Issue 1 - January 2009
Less is more: one Standard for Customer-to-Bank CommunicationEPC approves updated Implementation Guidelines for the initiation of SEPA payments
22.01.09 By Bettina Schönfeld, Esther Uyehara and Ingo Beyritz
The availability of standardised SEPA Implementation Guidelines (SIGL) for the customer-to-bank(C2B) communication marks an important step towards the realisation of end-to-end SEPA payment solutions. Standardised end-to-end processes (customer to bank, bank to bank, bank to customer) allow for cost-efficient straight-through-processing of billions of electronic payment transactions. Implementation of the SEPA C2B Guidelines by banks is not mandatory but strongly recommended by the EPC. Ultimately, market demand will determine whether one standard in the SEPA customer-to-bank communication will prevail.
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For an introduction to the concept of the SEPA Data Formats and the related SEPA Implementation Guidelines see the information provided in box below
Consultations of bank customers carried out regularly to identify their SEPA requirements have revealed the pronounced need - voiced in particular by the corporate community - for standardised means of customer-to-bank communication. EPC now provides a common set of data to be exchanged between bank customers and banks when initiating a SEPA transaction. This is a requirement of bank customers such as businesses and public administrations executing mass payments. The EPC recently approved enhanced SEPA Implementation Guidelines applying to the customer-to-bank messages (C2B Implementation Guidelines). Harmonised C2B specifications based on the SEPA Data Format are now available with respect to the SEPA Credit Transfer Scheme and the SEPA Direct Schemes.
Ultimately, standardisation of the customer-to-bank domain will be determined by the market
The use of the SEPA Data Format is mandatory for the exchange of SEPA payments between banks. However, taking into consideration differing market practices in the SEPA countries today, the use of the SEPA Data Formats in the customer-to-bank communication is recommended by the EPC, yet not mandated. Banks may continue to accept other formats from customers for the instruction of SEPA payments. The introduction of harmonised message standards to initiate SEPA payments based on the SEPA Data Formats provides an opportunity for customers to reach any bank in SEPA. Such a development would allow for rationalisation which in turn would significantly reduce the costs associated today with the maintenance of a multitude of payment platforms in different SEPA countries. Ultimately, customer demand will determine whether the SEPA Data Formats will be established as the standard way of instructing SEPA payments.
Going all the way: harmonised bank-to-customer messages
Ultimately, the "outcome" of a payment transaction must be communicated by a bank to the customer. This information takes place via electronic or paper-based reporting messages (reports, notifications and account statements) which inform a bank customer about payment transactions which affect his account. The benefits of fully automated end-to-end-processes for banks and their customers will be realised to their greatest extent with the provision of ISO 20022-based bank-to-customer messages applicable to SEPA payment transactions. The ISO standards necessary to allow for uniform mapping of SEPA transactions in the account statement are currently under further development by ISO itself. The opportunity of giving guidance (i.e. to create Implementation Guidelines) for the use of these ISO 20022 Cash Management messages in the SEPA area is under consideration by the EPC. Individual SEPA communities have already set up projects on how to use those messages in the bank-to-customer domain.
Bettina Schönfeld is an advisor with the Retail Banking, Banking Technology department of the Association of German Banks; Esther Uyehara is staff member at the EPC Secretariat and secretary of the
An introduction to the SEPA Data Formats and the SEPA Implementation Guidelines
In the world of payments processing, the role of the data format used to exchange information can be compared to the role of language in communication between people. The realisation of SEPA therefore requires agreement on common data to be exchanged in a common way between all parties involved in a payment transaction: between the payer initiating a payment and his bank, between the payer's bank and the payee's bank and eventually between the payee's bank and the payee receiving the payment. The SEPA Data Formats as specified by the EPC with respect to the SEPA Credit Transfer Scheme and the SEPA Direct Debit Schemes represent such a set of common data for the exchange of SEPA payments, respectively.
The SEPA Data Formats are based on the international ISO 20022 XML message standards. ISO, the International Organisation for Standardisation, is the world's developer of global standards. The ISO standard 20022 (see www.iso20022.org) provides a methodology for defining business processes and the related data. In the ISO process, business requirements are defined for all global markets based on the expertise provided by all concerned stakeholder communities. Different markets have different data needs. This means that each community may need to define its own version respecting the global standard, specific to its own situation. As such, the ISO messages have been adjusted to meet the SEPA requirements. The role of EPC in defining the SEPA Data Formats therefore consists in identifying within the global ISO standard all necessary data for making SEPA payments.
The SEPA Implementation Guidelines selects data provided by the ISO standard which are required by the SEPA Schemes. For example: The ISO standard allows several ways to identify the accounts to be credited or debited. SEPA Schemes, however, require the use of the IBAN. Therefore, the SEPA Implementation Guidelines specify the IBAN as the only permissible account identifier in SEPA whilst still being a valid subset of the global ISO 20022 XML message standard.
The EPC has provided a set of inter-bank and customer-to-bank Guidelines for each of the three SEPA schemes: the SEPA Credit Transfer, the Core Direct Debit and the Business-2-Business Direct Debit. The main audience of these guidelines is the community of service providers developing payment solutions for banks and their customers. The Guidelines were prepared with a view to facilitating the migration of mass payments currently being processed using national data formats with varying functionalities to the SEPA instruments.
Other articles in this issue
22.01.09 Update EPC Plenary Meetings - Main decisions taken in December 2008 By Herman Segers 22.01.09 SEPA Schemes: EPC approves Release Schedule - Predictable release cycle ensures planning security By Herman Segers 22.01.09 New EPC Publications available - Everything you always wanted to know about SEPA By Meral Ruesing 22.01.09 SEPA for Cards: From Vision to Reality - EPC takes forward its Cards Standardisation Programme By Francis Geets 22.01.09 The SEPA Highway for E-Payments*** - Make electronic payments from your current account across 32 countries By John Holsberg 22.01.09 Seeking common Ground - EPC advocates consistent implementation of the Payment Services Directive (PSD) By Ruth Wandhöfer 22.01.09 New Rules on cross-border Payments - Outlook on the revision of EU Regulation 2560/2001 By Séverine Anciberro 22.01.09 Cheer up: SEPA is on Track and open for Business - Market uptake is in line with roll-out of any major EU integration initiative By Herman Segers 22.01.09 Financial Crisis - SEPA can be part of the solution By Charlie McCreevy 22.01.09 Facing the Facts - The EPC Newsletter tracks SEPA progress By Herman Segers 22.01.09 Bring the Prophet to the Mountain - How to convince corporate customers of the benefits SEPA holds for them By Gerard Hartsink 22.01.09 Tomorrow is another Day - SEPA Survey 2008: corporate community lacks sense of SEPA urgency By Taco de Vries and Eddy Ouwendijk 22.01.09 Ready, willing and able? - The corporate View on SEPA Implementation An interview with Olivier Brissaud 22.01.09 SEPA goes mobile - EPC enables SEPA payments across 32 countries via a cell phone By Dag-Inge Flatraaker 22.01.09 Secure and convenient: the E-Mandate Solution - The SEPA Core Direct Debit Scheme now features electronic authorisation of payments By John Holsberg 22.01.09 The SEPA Direct Debit Mandate - you will just love it - EPC provides guidance on the creation of easy-to-use SEPA mandate forms By Meral Ruesing 22.01.09 New SCT Features meet key corporate Requirements - Updated SEPA Credit Transfer Scheme Rulebook goes live in February 2009 By Christian Westerhaus 22.01.09 Keep up the good Work - Banks offering SCT services: you in particular want to read this article By Andrew Bolton
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