Issue 1 - January 2009
The SEPA Highway for E-Payments***Make electronic payments from your current account across 32 countries
22.01.09 By John Holsberg
*** In June 2012, the EPC and its members decided to abandon the work on a draft SEPA e-Payment Framework
Most of us have experience of online shopping including buying laptops, concert tickets or making hotel reservations on the Internet - the volume of electronic commerce transactions continues to increase rapidly. Accordingly, the EPC is currently developing the SEPA e-Payments Framework. Existing or new e-payments schemes connected to the SEPA e-Payments Framework will enable consumers to make a guaranteed payment to online merchants located anywhere in the 31 SEPA countries.***
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A new option: e-payments to any online merchant in SEPA
In the virtual shopping mall the online buyer traditionally uses a transfer, a credit card, and more recently PayPal, at the merchant's Internet checkout. In several SEPA countries today, consumers are also able to make payments from one's current account when completing their online purchases. This form of electronic payment avoids the costs associated with credit card usage for the buyer, the merchant, or both. National payment facilities which allow online buyers to have payments debited from their own current account are referred to as e-payments schemes. Many of these e-payments schemes, however, today only work within national borders: the Belgian customer can buy on the website of a Belgian merchant and pay from his current account with a Belgian bank, but he cannot make a payment in this way to a non-Belgian merchant. The Internet, obviously, does not recognise such political boundaries. The Belgian customer who finds just what he wants on a Finish merchant's website might prefer to pay from his Belgian current account rather than use his credit card. In fact, he may be holder of a current account but not have any debit or credit card at all.
An e-payment scheme connected to the SEPA e-Payments Framework will enable a buyer using Internet to visit the web-shop of an online merchant regardless where he is located in SEPA, and to pay the merchant using both his internet banking services and his current account. The Framework will create a situation where a number of e-payments schemes existing in the market today can easily integrate SEPA payments services.
The SEPA Credit Transfer is the key to cross-border e-payments
To enable customers to make e-payments across all SEPA countries it is also necessary to provide a payment vehicle that allows the exchange of funds between any accounts held in SEPA. Obviously, at this point the SEPA Credit Transfer (SCT) is the only payment instrument that can be used for domestic and cross-border electronic payments in Europe.
To illustrate the convenience of making an SCT payment under the SEPA e-Payments Framework, imagine the following scenario: I have a current account with a bank in Belgium. I am spending time in Italy. I want to buy my ticket for a concert in Milano now, at 2am Saturday, from an Italian online merchant for the event at 8pm tonight. In this instance, my Belgium-based bank will issue a payment guarantee to the Italian online merchant in real-time, so that the merchant can release my ticket for tonight's concert immediately. The merchant will be sure that the money will arrive by SCT on his account in due time.
This scenario is contingent upon the following: my Belgium-based bank must offer Internet banking services and SCT services. The merchant's Italy-based bank must be able to receive SCT payments, e.g. both banks must be so called SCT scheme participants. At the same time, the Italian bank and the Italian merchant must be participants in the same e-payments scheme. This e-payments scheme must be compliant with the SEPA e-Payments Framework.
The way forward
The SEPA e-Payments Framework is being developed by the EPC E-Channel Task Force. It is planned to release the Service Description of the Framework for national consultation in the first half of 2009 and to complete the Framework by year-end 2009. The SEPA e-Payments Framework marks yet another step forward to creating a euro payments infrastructure that will give consumers and enterprises a maximum of choices. In SEPA, eventually, I will debit my Belgium-based current account making e-payments to an online merchant in Finland over the mobile phone while sipping a cup of coffee in Milano (by the way, that concert was great). See also the article "SEPA goes mobile" in this newsletter.
John Holsberg is a member of the EPC SEPA Payment Schemes Working Group (SPS WG) and the Chair of the EPC E-Channel Task Force.
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 Less is more: one Standard for Customer-to-Bank Communication - EPC approves updated Implementation Guidelines for the initiation of SEPA payments By Bettina Schönfeld, Esther Uyehara and Ingo Beyritz 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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