Percentage of banks in SEPA offering SCT services

In January 2008, more than 4300 banks in 31 countries took a historical first step by launching the SEPA Credit Transfer Scheme (SCT) for euro payments. The payments services providers offering SCT services today represent roughly 95 percent of SEPA payment volume.

Percentage of SCT transactions compared to total volume generated by customers

SEPA will become a reality when a critical mass of euro payments has migrated from legacy payment instruments to the new SEPA payment instruments. This development is contingent upon key customer communities such as public administrations and the business community embracing the SEPA vision and implementing the necessary changes in-house. It is expected that eventually all users of payments services will migrate to the new SEPA instruments.

According to the SEPA Indicators compiled by the European Central Bank, in November 2008 (latest data available), the share of SEPA Credit Transfers as a percentage of the total volume of credit transfers generated by bank customers amounted to about 1.8 per cent. The ECB SEPA Indicators are publicly accessible at http://www.ecb.int/paym/sepa/timeline/use/html/index.en.html. A figure of 100 per cent would indicate that only SEPA services are used and have fully replaced the non-SEPA instruments.

The ECB SEPA Indicators are based on aggregated data provided by clearing and settlement infrastructures in the euro area processing SEPA transactions. These data exclude SEPA transactions sent for example via links between infrastructures to avoid double-counting. The data also exclude "on-us" transactions (SEPA credit transfers between accounts at the same bank) as well as transactions cleared between banks bilaterally or via correspondent banking.

SEPA for Cards: tracking migration to EMV

Good progress is being made in the realisation of a SEPA for cards. The latter's aim is to enable a consistent customer experience when making or accepting payments with cards. The EPC's SEPA Cards Framework (SCF)outlines high level principles and rules that when implemented by banks and card schemes will deliver this consistent experience.The SCF recognises the EMV standard as the technology platform for Europe-wide acceptance of payments with cards at very high levels of security. EMV stands for Europay MasterCard Visa programme to implement CHIP and PIN security for card transactions.

An important indicator on the progress in this area is the number of cards, POS (points of sale: terminals at retailers' check outs) and ATMs  now in the market that require the use of PIN and CHIP for the authorisation of a card payment. More specifically, the percentage of so called EMV-compliant cards, POS and ATMs is monitored. At the end of 2008, 63.83 per cent of cards in SEPA are EMV-compliant; 71.14 percent of POS are EMV-compliant and 88.07 per cent of ATMs are EMV-compliant (source: EPC Cards Working Group). Note that the entire cards payments infrastructure including the bank cards themselves are provided for by the supply side, e.g. banks and service providers operating in the cards market.

The score board: monitoring SEPA progress by public administrations

SEPA is a policy-maker-driven public harmonisation initiative launched by EU-governments, the European Commission and the European Central Bank, designed to complete the EU internal market and monetary union. As a matter of principle it may therefore be expected that the public sector will act as the launching customer of the new SEPA payment services.

The public sector is a prime economic actor and is responsible for as much as 50 per cent of the GDP in the euro area and accounts for up to 20 per cent of cashless payments made in society. Moving this volume to the SEPA instruments would significantly contribute to creating critical mass and trigger the adoption of SEPA instruments by others, such as corporates and consumers. The engagement of the public sector is indispensable. As EU Commissioner Charly McCreevy points out in this newsletter, public administrations in countries such as Belgium, Finland and France are making good progress and are committed to early SCT migration. Such demonstrated commitment by the public sector, however, remains quite the exception at this point.

The European Commission plans to publish the results of its survey on SEPA preparedness and migration by public administrations as part of its progress report on the state of SEPA migration, which is due to be adopted by the ECOFIN Council in early 2009. The EPC Newsletter will report on the findings of this survey.

To promote SEPA implementation, the European Commission and the European Central Bank are jointly developing a SEPA Action Plan. A first proposal of this Action Plan envisages the regular publication of a score board assessing the progress achieved by national public administrations in their migration to SEPA. When such a score board will be publicly available, it will be featured in the SEPA Market Uptake Reports provided in the EPC Newsletter.

Validity of existing mandates under the SEPA Direct Debit Scheme

In any direct debit scheme, a mandate is completed by the debtor (a customer purchasing goods or services) to authorise the creditor (the provider of goods or services) to collect payments via direct debit. At the same time, a mandate usually includes the authorisation of the debtor bank to pay these collections.

To facilitate migration of customers to the SEPA Direct Debit Scheme, it is imperative that mandates existing today can be used under the scheme, even if these do not incidentally meet all the requirements of the SEPA mandate. Since existing mandates in the different SEPA countries vary considerably, in each country a user-friendly and legally sound means of mandate migration has to be found. Where necessary, EU Member States must implement legislative solutions to ensure the continued legal validity of existing mandates under the SEPA Direct Debit Scheme. The next issue of the EPC Newsletter to be published in April 2009 will provide an overview of Member States allowing mandate migration. Providing such solutions is also a prime indicator of the level of commitment to the success of SEPA demonstrated by national governments.

Availability of information on IBAN and BIC

IBAN (International Bank Account Number) and BIC (Bank Identifier Code) will be the only permissible account and bank identifiers for SEPA transactions. Whereas until now IBAN and BIC have been used only for cross-border payments in most countries, with SEPA they apply to national payments as well. SEPA market uptake therefore requires easily available information on IBAN and BIC of business partners and public administrations to whom payments are made. EPC invites organisations representing bank customers and public authorities to ensure that individual businesses and government entities feature related information prominently on web sites and stationary. The EPC is monitoring the steps taken by businesses and public administrations to allow for easy access to the SEPA account identifiers. The next EPC Newsletter will report the results of these monitoring activities.

Customers: call to action

To realise the SEPA vision, the buy-in of all stakeholders, particularly in the euro area, is required. The EPC provides information material designed to facilitate the creation of dedicated SEPA implementation teams at the level of individual companies and public administrations (see the article "New EPC Publications available" in this newsletter). Putting in place specific implementation plans on the side of bank customers is a necessary prerequisite to raise SEPA transaction volume. Also, the EPC advocates a host of measures to be implemented in particular by the political drivers of the SEPA initiative to facilitate the migration of customers to the new SEPA instruments (see the article "Bring the Prophet to the Mountain" in the Focus section). To put the current rate of SEPA market uptake into perspective, see the article "Cheer up: SEPA is on Track and open for Business" in this newsletter.

Herman Segers is the Secretary General of the EPC.