Issue 5 - January 2010
SEPA for Cash
The Road ShowEC expected to harmonise rules for cross-border cash transport by road
28.01.10 BY Leonor Machado
As reported previously in this Newsletter, the EPC advocates the creation of a Single Euro Cash Area (SECA) with a view to increase the efficiency of the wholesale cash processing cycle; e.g. the processes required to put euro banknotes and coins in circulation and to transport them. In SECA, as envisioned by the EPC, cash-in-transit companies (CITs) should be able to establish cross-border cash transporting routes. However, eight years after the introduction of euro coins and banknotes CITs continue to operate exclusively within national boundaries due to existing differences between related legal regimes in Member States. To remediate the situation, the European Commission intends to introduce a proposal for a Regulation on cross-border euro cash transport by road during the second quarter of 2010. Leonor Machado reports on a set of principles developed by the EPC with a view to ensure greatest possible effectiveness of legislation in this matter.***
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Cross-border cash transport: a precondition for effective wholesale cash processing
The possibility to transport cash across borders would enable CITs to use routes between and among retail points (bank branches, ATMs and merchants, for example), National Central Bank (NCB) branches and CIT cash centres located in different Member States. To date, differences between national legal regimes on multiple aspects of cash transport including carrying of firearms by CIT staff, armouring and equipment of transport vehicles or the number of staff required during the transport, impede cross-border transport of euro cash in the internal market.
It is widely recognised however that harmonisation of related rules would significantly improve the efficiency of the wholesale cash processing cycle whilst increasing competition in the CIT market, particularly in the border regions. In addition, such harmonisation would support a main objective of the SECA initiative, e.g. convergence of National Central Bank (NCB) cash services in the euro area (see also the article "Cashing out. National Central Banks commit to optimise cash handling in SECA: a progress report"; a link to this article is set out below). Perhaps most importantly, a common legal framework would reduce the risks involved in the business of cash transport as CITs could choose the shortest and most secure route to their destination.
Following publication of a related White Paper in May 2009, the European Commission intends to introduce a proposal for a Regulation on cross-border euro cash transport by road during the second quarter of 2010. The EPC advocates taking into consideration the principles outlined below to ensure greatest possible effectiveness of such legislation.
Widest possible value type scope
Whilst the Commission's White Paper proposes to limit the scope of a Regulation on cross-border cash transport to cover euro coins and banknotes only, the EPC recommends extending the value type scope also to non-euro currencies and other precious values. The movement of these values should be allowed during any single cross-border transport together with euro cash picked up at retail points resulting in the rationalisation of daily value transports by CITs and less costs for their clients.
Regulation on cross-border euro cash transport should apply in all EU Member States, whether they are a euro country or not. This would provide equal opportunities to CITs from euro and non-euro countries to compete for cross-border routes involving various value types. In case the European Commission considers limitation of the geographical scope to the euro zone as a first step in a phased process of harmonisation, it should be ensured that CITs from neighbouring non-euro countries are allowed to compete for cross-border euro zone cash transport. The Commission, however, currently considers introducing two separate pieces of legislation: one comprehensive regulation applying to the euro-zone countries and a second regulation giving non euro-zone countries the possibility to "opt in".
License and registration validity
A CIT validly licensed and registered in one Member State should be allowed to perform cross-border cash transport if the CIT complies with the security dispositions (means of transport, firearms, personal, convoy and accompanying procedures) in force in the visited Member State. The same should apply to a CIT located in a Member State where licensing is not required if the CIT has equivalent authorisation and has effectively provided cash transport services for at least 12 months.
Duration of transport and return of a security vehicle to its Member State of origin
As regards to the duration of the journey and the return of a security vehicle to its Member State of origin, security vehicles should be granted full flexibility to leave the Member State home base, execute its itinerary throughout multiple border zones, deliver its content at a CIT centre in a neighbouring Member State at end of day and stay overnight at this particular centre (to start a new border route early next day). Constraints set by the visited Member State for cash transporters licensed in this Member State should apply to the visiting CIT security vehicle as well. Such flexibility would motivate CITs to expand their network and plan new routes in neighbouring countries resulting in increased choices for their customers.
Different options are currently considered with a view to achieve the necessary harmonisation: mutual recognition of national legal regimes, full harmonisation of CIT transport in the Member States or common rules on cross-border transport only. The approach of choice should ensure that the following objectives are achieved:
- As a minimum, professionals should have the possibility to transport cash cross-border within set "corridors" of a wide kilometre range on each side of a border. Within these corridors, professional cash transporters of one Member State should be free to service merchants and retailers, financial institutions and their branches as well as National Central Banks branches in another Member State, provided they comply with the security dispositions mandated by the visited Member State.
- If, as a transitional measure, cross border corridor boundaries would have to be determined, these corridor limitations should be lifted in the long term so that any professional cash transporter would be allowed to render services anywhere in the EU.
Last but certainly not least, EU legislation on this matter must not lead to dispositions which could negatively impact the current security levels and/or increase the cost for the users of professional national cash transport by road in the Member States concerned.
The market is now awaiting the European Commission's proposal for a Regulation on cross-border euro cash transport by road during the second quarter of 2010. Hopes are high that in the foreseeable future the principles governing the concept of the internal market will apply to the daily business of making available cross-border cash transport by road to consumers and enterprises throughout the EU as well.
Leonor Machado is the Chair of the EPC Cash Working Group.
Related article in previous issue of the EPC Newsletter::
Other articles in this issue
28.01.10 Update EPC Plenary Meetings - Main decisions taken in December 2009 By Gerard Hartsink 28.01.10 SEPA Scheme Change Management Cycle 2010 - Suggestions for changes must reach the EPC by end February 2010 By Herman Segers 28.01.10 The EPC Shortcut Series: continued - Three new EPC publications highlight key concepts of a SEPA for Cards By Meral Ruesing 28.01.10 PSD in Practice - Discrepancies in national transposition pose a challenge to banks By Ruth Wandhöfer 28.01.10 Expectations are promising (and Patience is a Virtue) - Results of the Second Annual Progress Report on the state of SEPA migration in 2009 By Zuzana Kalivodova and Gerd Heinen 28.01.10 Clarity and Incentives needed - ECOFIN conclusions of December 2009 on setting an end date for migration to SEPA By Gerard Hartsink 28.01.10 Facing the Facts in January 2010 - The EPC Newsletter tracks the progress of SEPA implementation By Herman Segers 28.01.10 Everybody loves E!*** - The role of the EPC in the creation of e-SEPA By Gerard Hartsink 28.01.10 Food for Thought - The EC Expert Group on e-Invoicing Final Report By Charles Bryant 28.01.10 The big Picture - Dematerialisation of business processes - in payments and beyond By Peter Potgieser 28.01.10 SEPA Survey 2009: Corporate Readiness on the Rise - The findings confirm that early movers have everything to gain By Eddy Ouwendijk and Joris Barbas 28.01.10 Nowhere to go but forward - How to create momentum for the SEPA programme By Javier Santamaría 28.01.10 SEPA to go - EPC White Paper on mobile payments: consultation is going on now By Dag-Inge Flatraaker 28.01.10 Optional SEPA Direct Debit Scheme in the Pipeline - Additional SDD Fixed Amount Scheme provides maximum planning security to consumers and billers By Javier Santamaría
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