Please adjust your set
11 years ago
Monday 12 October 2009
Thursday 4 December 2008
French banks down tools on EU-wide payment project
BRUSSELS, Nov 26 (Reuters) .
French banks have suspended the launch of new pan-European payment services due to confusion over tariffs in the latest setback for a key EU project to improve consumer choice and boost growth.
The European Union has plans for a single euro payments system or SEPA to give its 495 million consumers cheap payments of bills and purchases in euros from a single bank account.
The move is designed to encourage cross-border competition and spur the creation of jobs and growth, the EU's executive European Commission has said.
The project requires the bloc's 8,000 banks to invest billions of euros changing their systems to comply with common SEPA standards on credit transfers, direct debits and payment cards.
SEPA-compliant credit transfers were launched in January by banks across the EU but the French Banking Federation (FBF) said on Thursday its members have suspended work pending clarification from European authorities on tariffs, in particular charging for services that banks supply to each other, it said in a statement.
"As long as these rules are not clarified, the French banks, like many European banks, cannot start the work on the timetable because like all businesses, banks need to know their economic and legal risks," the statement said.
Banks across the EU are worrying how the new services would be paid for after last December when the Commission said MasterCard's (MA.N: Quote, Profile, Research, Stock Buzz) interchange fee on its cross-border credit cards and Maestro direct debit cards violated EU competition rules.
The interchange fee is charged to retailers for processing a card payment but retailers have dubbed it a tax on consumers.
MasterCard is appealing the decision, a process that will take months but the November 2009 deadline for a full switch to SEPA products in Europe is looming.
The Commission and the European Central Bank has said banks could use an interchange fee on direct debits but only for an "interim period" and if it was justified -- a move that banks say has "destabilised" their planned SEPA business models. (Editing by Dale Hudson and Elaine Hardcastle)
Sixth SEPA progress report from ECB
SEPA: Significant progress made but concerns need to be addressed without delay
(Sixth SEPA progress report)
November 24, 2008 · No Comments
Release here.
In the sixth progress report on the Single Euro Payments Area (SEPA), published today, the Governing Council of the ECB welcomed the evident progress made on this project, but emphasised that work urgently remains to be done to ensure the success of SEPA. The sixth progress report also contains a list of “Ten milestones for SEPA implementation and migration”.
There have been many new developments since the publication of the fifth progress report in July 2007. The successful launch of SEPA in January 2008 was a major achievement. With the introduction of the SEPA Credit Transfer (SCT) on 28 January 2008, the first benefits of SEPA have materialised for banks and, more importantly, for the end-users of payment services. National SEPA implementation and migration plans have been drafted and published. Most automated clearing houses that were processing credit transfers in euro are now able to process SCTs. In January 2008, SEPA was also started for card payments, but more effort is needed in this area if the goals of the SEPA project are to be achieved, for example the emergence of at least one additional European card scheme. Preparations for the third type of payment instrument, SEPA Direct Debit (SDD), have continued over the past year, resulting in the adoption of the Rulebooks. The launch of the SDD is scheduled for 1 November 2009. Nevertheless, the launch of this important SEPA instrument needs to be accompanied by clarification between the banking sector and the relevant competition authorities with regard to the possible interbank pricing models. This issue needs to be resolved urgently. Finally, considerable progress has been made in the fields of e-payments and mobile payments.
The areas which require most attention now are: a) the timely launch of the SEPA Direct Debit on 1 November 2009; b) the emergence of an additional European card scheme; and c) measures to stimulate migration to SEPA Credit Transfer and SEPA Direct Debit, including the setting of a realistic, but ambitious end-date for national credit transfers and direct debits.
The key messages of this report, which should be followed up by the market to ensure the success of SEPA, are as follows:
1. Banks need to ensure more communication, clear product offerings and the delivery of a consistent customer experience in order to stimulate the uptake of SEPA Credit Transfer by all customers, with public administrations, in particular, becoming early adopters.
2. The remaining obstacles to a timely launch of SEPA Direct Debit should be overcome. To move forward, solutions must be found urgently, e.g. by providing clarity on the launch date, ensuring the continued validity of existing mandates, meeting customer requirements, increasing communication efforts and closing the debate on the multilateral interchange fee.
3. SEPA needs to enable end-to-end straight-through-processing (whereby payments are processed smoothly and without manual intervention) and to move beyond core and basic products by embracing innovative products and services, such as m-payments, e-payments, e-invoicing, etc.
4. The setting of a realistic, but ambitious end-date for the migration to SCT and SDD is a necessary step in order to reap the benefits of SEPA early.
5. A more ambitious approach needs to be taken towards the SEPA for Cards and supporting market initiatives to create a European card scheme.
6. The European payment industry should ensure that it has adequate influence over the SEPA cards standards, which should preferably be non-proprietary standards – The EPC is to advance the SEPA cards standardisation programme.
7. Security is the basis for trust in SEPA payments, and all stakeholders need to continue and even intensify their efforts.
8. Infrastructures are leading by example, but the remaining restrictions on interoperability should be removed.
9. Good governance of the SEPA project requires changes to the EPC’s mandate and organisation. One short-term step would be to strengthen the EPC’s Secretariat so that it can adequately support the EPC in its many tasks. In the medium to longer term, more substantial changes are needed to improve the EPC’s effectiveness, transparency and accountability.
10. Clarity and certainty with regard to the SEPA tasks: the SEPA implementation and migration milestones provide a list of concrete tasks that the Eurosystem expects to be fulfilled to ensure the success of the SEPA project.
The addressees of the report are not only the banks and future payment institutions, but all relevant stakeholders, such as corporates, public administrations, merchants and consumers.
The report, which is being published in English today, will be available in other official Community languages in due course.
(Sixth SEPA progress report)
November 24, 2008 · No Comments
Release here.
In the sixth progress report on the Single Euro Payments Area (SEPA), published today, the Governing Council of the ECB welcomed the evident progress made on this project, but emphasised that work urgently remains to be done to ensure the success of SEPA. The sixth progress report also contains a list of “Ten milestones for SEPA implementation and migration”.
There have been many new developments since the publication of the fifth progress report in July 2007. The successful launch of SEPA in January 2008 was a major achievement. With the introduction of the SEPA Credit Transfer (SCT) on 28 January 2008, the first benefits of SEPA have materialised for banks and, more importantly, for the end-users of payment services. National SEPA implementation and migration plans have been drafted and published. Most automated clearing houses that were processing credit transfers in euro are now able to process SCTs. In January 2008, SEPA was also started for card payments, but more effort is needed in this area if the goals of the SEPA project are to be achieved, for example the emergence of at least one additional European card scheme. Preparations for the third type of payment instrument, SEPA Direct Debit (SDD), have continued over the past year, resulting in the adoption of the Rulebooks. The launch of the SDD is scheduled for 1 November 2009. Nevertheless, the launch of this important SEPA instrument needs to be accompanied by clarification between the banking sector and the relevant competition authorities with regard to the possible interbank pricing models. This issue needs to be resolved urgently. Finally, considerable progress has been made in the fields of e-payments and mobile payments.
The areas which require most attention now are: a) the timely launch of the SEPA Direct Debit on 1 November 2009; b) the emergence of an additional European card scheme; and c) measures to stimulate migration to SEPA Credit Transfer and SEPA Direct Debit, including the setting of a realistic, but ambitious end-date for national credit transfers and direct debits.
The key messages of this report, which should be followed up by the market to ensure the success of SEPA, are as follows:
1. Banks need to ensure more communication, clear product offerings and the delivery of a consistent customer experience in order to stimulate the uptake of SEPA Credit Transfer by all customers, with public administrations, in particular, becoming early adopters.
2. The remaining obstacles to a timely launch of SEPA Direct Debit should be overcome. To move forward, solutions must be found urgently, e.g. by providing clarity on the launch date, ensuring the continued validity of existing mandates, meeting customer requirements, increasing communication efforts and closing the debate on the multilateral interchange fee.
3. SEPA needs to enable end-to-end straight-through-processing (whereby payments are processed smoothly and without manual intervention) and to move beyond core and basic products by embracing innovative products and services, such as m-payments, e-payments, e-invoicing, etc.
4. The setting of a realistic, but ambitious end-date for the migration to SCT and SDD is a necessary step in order to reap the benefits of SEPA early.
5. A more ambitious approach needs to be taken towards the SEPA for Cards and supporting market initiatives to create a European card scheme.
6. The European payment industry should ensure that it has adequate influence over the SEPA cards standards, which should preferably be non-proprietary standards – The EPC is to advance the SEPA cards standardisation programme.
7. Security is the basis for trust in SEPA payments, and all stakeholders need to continue and even intensify their efforts.
8. Infrastructures are leading by example, but the remaining restrictions on interoperability should be removed.
9. Good governance of the SEPA project requires changes to the EPC’s mandate and organisation. One short-term step would be to strengthen the EPC’s Secretariat so that it can adequately support the EPC in its many tasks. In the medium to longer term, more substantial changes are needed to improve the EPC’s effectiveness, transparency and accountability.
10. Clarity and certainty with regard to the SEPA tasks: the SEPA implementation and migration milestones provide a list of concrete tasks that the Eurosystem expects to be fulfilled to ensure the success of the SEPA project.
The addressees of the report are not only the banks and future payment institutions, but all relevant stakeholders, such as corporates, public administrations, merchants and consumers.
The report, which is being published in English today, will be available in other official Community languages in due course.
SEPA? The ECB's point of view
Do you SEPA?The ECB's point of viewBy Banque Centrale Européenne (www.ecb.int) - October 27, 08 at 14:19 | |
ECB
Keynote speech at the 3rd International Payments Summit
Milan, 27 October 2008
Introduction
What does “to SEPA” mean? Does it mean to follow a fashion or to pay lip service to an idea? To me, it means more than that: it means being fully committed to creating a more integrated retail payments market in Europe, enabling competition and innovation, and in general making retail payments more efficient, safer and easier to use.
People may wonder why, at a time of unprecedented financial turmoil, we continue to focus our attention and energy on payment issues. I would argue that the payments business, which generates about one-quarter of all banking revenue [1], is rock-solid. At a time when banks’ other sources of income are more volatile, they can count on reliable and regular revenues being generated through payment services. So far, it appears that banks that are active as universal banks have been able to weather the crisis better than specialised banks.
Even at the current juncture, European integration of trade will continue, and the integration of payments has to follow suit. Moreover, there is a need for SEPA at such a time of distress, as it will contribute to a smooth and safe underlying payments infrastructure for stable transactions at the retail banking level and thus to safeguarding financial stability.
At last years’ International Payments Summit, SEPA was in its warm-up phase. Is it now going full-steam ahead, or has the engine stalled? Let’s have a look at the status of the different components of the vehicle, namely SEPA Credit Transfer (SCT), SEPA Direct Debit (SDD) and SEPA for Cards.
Do you SCT?
In January 2008, we all welcomed the launch of the SEPA Credit Transfer. Now, at a time when banks are under stress, it is tempting to slow down the process of modernisation and innovation of payment services. This reaction is understandable, but, actually, we need to respond in precisely the opposite way.
However, the ongoing financial turmoil is only part of the story. The gap still needs to be closed between being technically ready to send and receive SCTs and actively offering user-friendly SCT products and services to customers. Thus, customer experience of the SCT cannot yet be fully compared with national credit transfers. For instance, it is not always possible to make payments with a scheduled execution date and/or periodic payments. The online banking applications for the SCT – if it is available at all – are sometimes more complex than those for national credit transfers. Often, the SCT is offered in the same way as other cross-border instruments for payments to countries outside Europe, although it should be considered a domestic payment instrument.
Based on data collected by the Eurosystem, half a year after the launch of the SCT, SCT transactions account for only about 1.4% of total credit transfers in the euro area. The use of SCTs seems to be mainly restricted to cross-border transactions. Although corporates which, together with public administrations may bring a critical mass of payments to the SEPA environment, claim that they can see the benefits of SEPA, they are still taking a cautious approach towards its actual implementation. One of the major difficulties cited relates to obtaining IBAN and BIC information. In this respect, I am happy to observe that in Italy the IBAN became the single, exclusive standard used to identify current accounts in the execution of domestic payments as of January 2008. I expect that the provision of good quality services for deriving IBAN from national account numbers and reliable directory services will also help to overcome this obstacle in other countries.
Do you SDD?
Although some SEPA Direct Debit pilot projects have been launched by banks, infrastructures and IT providers, it cannot be denied that the SDD is having some engine trouble. I have recently discussed the three main problems faced by the SDD, namely the migration of mandates, the uncertainty of users and the multilateral interchange fee for direct debits.
It is claimed that it is a heavy burden to have to sign new mandates when switching from the national direct debit schemes to the SEPA direct debit schemes. Nevertheless, some countries have already found a solution to ensure the continued legal validity of existing direct debit mandates, while others are still looking for an answer. The European Commission and the European Payments Council are gathering information on this issue, and I would welcome more transparency in this regard.
Owing to different national business practices, many opinions were voiced, in particular about the SDD, even before the product was visible: “it is not safe enough”; “it is too safe to be efficient and inexpensive”; “it is not modern enough”; “it is too different from previous procedures”. Consequently, direct debit users are somewhat uncertain about what form the SDD would take. All users, including here in Italy, should be reassured that their special needs can be met by means of individual offers from their banks, by transparent additional optional services that are offered by groups of banks or by additional services offered at the level of whole banking communities.
Users are obviously concerned about prices. They will only embrace the SDD scheme if it is clear that the prices of these services will not go up. In this respect, the review of EU Regulation 2560 [2] will extend its scope from credit transfers and card payments to include direct debits. Thus, the price of making a cross-border direct debit will not exceed that of making a national direct debit. Increasing the national prices would clearly be against the spirit of the review and would severely affect banks’ reputations and credibility in the eyes of their customers.
Costs and prices are not only a matter of concern in the customer-to-bank domain, but also in the bank-to-bank domain. The multilateral interchange fee for the SDD has proven to be a controversial issue. To encourage the market to move ahead, the European Commission and the European Central Bank have proposed an interim solution. The objective of the interim solution is to have, right from the start, a level playing-field in place for the both the SDD scheme and the national, legacy direct debit schemes.
Allowing a properly justified multilateral interchange fee (MIF) for cross-border SDDs during an interim phase would help to get the engine running. At national level, the existing legacy MIF could remain in place and be applied to both legacy direct debits and SDDs. Any changes to the legacy MIF should be applicable to the SDD scheme, too. Given that most direct debits will initially still be conducted at the national level, the vast majority of direct debits would thus be treated in the same manner. Customers, in particular, creditors, would not need to be afraid of price increases.
In the long term, an alternative compensation model for SDD will have to be devised, as it is understood that the transaction-based MIF will have to be phased out for both the SDD and for legacy direct debits at both national and cross-border levels.
Different models can be conceived or are already in use for covering costs and providing incentives for those involved in offering and using direct debits. If this compensation is based on a proper calculation and methodology, it should also be acceptable to the competition authorities.
Unfortunately, public perception of the problems faced by the SDD has deflected attention away from the considerable achievement that the design of SEPA Direct Debit represents. For the first time, customers will have access to a direct debit instrument that can be used not only at the national level, but also on a pan-European level. Banks, CSMs (clearing and settlement mechanisms) and IT providers have launched pilot projects for the SEPA Direct Debit, and I am convinced that SDD will bring great benefits to its users in 2009.
Do you SEPA for Cards?
The SEPA for Cards scheme started officially on 1 January 2008. However, although several individual card schemes have adapted their rules to SEPA requirements, SEPA for Cards is difficult to perceive and is even invisible to merchants and cardholders. This is mainly owing to the fact that the EPC did not create a scheme for card payments, but rather a framework, which owing to its more general nature, leaves some room for interpretation.
The Eurosystem has repeatedly voiced its expectation that the banking industry will set up at least one additional European card scheme. At the moment, I know that several projects are underway on one or more European card schemes, and I hope that they will soon release their prototypes to the public. For the interlinking of existing schemes, a degree of determination is required to move beyond an interim solution towards a long-term merging of the schemes.
As with SEPA Direct Debit, the main obstacle to the work towards a European card solution seems to be the gridlock regarding the future of the multilateral interchange fee.
To bring SEPA for Cards to fruition, it is necessary to surmount these obstacles, as national card schemes are at risk of extinction, and competition might decrease to a duopoly of international schemes with similar business models.
Again, discussion of these obstacles should not divert attention away from the great benefits that SEPA for Cards will bring to banks, merchants and cardholders. Better security standards, more choice and higher acceptance levels will be an incentive to increase card usage which, in turn, also has the potential to lower cash usage, which can be quite costly for banks and for society as a whole.
Who drives SEPA?
Having discussed what “to SEPA” means, let me turn to the question of who is in the driving seat of the SEPA process. The creation of SEPA is a major European policy objective for the European Commission and the Eurosystem. Thus, we are closely monitoring the developments, assessing the state of preparation and providing guidance to the market where necessary. Here, I refer back to the guidance we recently gave in the SDD dossier. Also, in the upcoming weeks, we will have a further exchange of views on the possibility and necessity of a migration end-date for the SCT and the SDD.
Notwithstanding the aforementioned political objective, I wish to emphasise that the establishment of SEPA is a market-driven project. It is up to the banks to win over their customers and convince them through marketable and user-friendly SEPA products and services. Likewise, service providers to banks, such as clearing and settlement infrastructures, and information and communication technology suppliers are expected to drive SEPA. One of the organisers of this Summit, SIA-SSB, has underlined its commitment to the SEPA project. It is one of the first CSMs to have published its self-assessment against the Eurosystem’s Terms of reference for the SEPA-compliance of retail payment infrastructures. I expect others to soon follow suit.
Who will “go SEPA”?
The expectation is for SEPA to be more than a policy vision. It should address the needs of all users of payment services, irrespective of whether they are corporates, SMEs, merchants, public administrations or retail customers. However, in order to reap the benefits of SEPA, users need to “go SEPA”. By “going SEPA”, I mean be ready to change: change habits, change national practices, even change focus, if necessary.
For corporates, SEPA is expected to enable bank relationships and account structures to be rationalised. A centralised treasury, better liquidity management and optimised payment processing will be made possible. Even for smaller, mainly nationally-oriented corporates, SEPA is expected to provide benefits as competition in the banking sector will increase, leading to a broader range of banks and banking services to choose from. However, in order to realise these benefits, corporates may have to adapt their customer-to-bank interfaces and internal processes to SEPA standards. The direct cost of making these adaptations might be considerable. Another reason for the reluctance to “go SEPA” that I touched upon earlier is the difficulty of obtaining the IBAN and BIC information of business partners and clients.
Public administrations, i.e. tax authorities, customs and social security systems, initiate and receive large volumes of payments for salaries, social benefits, taxes, pensions, etc. As political actors, it is essential that public administrations “go SEPA”. I understand that there is quite some frustration on the part of the market regarding the lack of operational involvement of public administrations to date. Yet there are countries where public administrations do participate closely in SEPA implementation structures and actively promote SEPA, for example through the mass distribution of information on SEPA in letters regarding taxation or the provision of dedicated web pages explaining SEPA to citizens. This is what I understand by “going SEPA”.
Will SEPA keep going?
At the moment, SEPA is at a crossroads. Contention over sticky issues, such as the interchange fees for card payments and the SDD, has the potential to stall progress in other areas of the project. Waiting for a final verdict and insisting on positions that will not be sustainable will lead the project up a dead-end street. SEPA will only get up and running if appropriate action is taken in a timely manner. Before I conclude, let me mention three crucial action points:
a migration end-date for SCT and SDD;
communication; and
eSEPA.
Migration end-date for SCT and SDD
For SEPA to be ultimately successful, it is important to have a schedule for replacing the national payment instruments with SEPA payment instruments. We all know that it is inefficient and costly if two schemes continue to run in parallel for a prolonged period of time. Dual processing will not generate the economies of scale that SEPA is capable of delivering and will hinder stakeholders in fully reaping its benefits. Maintaining national instruments means that fragmentation along national borders will be preserved.
Continued national fragmentation will prevent the opening of the European retail market to pan-European competition. Hence, the focus in the debate on a migration end-date for SCT and SDD from a competition authorities’ point of view should not be on the setting of an end-date, but on the consequences if no end-date is set. Currently, different options for a migration end-date are being discussed. A migration end-date, whether it is staggered by individual instrument or common to both the SCT and the SDD, may be achieved through self-regulation by the banks or through regulation by the authorities. Banks and regulation authorities will discuss what is the best way forward. The migration end-date(s) should be communicated in early 2009.
Communication
The public at large still knows very little about SEPA and its advantages. Yet, users need to know more about SEPA, SEPA instruments and the different possibilities that exist to add features to core schemes so that they fulfil specific needs. In short, information about SEPA needs to be communicated more effectively to users: SEPA must be “sold” to users. Continuous and increased efforts are called for to explain the changes and advantages that SEPA will bring.
It is up to the banking industry to provide more information to customers and to convince them with concrete, marketable and high-quality offers. Banks have direct contact with their customers and are best placed to inform them. Naturally, public authorities should also play a role in disseminating information and lead by example by actually using SEPA products. However, it is crucial for banks to effectively communicate what SEPA is about to users.
eSEPA
SEPA does not stop at the development and implementation of the core SEPA payment schemes. In order to ensure a competitive, forward-looking and innovative SEPA, it is necessary to develop Additional Optional Services (AOS) that add features to the core SEPA payment schemes. Designing and offering payment services for specific contexts and channels will allow customers to realise cost-savings, reduce their risk and save liquidity. To be concrete, this is about priority payments, e-invoicing and e-reconciliation, mobile payments or payments at online merchants. Studies have shown that e-services promise substantial economic benefits both on the demand and the supply side. Thus, I expect that, in the future, this International Payments Summit will change its slogan from “Do you SEPA?” to “Do you eSEPA?”
Conclusion
I am convinced that SEPA is more than just a passing fad. It acts as an engine for creating a more integrated retail payments market in Europe, enabling competition and innovation, and making retail payments in general more efficient, safer and easier for users. Let’s keep it running, let’s SEPA!
--------------------------------------------------------------------------------
[1] Source: European Payment Profit Pool Analysis, McKinsey & Company, 2005.
[2] Regulation (EC) No 2560/2001 of the European Parliament and of the Council of 19 December 2001 on cross-border payments in euro.
European Central Bank
Directorate Communications
Press and Information Division
Kaiserstrasse 29, D-60311 Frankfurt am Main
Tel.: +49 69 1344 7455, Fax: +49 69 1344 7404
Internet: http://www.ecb.europa.eu
Keynote speech at the 3rd International Payments Summit
Milan, 27 October 2008
Introduction
What does “to SEPA” mean? Does it mean to follow a fashion or to pay lip service to an idea? To me, it means more than that: it means being fully committed to creating a more integrated retail payments market in Europe, enabling competition and innovation, and in general making retail payments more efficient, safer and easier to use.
People may wonder why, at a time of unprecedented financial turmoil, we continue to focus our attention and energy on payment issues. I would argue that the payments business, which generates about one-quarter of all banking revenue [1], is rock-solid. At a time when banks’ other sources of income are more volatile, they can count on reliable and regular revenues being generated through payment services. So far, it appears that banks that are active as universal banks have been able to weather the crisis better than specialised banks.
Even at the current juncture, European integration of trade will continue, and the integration of payments has to follow suit. Moreover, there is a need for SEPA at such a time of distress, as it will contribute to a smooth and safe underlying payments infrastructure for stable transactions at the retail banking level and thus to safeguarding financial stability.
At last years’ International Payments Summit, SEPA was in its warm-up phase. Is it now going full-steam ahead, or has the engine stalled? Let’s have a look at the status of the different components of the vehicle, namely SEPA Credit Transfer (SCT), SEPA Direct Debit (SDD) and SEPA for Cards.
Do you SCT?
In January 2008, we all welcomed the launch of the SEPA Credit Transfer. Now, at a time when banks are under stress, it is tempting to slow down the process of modernisation and innovation of payment services. This reaction is understandable, but, actually, we need to respond in precisely the opposite way.
However, the ongoing financial turmoil is only part of the story. The gap still needs to be closed between being technically ready to send and receive SCTs and actively offering user-friendly SCT products and services to customers. Thus, customer experience of the SCT cannot yet be fully compared with national credit transfers. For instance, it is not always possible to make payments with a scheduled execution date and/or periodic payments. The online banking applications for the SCT – if it is available at all – are sometimes more complex than those for national credit transfers. Often, the SCT is offered in the same way as other cross-border instruments for payments to countries outside Europe, although it should be considered a domestic payment instrument.
Based on data collected by the Eurosystem, half a year after the launch of the SCT, SCT transactions account for only about 1.4% of total credit transfers in the euro area. The use of SCTs seems to be mainly restricted to cross-border transactions. Although corporates which, together with public administrations may bring a critical mass of payments to the SEPA environment, claim that they can see the benefits of SEPA, they are still taking a cautious approach towards its actual implementation. One of the major difficulties cited relates to obtaining IBAN and BIC information. In this respect, I am happy to observe that in Italy the IBAN became the single, exclusive standard used to identify current accounts in the execution of domestic payments as of January 2008. I expect that the provision of good quality services for deriving IBAN from national account numbers and reliable directory services will also help to overcome this obstacle in other countries.
Do you SDD?
Although some SEPA Direct Debit pilot projects have been launched by banks, infrastructures and IT providers, it cannot be denied that the SDD is having some engine trouble. I have recently discussed the three main problems faced by the SDD, namely the migration of mandates, the uncertainty of users and the multilateral interchange fee for direct debits.
It is claimed that it is a heavy burden to have to sign new mandates when switching from the national direct debit schemes to the SEPA direct debit schemes. Nevertheless, some countries have already found a solution to ensure the continued legal validity of existing direct debit mandates, while others are still looking for an answer. The European Commission and the European Payments Council are gathering information on this issue, and I would welcome more transparency in this regard.
Owing to different national business practices, many opinions were voiced, in particular about the SDD, even before the product was visible: “it is not safe enough”; “it is too safe to be efficient and inexpensive”; “it is not modern enough”; “it is too different from previous procedures”. Consequently, direct debit users are somewhat uncertain about what form the SDD would take. All users, including here in Italy, should be reassured that their special needs can be met by means of individual offers from their banks, by transparent additional optional services that are offered by groups of banks or by additional services offered at the level of whole banking communities.
Users are obviously concerned about prices. They will only embrace the SDD scheme if it is clear that the prices of these services will not go up. In this respect, the review of EU Regulation 2560 [2] will extend its scope from credit transfers and card payments to include direct debits. Thus, the price of making a cross-border direct debit will not exceed that of making a national direct debit. Increasing the national prices would clearly be against the spirit of the review and would severely affect banks’ reputations and credibility in the eyes of their customers.
Costs and prices are not only a matter of concern in the customer-to-bank domain, but also in the bank-to-bank domain. The multilateral interchange fee for the SDD has proven to be a controversial issue. To encourage the market to move ahead, the European Commission and the European Central Bank have proposed an interim solution. The objective of the interim solution is to have, right from the start, a level playing-field in place for the both the SDD scheme and the national, legacy direct debit schemes.
Allowing a properly justified multilateral interchange fee (MIF) for cross-border SDDs during an interim phase would help to get the engine running. At national level, the existing legacy MIF could remain in place and be applied to both legacy direct debits and SDDs. Any changes to the legacy MIF should be applicable to the SDD scheme, too. Given that most direct debits will initially still be conducted at the national level, the vast majority of direct debits would thus be treated in the same manner. Customers, in particular, creditors, would not need to be afraid of price increases.
In the long term, an alternative compensation model for SDD will have to be devised, as it is understood that the transaction-based MIF will have to be phased out for both the SDD and for legacy direct debits at both national and cross-border levels.
Different models can be conceived or are already in use for covering costs and providing incentives for those involved in offering and using direct debits. If this compensation is based on a proper calculation and methodology, it should also be acceptable to the competition authorities.
Unfortunately, public perception of the problems faced by the SDD has deflected attention away from the considerable achievement that the design of SEPA Direct Debit represents. For the first time, customers will have access to a direct debit instrument that can be used not only at the national level, but also on a pan-European level. Banks, CSMs (clearing and settlement mechanisms) and IT providers have launched pilot projects for the SEPA Direct Debit, and I am convinced that SDD will bring great benefits to its users in 2009.
Do you SEPA for Cards?
The SEPA for Cards scheme started officially on 1 January 2008. However, although several individual card schemes have adapted their rules to SEPA requirements, SEPA for Cards is difficult to perceive and is even invisible to merchants and cardholders. This is mainly owing to the fact that the EPC did not create a scheme for card payments, but rather a framework, which owing to its more general nature, leaves some room for interpretation.
The Eurosystem has repeatedly voiced its expectation that the banking industry will set up at least one additional European card scheme. At the moment, I know that several projects are underway on one or more European card schemes, and I hope that they will soon release their prototypes to the public. For the interlinking of existing schemes, a degree of determination is required to move beyond an interim solution towards a long-term merging of the schemes.
As with SEPA Direct Debit, the main obstacle to the work towards a European card solution seems to be the gridlock regarding the future of the multilateral interchange fee.
To bring SEPA for Cards to fruition, it is necessary to surmount these obstacles, as national card schemes are at risk of extinction, and competition might decrease to a duopoly of international schemes with similar business models.
Again, discussion of these obstacles should not divert attention away from the great benefits that SEPA for Cards will bring to banks, merchants and cardholders. Better security standards, more choice and higher acceptance levels will be an incentive to increase card usage which, in turn, also has the potential to lower cash usage, which can be quite costly for banks and for society as a whole.
Who drives SEPA?
Having discussed what “to SEPA” means, let me turn to the question of who is in the driving seat of the SEPA process. The creation of SEPA is a major European policy objective for the European Commission and the Eurosystem. Thus, we are closely monitoring the developments, assessing the state of preparation and providing guidance to the market where necessary. Here, I refer back to the guidance we recently gave in the SDD dossier. Also, in the upcoming weeks, we will have a further exchange of views on the possibility and necessity of a migration end-date for the SCT and the SDD.
Notwithstanding the aforementioned political objective, I wish to emphasise that the establishment of SEPA is a market-driven project. It is up to the banks to win over their customers and convince them through marketable and user-friendly SEPA products and services. Likewise, service providers to banks, such as clearing and settlement infrastructures, and information and communication technology suppliers are expected to drive SEPA. One of the organisers of this Summit, SIA-SSB, has underlined its commitment to the SEPA project. It is one of the first CSMs to have published its self-assessment against the Eurosystem’s Terms of reference for the SEPA-compliance of retail payment infrastructures. I expect others to soon follow suit.
Who will “go SEPA”?
The expectation is for SEPA to be more than a policy vision. It should address the needs of all users of payment services, irrespective of whether they are corporates, SMEs, merchants, public administrations or retail customers. However, in order to reap the benefits of SEPA, users need to “go SEPA”. By “going SEPA”, I mean be ready to change: change habits, change national practices, even change focus, if necessary.
For corporates, SEPA is expected to enable bank relationships and account structures to be rationalised. A centralised treasury, better liquidity management and optimised payment processing will be made possible. Even for smaller, mainly nationally-oriented corporates, SEPA is expected to provide benefits as competition in the banking sector will increase, leading to a broader range of banks and banking services to choose from. However, in order to realise these benefits, corporates may have to adapt their customer-to-bank interfaces and internal processes to SEPA standards. The direct cost of making these adaptations might be considerable. Another reason for the reluctance to “go SEPA” that I touched upon earlier is the difficulty of obtaining the IBAN and BIC information of business partners and clients.
Public administrations, i.e. tax authorities, customs and social security systems, initiate and receive large volumes of payments for salaries, social benefits, taxes, pensions, etc. As political actors, it is essential that public administrations “go SEPA”. I understand that there is quite some frustration on the part of the market regarding the lack of operational involvement of public administrations to date. Yet there are countries where public administrations do participate closely in SEPA implementation structures and actively promote SEPA, for example through the mass distribution of information on SEPA in letters regarding taxation or the provision of dedicated web pages explaining SEPA to citizens. This is what I understand by “going SEPA”.
Will SEPA keep going?
At the moment, SEPA is at a crossroads. Contention over sticky issues, such as the interchange fees for card payments and the SDD, has the potential to stall progress in other areas of the project. Waiting for a final verdict and insisting on positions that will not be sustainable will lead the project up a dead-end street. SEPA will only get up and running if appropriate action is taken in a timely manner. Before I conclude, let me mention three crucial action points:
a migration end-date for SCT and SDD;
communication; and
eSEPA.
Migration end-date for SCT and SDD
For SEPA to be ultimately successful, it is important to have a schedule for replacing the national payment instruments with SEPA payment instruments. We all know that it is inefficient and costly if two schemes continue to run in parallel for a prolonged period of time. Dual processing will not generate the economies of scale that SEPA is capable of delivering and will hinder stakeholders in fully reaping its benefits. Maintaining national instruments means that fragmentation along national borders will be preserved.
Continued national fragmentation will prevent the opening of the European retail market to pan-European competition. Hence, the focus in the debate on a migration end-date for SCT and SDD from a competition authorities’ point of view should not be on the setting of an end-date, but on the consequences if no end-date is set. Currently, different options for a migration end-date are being discussed. A migration end-date, whether it is staggered by individual instrument or common to both the SCT and the SDD, may be achieved through self-regulation by the banks or through regulation by the authorities. Banks and regulation authorities will discuss what is the best way forward. The migration end-date(s) should be communicated in early 2009.
Communication
The public at large still knows very little about SEPA and its advantages. Yet, users need to know more about SEPA, SEPA instruments and the different possibilities that exist to add features to core schemes so that they fulfil specific needs. In short, information about SEPA needs to be communicated more effectively to users: SEPA must be “sold” to users. Continuous and increased efforts are called for to explain the changes and advantages that SEPA will bring.
It is up to the banking industry to provide more information to customers and to convince them with concrete, marketable and high-quality offers. Banks have direct contact with their customers and are best placed to inform them. Naturally, public authorities should also play a role in disseminating information and lead by example by actually using SEPA products. However, it is crucial for banks to effectively communicate what SEPA is about to users.
eSEPA
SEPA does not stop at the development and implementation of the core SEPA payment schemes. In order to ensure a competitive, forward-looking and innovative SEPA, it is necessary to develop Additional Optional Services (AOS) that add features to the core SEPA payment schemes. Designing and offering payment services for specific contexts and channels will allow customers to realise cost-savings, reduce their risk and save liquidity. To be concrete, this is about priority payments, e-invoicing and e-reconciliation, mobile payments or payments at online merchants. Studies have shown that e-services promise substantial economic benefits both on the demand and the supply side. Thus, I expect that, in the future, this International Payments Summit will change its slogan from “Do you SEPA?” to “Do you eSEPA?”
Conclusion
I am convinced that SEPA is more than just a passing fad. It acts as an engine for creating a more integrated retail payments market in Europe, enabling competition and innovation, and making retail payments in general more efficient, safer and easier for users. Let’s keep it running, let’s SEPA!
--------------------------------------------------------------------------------
[1] Source: European Payment Profit Pool Analysis, McKinsey & Company, 2005.
[2] Regulation (EC) No 2560/2001 of the European Parliament and of the Council of 19 December 2001 on cross-border payments in euro.
European Central Bank
Directorate Communications
Press and Information Division
Kaiserstrasse 29, D-60311 Frankfurt am Main
Tel.: +49 69 1344 7455, Fax: +49 69 1344 7404
Internet: http://www.ecb.europa.eu
By Banque Centrale Européenne (www.ecb.int)
Tuesday 21 October 2008
Single Euro Payments Area : EACT favours setting an end date for SEPA Credit Transfer
CFO News
17 October 2008EACT strongly emphasizes that the completion of SEPA is a prerequisite to an efficient working capital management in corporates, opening the door to cross border end-to-end straight through processing.
Corporate treasurers, like other stakeholders, have been invited by the European Payments Council in a Customers Stakeholders Forum to review and enhance the SEPA rulebooks developed by the banks during the past years. SEPA Credit Transfer seems to be at the time the only mature instrument almost satisfying all stakeholders.
In order to achieve a more efficient and transparent payments landscape, EACT recognizes the need to agree with all market participants on a deadline by which the legacy systems will be deactivated. This will enable all stakeholders a proper, harmonized and meaningful migration planning. As there are only a few but none the less important enhancements needed to make the SCT an attractive payment instrument for the corporate treasurers (see the notes for Editors), the EACT proposes to commit to an end date linked to the solution of the issues indicated by EACT, their incorporation in a future SCT Rulebook, and the market availability of the SCT features requested.
To ensure sufficient time for controlling the risk and cost of the transition to SCT, a 24 month period after the rulebook availability and an 18 month period after market availability is necessary.
In order to make a smooth transition, EACT strongly recommends that the switch takes place anytime between March and September in order to avoid year-end complications.
Olivier Brissaud, the EACT board member in charge of European Affairs, has played an active part as co-chair of the European Payments Council’s Customer Stakeholders Forum. Olivier Brissaud said: “It is vital that introduction of the SEPA Credit Transfer takes place at an agreed date and only after the EPC has completed its rulebook and the banking market has fully addressed the outstanding questions. Failure to resolve these remaining issues will create unacceptable risks and costs for the corporate community”.
Note for Editors :
EACT has identified the following enhancements to the SCT Rulebooks:
1. "Same Day Value" payments and “Guaranteed value date to beneficiary”
2. “Optional” BIC codes
3. Standard Bank Reporting of SEPA data
4. ISO and non-ISO 140 chars EACT Remittance information
5. Check Unique Entity Identifier (UEI) of beneficiary *
6. Report “Requested Execution Date” and remove semantic confusion
7. SEPA Banks agree to an end-date to accept ISO 20022 Payment Initiation messages.
NOTES : all seven points are in EPC’s remit.
*Point N. 5 requires an additional explanation.
A Unique Entity Identifier (UEI) is a long-standing request of the EACT. In SEPA, a code is needed to identify creditors of SDD and, we maintain, all account
owners. This code should be an “international” one. ISO will soon examine a proposal in this sense. EACT request to the EPC is an AOS allowing banks to credit an SCT to an account based on the IBAN and the UEI, if this item is present in the payment order. No change is required in the SCT format (the field is already provided in the message).
German Operators Launch Mobile Payments Service
Cellular news
17th October 2008
Two German operators, O2 and Vodafone are launching a mobile payment service today (Friday), branded as mpass. The new mpass service combines the proven direct debiting scheme with a SMS payment confirmation on the mobile phone. In practice, this means that customers will in future be able to order a product in the internet shop or on the mobile portal. All they have to do is enter the mobile number and a mpass PIN of their choice. 
17th October 2008
Two German operators, O2 and Vodafone are launching a mobile payment service today (Friday), branded as mpass. The new mpass service combines the proven direct debiting scheme with a SMS payment confirmation on the mobile phone. In practice, this means that customers will in future be able to order a product in the internet shop or on the mobile portal. All they have to do is enter the mobile number and a mpass PIN of their choice.
The customers will subsequently receive a SMS which they confirm and get the amount debited from their bank account automatically.
The operators said that payment through two independent communications media significantly increases the security as entering sensitive and personal data like bank details and credit card numbers is not required anymore.
Lutz Schüler, General Manager, Marketing & Sales for Telefónica O2 Germany: "Our customers ask for simple and smart solutions. Our payment system takes account of this request. Effective immediately and without the need to register, the system offers about 14 million contract customers of Vodafone and O2 the possibility to pay online in an easy, rapid and secure manner - at home and on the go."
Dr. Peter Walz, Member of the Executive Committee of Vodafone Deutschland and Director Arcor AG Strategy and Partner Companies: "The innovative payment service not only meets customer requirements. In addition, the payment method offers retailers many benefits like more efficient accounting processes or the acquisition of new customers who have been skeptical towards shopping and paying in cyberspace so far."
Tuesday 7 October 2008
Do European businesses seize SEPA opportunities? Survey conducted by Atos Consulting and Deloitte gives answers
WEBWIRE – Tuesday, September 30, 2008
Do European businesses seize SEPA opportunities? Survey conducted by Atos Consulting and Deloitte gives answers
Rotterdam/Utrecht, The launch of SEPA Credit Transfer in January 2007 marked the first tentative step towards the implementation of SEPA (Single Euro Payments Area). However, European businesses are insufficiently prepared for the implications of SEPA and seize its opportunities. Furthermore, the banking sector seems unable to offer reliable and adequate support to the businessworld. These are the findings of the SEPA survey conducted by Atos Consulting and Deloitte among the members of the European Association of Corporate Treasurers in 9 European countries. The full report will be presented at EuroFinance conference in Barcelona on 1 October 2008.
“This survey not only gauges the level of familiarity with SEPA among the business community, it creates familiarity at the same time”, explains Olivier Brissaud, chairman of the European Association of Corporate Treasurers.
Although the implementation of SEPA will require considerable investment, it is widely expected to be highly profitable. Various studies confidently predict revenues of between EUR 50 and EUR 175 billion over the next 6 years. Although European businesses are aware of the cost savings potential and opportunities presented by SEPA, 43% of respondents are unable to quantify the investments required, while 48% have no clear insight into the financial benefits arising from SEPA.
Banking sector missing out on golden opportunities
Whilst most respondents (84%) are familiar with SEPA, 79% are not ready to implement SEPA and 80% have failed to draw up a strategy. Banks play an important role in implementing SEPA on behalf of the business community, but are missing out on golden opportunities. Only 56% of respondents have been approached by their bank to discuss SEPA, and only 53% of banks have suggested a solution. According to respondents, only 26% of banks have suggested a suitable solution.
Seizing opportunities
"Companies are aware of the opportunities presented by SEPA. The next step is to seize these opportunities and translate them into genuine cost savings by improving cash- and treasury management via uniform pan-European transmission and via improved account management”, believes Folkert Zwinkels, partner at Deloitte.
“To further stimulate the necessary adoption of SEPA it is vital that banks join forces with appropriate partners and support businesses with suitable solutions that facilitate the successful launch of SEPA", Paul van der Knaap, partner at Atos Consulting concludes.
The aim of SEPA - an initiative of the European Commission - is to move towards a fully harmonised European payments area, in which enhanced transparency and competition will eventually result in more efficient and cheaper payment transactions. SEPA Credit Transfer (SCT), the pan-European standard in electronic transfers, was launched on 28 January 2008. The European variant of the automatic debt collection system, the SEPA Direct Debit (SDD), is expected to go live in 2009.
About Atos Origin
Atos Origin is an international information technology services company. Its business is turning client vision into results through the application of consulting, systems integration and managed operations. The company’s annual revenues are EUR 5.8 billion and it employs 50,000 people in 40 countries. Atos Origin is the Worldwide Information Technology Partner for the Olympic Games and has a client base of international blue-chip companies across all sectors. Atos Origin is quoted on the Paris Eurolist Market and trades as Atos Origin, Atos Worldline and Atos Consulting.
About Atos Consulting
Atos Consulting, the global consulting practice of Atos Origin, is a leading provider of business, process and technology consulting services. With more than 2,500 staff globally, it focuses on delivering proven, pragmatic solutions to the telecom, manufacturing, financial services and public sectors.
About Deloitte Touche Tohmatsu
Deloitte Touche Tohmatsu is an organisation of independent member firms focused on providing top-quality professional services and advice. Our service is based on a worldwide strategy for about 140 countries. The expertise of 150,000 professionals from all over the globe and the offices of our member firms helps make this a reality. Services are offered in four professional disciplines: accounting, tax advice, consulting and financial advice. Our member firms work for some of the world’s largest corporations as well as national companies, the public sector and fast-growing businesses. Deloitte Touche Tohmatsu is a Swiss Verein. Neither Deloitte Touche Tohmatsu or any of the member firms accept responsibility for the actions or negligence of other member firms. Each member firm is an independent legal unit working under ‘Deloitte’, ‘Deloitte & Touche’, ‘Deloitte Touche Tohmatsu’ or any other related name. The services outlined in this publication are provided by the member firm in question and not by Deloitte Touche Tohmatsu Verein.
Do European businesses seize SEPA opportunities? Survey conducted by Atos Consulting and Deloitte gives answers
Rotterdam/Utrecht, The launch of SEPA Credit Transfer in January 2007 marked the first tentative step towards the implementation of SEPA (Single Euro Payments Area). However, European businesses are insufficiently prepared for the implications of SEPA and seize its opportunities. Furthermore, the banking sector seems unable to offer reliable and adequate support to the businessworld. These are the findings of the SEPA survey conducted by Atos Consulting and Deloitte among the members of the European Association of Corporate Treasurers in 9 European countries. The full report will be presented at EuroFinance conference in Barcelona on 1 October 2008.
“This survey not only gauges the level of familiarity with SEPA among the business community, it creates familiarity at the same time”, explains Olivier Brissaud, chairman of the European Association of Corporate Treasurers.
Although the implementation of SEPA will require considerable investment, it is widely expected to be highly profitable. Various studies confidently predict revenues of between EUR 50 and EUR 175 billion over the next 6 years. Although European businesses are aware of the cost savings potential and opportunities presented by SEPA, 43% of respondents are unable to quantify the investments required, while 48% have no clear insight into the financial benefits arising from SEPA.
Banking sector missing out on golden opportunities
Whilst most respondents (84%) are familiar with SEPA, 79% are not ready to implement SEPA and 80% have failed to draw up a strategy. Banks play an important role in implementing SEPA on behalf of the business community, but are missing out on golden opportunities. Only 56% of respondents have been approached by their bank to discuss SEPA, and only 53% of banks have suggested a solution. According to respondents, only 26% of banks have suggested a suitable solution.
Seizing opportunities
"Companies are aware of the opportunities presented by SEPA. The next step is to seize these opportunities and translate them into genuine cost savings by improving cash- and treasury management via uniform pan-European transmission and via improved account management”, believes Folkert Zwinkels, partner at Deloitte.
“To further stimulate the necessary adoption of SEPA it is vital that banks join forces with appropriate partners and support businesses with suitable solutions that facilitate the successful launch of SEPA", Paul van der Knaap, partner at Atos Consulting concludes.
The aim of SEPA - an initiative of the European Commission - is to move towards a fully harmonised European payments area, in which enhanced transparency and competition will eventually result in more efficient and cheaper payment transactions. SEPA Credit Transfer (SCT), the pan-European standard in electronic transfers, was launched on 28 January 2008. The European variant of the automatic debt collection system, the SEPA Direct Debit (SDD), is expected to go live in 2009.
About Atos Origin
Atos Origin is an international information technology services company. Its business is turning client vision into results through the application of consulting, systems integration and managed operations. The company’s annual revenues are EUR 5.8 billion and it employs 50,000 people in 40 countries. Atos Origin is the Worldwide Information Technology Partner for the Olympic Games and has a client base of international blue-chip companies across all sectors. Atos Origin is quoted on the Paris Eurolist Market and trades as Atos Origin, Atos Worldline and Atos Consulting.
About Atos Consulting
Atos Consulting, the global consulting practice of Atos Origin, is a leading provider of business, process and technology consulting services. With more than 2,500 staff globally, it focuses on delivering proven, pragmatic solutions to the telecom, manufacturing, financial services and public sectors.
About Deloitte Touche Tohmatsu
Deloitte Touche Tohmatsu is an organisation of independent member firms focused on providing top-quality professional services and advice. Our service is based on a worldwide strategy for about 140 countries. The expertise of 150,000 professionals from all over the globe and the offices of our member firms helps make this a reality. Services are offered in four professional disciplines: accounting, tax advice, consulting and financial advice. Our member firms work for some of the world’s largest corporations as well as national companies, the public sector and fast-growing businesses. Deloitte Touche Tohmatsu is a Swiss Verein. Neither Deloitte Touche Tohmatsu or any of the member firms accept responsibility for the actions or negligence of other member firms. Each member firm is an independent legal unit working under ‘Deloitte’, ‘Deloitte & Touche’, ‘Deloitte Touche Tohmatsu’ or any other related name. The services outlined in this publication are provided by the member firm in question and not by Deloitte Touche Tohmatsu Verein.
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