Countdown to 2017 launch for real-time credit transfers across SEPA

From GT News –

“The European Payments Council (EPC) has outlined plans for a new pan-European instant credit transfer scheme, which aims to bring real-time money transfers across the single euro payment area (SEPA) region.

The plan for the instant credit transfer scheme, named SCT Inst, has been submitted by the EPC to and approved by the Euro Retail Payments Board (ERPB), a body chaired by the European Central Bank (ECB). It is expected to be adopted in November 2017.”

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Europe's businesses not prepared for looming SEPA deadline

“With the Sepa migration deadline now just a year away, Europe's businesses still have a long way to go, with only 30% of credit transfers and two per cent of direct debits compliant, according to Experian.

Last year lawmakers finally settled on a deadline of February 2014 for the switch to a Sepa (Single euro area payment) system - designed to simplify and streamline processing operations for domestic and international payments - for Eurozone countries.” <<READ MORE>>

European Payments Council launches public consultation on mobile contactless SEPA Card Payments Interoperability

The European Payments Council (EPC), representing the European banking industry on payments, has released the “Mobile Contactless SEPA Card Payments Interoperability Implementation Guidelines” for public consultation. The EPC has requested industry feedback by 17 June 2011. The final version of these guidelines is expected to be published during October 2011. The EPC is committed to advancing a sustainable mobile contactless payments ecosystem through the delivery of implementation guidelines that promote an interoperable and flexible architecture.

The Guidelines offer a description of the mobile contactless payments ecosystem today and the stakeholder involved, and is aimed at providing a clear understanding of the technology available and its deployment within the market.

The EPC believes that the enhanced level of clarity offered by the document will ensure adherence to an adequate level of security measures and appropriate governance by payment service providers, and will enable the quick development and implementation of mobile solutions by:

• Promoting the use of open standards, which will avoid market fragmentation and the deployment of proprietary solutions with limited geographical reach. 
• Providing transparency to market participants by clarifying the roles of key stakeholders. 
• Stating the position and responsibilities of the EPC in relation to other industry bodies.
• Defining the adequate level of security for the whole mobile contactless payment value chain in order to establish confidence in this environment.

EPC Chair Gerard Hartsink commented: “The EPC Mobile Contactless SEPA Card Payments Interoperability Implementation Guidelines are the EPC’s next step in making SEPA mobile contactless payments a reality. The EPC invites stakeholders to participate in the consultation process and to provide feedback on these guidelines by 17 June 2011.” These guidelines are exclusive to mobile contactless payments using near field communications (NFC) technology. The EPC is also developing implementation guidelines for mobile remote payments to be released at a later stage.

Bank payments delayed in Finland

Payments through Finnish banks were late this past Tuesday as a result of a European payment system malfunction. The Federation of Finnish Financial Services says that all the delayed payments had reached their destinations by Tuesday afternoon.

The disruption affected payments in the Single European Payments Area, which form a large proportion of all bank payments. According to Development Manager Anne Nisén from the Federation of Finnish Financial Services, about 30-40 percent of all payments have been delayed.

A disruption appeared in the European payment system overnight, preventing SEPA-payments from transferring normally. Payments did not reach customers’ bank accounts in the morning as is normal. The problem was later fixed.

The Finnish Consumers’ Association has demanded compensation from banks over the payment delays. It notes that when salaries and pensions do not appear in accounts as agreed, other payments are also delayed.

The association says Tuesday’s delay was the sixth this year. From the consumers’ viewpoint, it is irrelevant which system is blamed, the Association notes.

European Commission sets SEPA migration deadlines

The European Commission has finally set out its proposals for EU-wide end-dates for the migration of national credit transfers and direct debits to Single Euro Payments Area (SEPA) instruments.

The move means that, once the regulation comes into force, national credit transfers will be replaced by the pan European SEPA SCT within 12 months, with direct debits following after another year.

The proposal now goes to the European Parliament and the member states for consideration.

The EC says it has moved to enforce the move because self-regulation has failed. According to available European Central Bank data, as of October, only 9.6% of all credit transfers in the euro area were executed using a pan-European payment instrument. If this trend continues, it will take 25 years for the full benefits of the SEPA to be felt.

To ensure interoperability, the use of certain common standards and technical requirements such as the use of international bank account numbers (IBAN), bank identifier codes (BIC) and a financial services messaging standard (ISO 20022 XML) will be mandatory for all bank account payments in euro in the EU.

Internal market and services commissioner Michel Barnier says: "We have a Single Market, many countries share a single currency and soon we will move to a single pan-European payment system in Europe. It means that making payments cross-border will become as easy as making them at home. Consumers will only need one bank account and their payments will be faster, cheaper and safer. Businesses will benefit from one set of standards and much simpler processes. The proposal adopted today fixes end-dates to make this pan-European system a reality, hopefully as early as 2012."

The European Central Bank's Gertrude Tumpel-Gugerell - who has long called for a deadline - told the Financial Times that she "very much welcomed" the EC proposal.

Last month the European Payments Council warned that the EC will "effectively derail the entire SEPA project" if regulatory intervention on migration end dates does not include deadlines for phasing out national schemes.

European Payments Council calls on EU lawmakers to set regulatory migration dates for SEPA

The European Payments Council (EPC) has announced updated and enhanced versions of the SEPA Credit Transfer (SCT) Scheme Rulebook and the SEPA Direct Debit (SDD) Scheme Rulebooks.

November 1, 2010 marks an important target date for SEPA, as all banks in the euro area are now reachable for cross-border SEPA direct debits.

The single element now required to achieve an integrated euro payments market is a clear deadline for the transition to the SEPA payment schemes. The EPC has called on EU lawmakers to set an end date for migration to SCT and SDD through EU Regulation. The EPC believes that a possible forthcoming regulatory intervention relating to SEPA, as outlined by the European Commission earlier this year, could derail the entire SEPA project. As such it believes that it would eliminate the extensive benefits SEPA would offer bank customers.

The SEPA Credit Transfer and SEPA Direct Debit Schemes evolve based on a transparent change management process providing all stakeholders with the opportunity to introduce suggestions for changes to the SEPA Schemes. Proposed changes to the schemes are subject to a three-month public consultation. As a result of this annual change cycle, the SEPA Credit Transfer and SEPA Direct Debit Schemes incorporate numerous features introduced by end users. The limited number of requests for new elements to be introduced into the newly released Rulebooks demonstrates the maturity of the SEPA Credit Transfer and SEPA Direct Debit Schemes and highlights that they are fit for purpose. In accordance with best industry practice, banks and their service providers have sufficient time to address the Rulebook updates ahead of November 2011, when these revised Rulebooks will come into effect.

1 November 2010 is also an important target date for the roll-out of SEPA Direct Debit services by banks. EU Regulation (EC) No 924/2009 established mandatory reachability of all banks in the euro area for cross-border direct debits. In practice, this means that any consumer who holds an account in the euro area, which provides the option to make euro direct debit payments at a national level, can now make cross-border payments by SEPA Direct Debit as well. As a result, paying bills becomes significantly easier for mobile European citizens. At the same time, companies are now able to collect payments by SEPA Direct Debit across the euro area resulting in enhanced business opportunities.

World Payments Report 2010

Global payments volumes continued to grow in 2009 despite impact of financial crisis. This is according to the 6th annual World Payments Report from Capgemini, RBS and Efma.

Covering Europe, North America and Asia, the “World Payments Report 2010” examines the latest trends in the global payments landscape including payments volumes and instruments usage as well as key payments-related regulatory initiatives such as SEPA/PSD, Basel III, Liquidity, Anti-Money Laundering (AML) and Anti-Terrorism Financing (ATF).

The report examines the accelerating transformation of the payments value chain including insights and strategic considerations regarding competitive and cooperative responses to the market environment from outsourcing to partnership strategies and payments hubs.

The World Payments Report 2010 draws on 13 executive interviews with 11 major banks and 2 clearing houses to balance global, regional and local points of view.

Key Findings from the 2010 World Payments Report

Global payments volumes continued to grow in 2009, despite economic pressure from the financial crisis. This followed a period of overall growth in non cash-payments which accelerated to 9% in 2008 from 7% in 2007. The rate of growth in non-cash payments volumes in 2008 was far faster in developing economies, such as China (29%), South Africa (25%) and Russia (66%), than in mature markets such as North America which had a growth rate of 4%. The report reveals that globally, cards remain the preferred non-cash payment instrument, accounting for more than 40% of payments in most markets and 58% globally.

The World Payments Report 2010 examines the latest trends in the global payments landscape including payments volumes and instruments usage as well as key payments-related regulatory initiatives and the consequent strategic challenges and options for banks.

Key findings include:

• The payments business has withstood the financial crisis well. Only time will tell the ultimate fallout, but initial data suggest payments volumes continued to expand in 2009
• Many concrete developments have taken place in the last year towards SEPA and PSD in Europe
• Regulatory pressures continued to affect the payments industry worldwide
• New technology and competition are making the payments universe more complex and expansive and the economic crisis as well as the response of the regulators is accelerating the evolution of the industry.

The Single Euro Payments Area - where do we stand?

In a speech at the European Payments Council offsite meeting held in Brussels, on 14 October 2010, Gertrude Tumpel-Gugerell, Member of the Executive Board of the ECB delivered a wide ranging review of the current status of SEPA and what still remains to be done.

You can read her full remarks in our IN FOCUS section – Click Here.

ECB wants “realistic but ambitious regulatory end dates” for SEPA Migration

The European Central Bank (ECB) has publisged its 7th Progress Report on the Single Euro Payments Area (SEPA).

Currently, 32 European countries are participating in SEPA, more than 4,400 banks have joined the SEPA credit transfer scheme, and more than 3,000 banks have signed up for the SEPA direct debit scheme. Hence, much has been achieved in implementing SEPA.

However, further action by European legislators is needed for SEPA to be completed successfully. In this respect, a mandatory timeline for the migration to SEPA payment instruments will significantly accelerate the pace of transition, enabling SEPA to be completed, preferably, by the end of 2012 for credit transfers and by the end of 2013 for direct debits.

The 7th Progress Report, entitled “Beyond theory into practice”, shows achievements in major areas. For instance, the launch of the SEPA direct debit in November 2009 has made direct debit payments possible for the first time across borders. By 1 November 2010 the reachability of payment accounts for SEPA direct debits will be guaranteed legally, allowing SEPA direct debits to be used effectively throughout Europe.

In addition, the governance structure of SEPA has been improved by the creation of the SEPA Council, which enables a more formalised involvement of high-level representatives of consumers, retailers, corporates, SMEs and public administrations in the SEPA dialogue.

Other areas where progress has been made include: the transposition and implementation of the Payment Services Directive, and standardisation in the area of cards.

Despite this progress, SEPA migration as a self-regulatory process, has not yet achieved the results that were initially expected. The banking industry’s self-imposed deadline of December 2010 for SEPA credit transfers and direct debits to be in general usage will not be met. By August 2010 only 9.3% of all credit transfers processed in the euro area were SEPA credit transfers. Since its launch in November 2009, SEPA direct debits remain at a share well below 1% of all direct debit transactions processed in the euro area. Therefore, the Eurosystem strongly supports the work of European legislators to create the necessary momentum to bring the SEPA project to completion. The envisaged regulation establishing a SEPA migration end date(s), in which the usage of national payments instruments will be discontinued, will be a key element for the timely and smooth adoption of SEPA. The Eurosystem is also confident that concerns raised by market participants on the envisaged regulation on SEPA migration end date(s) will be properly addressed by the European authorities.

Other key elements for the success of SEPA that still need to be addressed include: the provision of innovative payment services (e.g. online and mobile payment services), the creation of an additional European card scheme and the enhancement of the security of card transactions by phasing out the magnetic stripe on European cards.

Ms Gertrude Tumpel-Gugerell, Member of the ECB’s Executive Board, said: “SEPA is progressing from the market-driven phase of design and implementation to the phase of mandatory migration, aiming to ensure that the necessary adoption really takes place. At this stage, SEPA faces a number of specific challenges that only the market and the regulators together can master. I hope that the constructive cooperation between all stakeholders will become even closer in the decisive two to three years ahead, so that our joint efforts help us to achieve the final goal: an attractive integrated and competitive European market for euro payment services.”

EPC and GSMA publish mobile contactless payments white paper

The European Payments Council (EPC) and global wireless trade group GSMA have published a while paper on mobile contactless payments and the role of 'trusted service managers' (TSMs).

The white paper comes after the pair launched a consultation on SEPA and mobile contactless payments at the beginning of the year. They aim to get payment services providers and mobile network operators to cooperate on a system to enable over 500 million Europeans to make SEPA payments using their handsets.

The new paper describes the provision and lifecycle management - including distribution, configuration, activation, maintenance and deletion - of banks' contactless payment applications when integrated with a mobile phone.

It also outlines the role of the TSM, which is to support banks and operators aiming to promote mobile contactless payments. TSMs facilitate the distribution, configuration and activation of the bank's payment application on the Universal Integrated Circuit Card (UICC, or SIM) within bank customers' NFC handsets.

The hope of the EPC and GSMA is that the joint project will boost commercial relationships between issuing banks, the mobile network operators and TSMs and therefore speed the deployment of contactless m-payments.

Dag-Inge Flatraaker, chair, EPC m-channel working group, says: "Building a common architecture for mobile contactless payments is a key objective of the EPC's initiatives for mobile payments in the Single Euro Payments Area (SEPA). The implementation of interoperable and user-friendly mobile payment solutions makes it even easier for bank customers across 32 SEPA countries to access state-of-the-art SEPA payment services."

An end date for SEPA?

A successful SEPA implementation is seen by many as the key to more efficient European retail payment systems. SEPA credit transfers and payment cards have been available since January 2008, and SEPA direct debits since November 2009.

However, migration to the new payment instruments continues to be slower than is actually needed to contain the costs to payment-service providers, realize the promised economies of scale and reap all the expected benefits.

Setting a clear deadline for the migration of legacy products to SEPA products would enable users and providers to draw up suitable plans and would put new life into the project.

The European Commission has conducted a public consultation on the possible end-date(s) for phasing out legacy domestic payment schemes corresponding to SEPA standards. The findings have confirmed that the various stakeholders would prefer to see the end-date (and possibly two separate end-dates for SEPA credit transfers and SEPA direct debits) established by means of an EU Regulation.

In June 2010 the Commission launched a new public consultation on the "Working paper on SEPA migration end-date" outlining the main features of such Regulation. This document and the answers received will form the basis of the EU Regulation on the end-date(s).

The documents are available from the following European Commission website HERE.

European Payments Council publishes White Paper on Mobile Payments

The European Payments Council (EPC), the coordination and decision-making body of the European payments industry, has published their White Paper on Mobile Payments. The White Paper highlights the EPC's initiatives for mobile payments in the Single Euro Payments Area (SEPA) designed to facilitate implementation and interoperability of user-friendly mobile payment solutions across the 32 SEPA countries. The white paper explores how mobile payment services can be delivered through cooperation between service providers active in the banking industry and the new players emerging in the mobile ecosystem.

The EPC White Paper on Mobile Payments offers an informative read to anyone interested in mobile payments, and aims to foster a common understanding between payment service providers and bank customers by using non-technical language. The document predominantly focuses on mobile contactless card payments, where the mobile device needs to be in close proximity to a point-of-sale terminal, while also addressing some aspects of mobile remote payments, where two parties are able to send and receive funds irrespective of where they are located.

Given the proliferation of mobile phones and related service levels throughout the European Union (EU), the EPC recognizes that the mobile channel is an ideal launch pad for SEPA payment instruments. Many consumers are already using mobile phones for services beyond the traditional voice calls and short messaging services due to the introduction of packaged offers, including internet access provided by the mobile network operators. As a result, consumer expectations with regard to mobile phone functionality have increased dramatically, with many users eager to embrace new service solutions based on this delivery platform, such as payments. The availability of practical SEPA mobile payments, either account or card-based, would provide a realistic alternative to cash and cheques.

At the same time, merchants demand that new technology translates into cost savings, increased business volume and reduced exposure to security threats such as cash thefts or illicit payments, as well as enhanced marketing opportunities and brand recognition. Mobile phone initiated payments, in particular those using the contactless approach, are very well positioned to generate these benefits for merchants and other stakeholders who are directly providing services to consumers.

Gerard Hartsink, Chairman of the EPC, comments: “The EPC, working together with other stakeholders such as, for example, GSMA, the organization representing the interests of the worldwide mobile communications industry, is in the process of establishing the necessary standards and business rules with regard to the initiation and receipt of SEPA payments by mobile. The aim is to develop proposals that support collaboration and standardization and which form the basis for interoperability. Our intention is to establish a service framework sufficient to reach potentially all payers and payees in the European Economic Area and to create a trusted and secure environment for the multiple stakeholders active in the field.”

Dag-Inge Flatraaker, Chairman of the EPC M-Channel Working Group, adds: “The EPC White Paper on Mobile Payments responds to changing customer requirements in the payments market and demonstrates how mobile payments can increase efficiency, effectiveness and convenience. This paper creates awareness on how to best combine the benefits of state-of-the art SEPA payment instruments for credit transfers, direct debits and card payments handled through one of the most popular and versatile devices introduced in the past two decades – the mobile phone.”

The EPC plans to publish a second edition of the white paper in 2011 that will focus further on mobile remote payments.

To download the EPC White Paper on Mobile Payments CLICK HERE

SEPA migration deadlines: Possible end dates floated

With SEPA-compliant transaction volumes still weak, Harcus Cooper of Barclays is forecasting the introduction of phased end-dates for mandatory conversion to the new EU-wide payment instruments, with credit transfers expected to get the nod in 2013 and direct debits by 2015.

The SCT scheme was introduced in early 2008, yet, according to ECB figures, two years later it accounted for just 7.5% of credit transfers in the Euro area. SDD take-up has been equally sluggish - at the recent EBAday it was noted that a paltry 200 SDD transactions per day, globally, go through EBA Clearing.

Cooper, who is Barclays' senior product manager on SEPA, was speaking at a payments event in London. He noted that many corporates are having trouble justifying the business case for SEPA in the absence of a firm migration deadline away from legacy infrastructure.

The Experian event takes place just a week after the European Commission and European Central Bank hosted the first meeting of the SEPA Council, a new body created to guide the future development of the project which has been dogged with criticism.

The meeting is understood to have seen broad consensus reached that January 2013 would be a likely end date for credit transfers with direct debits following in 2015.

It has long been acknowledged that deadlines are necessary. Last March ECB executive board member Gertrude Tumpel-Gugerell warned: "We need a migration end date from which on onwards only the European payment instruments will exist. We all know that it is inefficient and costly if two schemes continue to run in parallel for a prolonged period of time".

After talks with stakeholders last year saw widespread support for deadlines, the move appeared to gain impetus, with the EC initiating talks with member states in November yet final dates have still not been set.

Payments – New SEPA Council aims to kickstart EU payments convergence

The European Commission and European Central bank have hosted the first meeting of the SEPA Council, a new body created to guide the future development of the Single Euro Payments Area project. The meeting brought together top-level representatives - both users and suppliers in the European payments market.

Participants from the users side included consumers, retailers, businesses/corporates, small and medium-sized companies, and national public administrations. Payment supplier representation comes from the European Payments Council (EPC), co-operative banks, saving banks, commercial banks, and payment institutions. In addition, four national central bank board members represent the Eurosystem.

The establishment of the new body follows strong criticism of the SEPA governance structure and the lack of consultation with end-users. At the EBAday meeting in Luxembourg earlier this month, banks too expressed their concerns about the expense of the project, its sluggish returns and the failure of national governments to support the scheme.

Internal market commissioner Michel Barnier describes the formation of the Council as "a crucial step forwards" in the realization of an integrated market for payments in euro.

"To achieve the full potential of SEPA, we clearly need to improve user involvement in this project, both from early design to final implementation," he says. "I very much hope that this new Council will act as a catalyst to create a retail payment framework fully meeting the expectations of all actors."

The main issues discussed at the first meeting were the need and conditions to establish migration end-dates for SEPA and the future of a SEPA for payment cards. The Council will meet twice a year for an initial period of three years, say the ECB and the Commission, who will monitor and evaluate its progress over time.

Gertrude Tumpel-Gugerell, ECB executive board member, says the Council will not displace the bank-backed co-ordinating body, the EPC.

"We need to recognize the importance of user involvement for the success of SEPA," she says. "The SEPA Council aims at bringing together, at the highest level, the demand and supply sides of the European payments market, without, however, replacing any of the existing bodies, such as the European Payments Council."

Using IBAN and BIC in SEPA Credit Transfers - Public Consultation Online

The European Payments Council (EPC) Customer Stakeholder Forum (CSF) representing the EPC and customer organizations acting on a European level have prepared a set of questionnaires to investigate the actual experience of users inputting the IBAN and the BIC. This has been a response to suggestions that some bank customers may have problems using these two identifiers when initiating SEPA Credit Transfers.

To this end, two online questionnaires have been prepared, one for individual users and another for business users. Users are asked to respond online to the survey published in English. As it is important to get as many responses as possible, translations have been provided for a number of languages - see below under related files.

The questionnaires will be available for a two-month period beginning 3 May 2010 and ending 5 July 2010.

You can access the questionnaires please CLICK HERE