with international bank account numbers (IBANs) and BICs, in a more obvious place than the legacy account identifiers, on invoices and other documents. Commercial and central banks, as well as payment institutions, should use SEPA instruments and — in case they do not conduct payments autonomously — choose a payments service provider that observes the SEPA rules and expectations. If the respective accounts are within the same institution, IBAN instead of legacy account identifiers should be used by banks to pay their suppliers and to effect salary payments;
- retailers — when accepting card payments from their customers — to consider whether the card schemes and acquirers with whom they are contracting follow the SEPA framework for cards and observe the Terms of Reference (ToR) for card schemes (once available). They should migrate towards “chip and PIN” (EMV-certified) terminals and systems using SEPA standards (once available), and should promote the use of efficient card schemes at the points of sale. If this is a viable commercial decision, they should consider accepting additional European card scheme(s), once available; and
- customers to inform themselves about the IBANs of their accounts and the corresponding BICs of their banks. Furthermore, it would be beneficial for the adoption of SEPA if they use BICs and IBANs for making payments (preferably with SEPA payment instruments) whenever they are indicated on invoices. When considering banking services, customers should compare offers of banks from various SEPA countries. When paying at the point of sale, card payments should be used, instead of less efficient means of payment, both for national and SEPA-wide transactions.
The English version of the Eurosystem’s SEPA expectations can be downloaded from the ECB’s website. Other language versions will be available in due course.