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In your view, what is the main advantage for non-consumer payment service users resulting from migration to harmonised SEPA payment schemes and technical standards? This poll is closed; view results here:

 

EPC Newsletter
Issue 21 - January 2014

SEPA: “The December [2013] figures show that, if the current pace of migration continues, the vast majority of stakeholders will complete their migration by 1 February 2014,” said European Central Bank on 20 January 2014.

The January 2014 edition of the EPC Newsletter focuses on legal and regulatory developments impacting the euro payments market.

The European Commission commented in December 2011 on the agreement by the European Parliament and the Council of the EU representing EU Member States on the 1 February 2014 deadline for compliance with the ‘Regulation (EU) No 260/2012 establishing technical and business requirements for credit transfers and direct debits in euro’: “The reasonable transition periods applied will allow customers and banks to get used to the adjustments in domestic payment transactions, provide legal certainty, avoid the cost of operating dual payments systems and bring forward the substantial future benefits of SEPA.”

The formal 1 February 2014 migration deadline applies in 17 euro area countries. On 20 January 2014, the European Central Bank stated: “The December [2013] figures show that, if the current pace of migration continues, the vast majority of stakeholders will complete their migration by 1 February 2014.” The latest qualitative SEPA indicators published by the European Central Bank in January 2014 confirm this outlook. The qualitative indicators take into account the specificities of the respective country with regard to migration progress by payment service providers (PSPs), ‘big billers’, public administrations and small and medium-sized enterprises (SMEs). According to this data, which reflects the assessment of national central banks, it is expected that on 1 February 2014 all PSPs, ‘big billers’ and public administrations will be ready. SMEs in 15 euro area countries are expected to achieve SEPA-compliance by this date.

To avoid difficulties for market participants in the euro area that have not achieved compliance with Regulation (EU) No 260/2012 on time, the European Commission introduced on 9 January 2014 a proposal to “give an extra transition period of six months during which payments which differ from the SEPA format can still be accepted” after 1 February 2014. The EU co-legislators, i.e. the European Parliament and the EU government ministers represented in the Council of the EU, indicated that they intend to finalise the legislative process required to amend Regulation (EU) No 260/2012 as proposed by the European Commission in the course of February 2014.

Consequently, payment service users and providers in the euro area are forced to determine their course of action as of 1 February 2014 based on the assumption that the EU co-legislators will amend Regulation (EU) No 260/2012 to effectively delay the migration deadline in the euro area to 1 August 2014 and the application of penalties for processing payments that do not comply with this Regulation to 2 August 2014. Market participants will also have to rely on the assumption that a new EU Regulation amending Regulation (EU) No 260/2012 will “have a retroactive effect as from 31 January 2014” as proposed by the European Commission.

In this edition of the EPC Newsletter, Javier Santamaría, Chair of the European Payments Council (EPC), reports on latest related developments and market reactions to this European Commission proposal. The EPC emphasises that once the EU co-legislators have effectively modified the deadline for compliance with Regulation (EU) No 260/2012 in the euro area, it will be crucial that relevant public authorities clarify the implications to payment service users and providers immediately. It is the responsibility of the public authorities determining the SEPA compliance requirements to avoid a situation where uncertainty around applicable legal deadlines would impact ongoing migration efforts and further delay the completion of migration.

This edition also includes the EPC’s analysis of the European Commission’s proposal for the revised Payment Services Directive (PSD2). The EPC has identified considerable scope for amendments with regard to the proposed new set of rules related to the activity of so-called third party payment service providers offering payment initiation or payment account information services. The EPC also sees a pressing need for review of the proposed new Article 67, (entitled ‘Refunds for payment transactions initiated by or through a payee’), regarding the details of the unconditional refund right for direct debits. Last but not least, this edition features comment from guest contributors on the implications of the proposed PSD2 and other regulatory initiatives impacting the euro payments market.

Please recommend the EPC Newsletter to your colleagues – subscription is free by clicking here. The next issue will be published in April 2014.

Focus: SEPA Migration

SEPA 2014: EPC Calls on European Parliament and EU Governments Represented in the Council of the European Union to Provide Clarity on SEPA Compliance Requirements As Soon As PossibleOn 9 January 2014, the European Commission introduced a proposal to effectively postpone the deadline for compliance with Regulation (EU) No 260/2012 from 1 February 2014 to 1 August 2014

30.01.14 By Javier Santamaría

In February 2012, the European Union (EU) co-legislators, (i.e. the European Parliament and the Council of the EU representing EU Member States), adopted the ‘Regulation (EU) No 260/2012 establishing technical and business requirements for credit transfers and direct debits in euro’, which effectively mandates migration to SEPA in the euro area by 1 February 2014. The European public authorities previously stressed that payment orders that do not comply with the legal requirements as laid down in this EU law “will not be allowed to be processed by payment service providers after 1 February 2014.” (See, for example, the European Central Bank press release of 24 October 2013.)

On 9 January 2014 the European Commission introduced a proposal for a new EU Regulation amending Regulation (EU) No 260/2012. According to the European Commission, this new Regulation – which is subject to review and adoption by the European Parliament and the Council of the EU – would state, inter alia, that payment service providers “may continue, until 1 August 2014, to process payment transactions in euro in formats that are different from those” mandated with Regulation (EU) No 260/2012. The European Commission has suggested that, if adopted after 1 February 2014, this new EU Regulation will “have a retroactive effect as from 31 January 2014.” Based on latest information available at the time of publication of this EPC Newsletter edition (30 January 2014), the European Parliament and the EU government ministers represented in the Council of the EU intend to finalise this legislative process in the course of February 2014.

In this article, Javier Santamaría, Chair of the European Payments Council (EPC), reports on market reactions to the European Commission proposal to “give an extra transition period” for SEPA migration in the euro area. The EPC emphasises that once the EU co-legislators have effectively modified the deadline for compliance with Regulation (EU) No 260/2012 in the euro area, it will be crucial that relevant public authorities clarify the implications to payment service users and providers immediately. It is the responsibility of the public authorities determining the SEPA compliance requirements to avoid a situation where uncertainty around applicable legal deadlines would impact ongoing migration efforts and further delay the completion of migration.

Details on the legislative procedure that must be followed to modify Regulation (EU) No 260/2012 as proposed by the European Commission are set out in the first information box included in this article. This information box will be updated following publication of the EPC Newsletter January 2014 edition to reflect latest developments and the outcome of this process. (Please note: the European Payments Council (EPC) is not an EU legislative body. More generally, the EPC is not part of the EU institutional framework. The EPC has therefore, no role in the adoption or modification of any EU laws.)

(This information box will be updated following publication of the EPC Newsletter January 2014 edition to reflect latest developments and the outcome of this process.)

An overview: the European Union (EU) legislative procedure that must be followed to “give an extra transition period of six months during which payments which differ from the SEPA format can still be accepted” after 1 February 2014, (i.e. adoption of a new EU Regulation amending the Regulation (EU) No 260/2012), as proposed by the European Commission and actors involved:

European Union (EU) legislative process: the European Commission has the right of initiative to propose laws for adoption by the EU co-legislators, i.e. the European Parliament and the Council of the EU representing EU Member States. The vast majority of European laws are adopted jointly by the European Parliament and the Council of the EU.

European Commission (often abbreviated as ‘EC’, or ‘EU Commission’ or ‘the Commission’).

European Parliament (often abbreviated as EP or ‘the Parliament’).

  • European Parliament Economic and Monetary Affairs Committee (ECON). The European Parliament organises its work through a system of specialised committees. EU legislation proposed by the European Commission related to the Single Euro Payments Area (SEPA) is considered by the ECON prior to the European Parliament taking a vote on a proposal.

The Council of the EU. The Council of the EU is the EU institution where the EU Member States’ government representatives sit, i.e. the ministers of each EU Member State with responsibility for a given policy area. (Publications issued by the various EU authorities as well as EU legislative acts reference the Council of the EU normally simply as ‘the Council’.)

  • Economic and Financial Affairs Council (ECOFIN). The Council of the EU meets in various configurations, each dealing with a number of fixed policy areas. Each configuration is comprised of the national ministers authorised to enter into agreements on behalf of their government. The ECOFIN is composed of the economics and finance ministers of the EU Member States, as well as budget ministers when required. EU legislation proposed by the European Commission related to SEPA is considered by the ECOFIN.
  • Permanent Representatives Committee (Coreper). The Coreper is responsible for preparing the work of the Council of the EU. It consists of representatives from the EU Member States with the rank of Member States’ ambassadors to the EU and is chaired by the EU Member State which holds the Council Presidency (the Council Presidency is held by Greece in the first half of 2014).

European Central Bank (ECB).

 

Actions by the EU institutions to modify Regulation (EU) No 260/2012:

Background: Article 6 (1) and (2) of the ‘Regulation (EU) No 260/2012 establishing technical and business requirements for credit transfers and direct debits in euro’ mandates that credit transfers and direct debits shall be carried out in accordance with the relevant requirements set out in Article 5 and in the Annex to the Regulation by 1 February 2014, subject to certain limited exemptions mentioned in the Regulation. In non euro countries, the deadline will be 31 October 2016. Effectively, this means that as of these dates, existing national euro credit transfer and direct debit schemes will be replaced by SEPA Credit Transfer and SEPA Direct Debit.

9 January 2014: with a press release the European Commission introduced its proposal for a new EU Regulation amending Regulation (EU) No 260/2012 to “give an extra transition period of six months during which payments which differ from the SEPA format can still be accepted” after 1 February 2014. The European Commission commented that this “proposal does not change the formal deadline for migration of 1 February 2014.” The European Commission invited the European Parliament and the Council of the EU “to consider this proposal as a case of absolute urgency”.

21 January 2014: the European Parliament Economic and Monetary Affairs Committee (ECON) presented its report on the proposal for a Regulation of the European Parliament and of the Council of the EU “amending Regulation (EU) No 260/2012 as regards the migration to [European] Union-wide credit transfers and direct debits”. The ECON report includes the amendments proposed by the ECON to the text of the new EU Regulation amending Regulation (EU) No 260/2012 proposed by the European Commission.

22 January 2014: the Council of the EU issued a press release which states: “The Permanent Representatives Committee today approved, on behalf of the Council [of the EU], an agreement with the European Parliament on a proposed regulation that postpones to 1 August 2014 the end-date in the euro area for the migration of domestic and intra-European credit transfers and direct debits in euros towards SEPA credit transfers and SEPA direct debits. The draft regulation, presented by the [European] Commission on 9 January, amends regulation 260/2012 on the migration to EU-wide credit transfers and direct debits, which had set a deadline of 1 February 2014. (...) The agreement on the change of date was reached after the [European] Parliament and the Council [of the EU] approved the text as set out in document 5250/1/14 REV. The [European] Parliament is expected to vote accordingly in its plenary session in February. The Council [of the EU] will subsequently formally approve the legislation without further discussion.”

22 January 2014: the European Central Bank (ECB) issued its legal opinion “on a proposal for a regulation on the postponement of SEPA migration date”. As stated in this document, the “ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and Article 3.1 of the Statute of the European System of Central Banks and of the European Central Bank, since the proposed regulation contains provisions falling within the ECB’s fields of competence, in particular in connection with the basic Eurosystem task under Article 127(2) of the Treaty of promoting the smooth operation of payment systems.” The legal opinion includes the amendments proposed by the European Central Bank to the text of the new EU Regulation amending Regulation (EU) No 260/2012 proposed by the European Commission.

4 February 2014: the European Parliament adopted a draft EU Regulation “amending Regulation (EU) No 260/2012 as regards the migration to Union-wide credit transfers and direct debits”.

18 February 2014: the Council of the EU (Economic and Financial Affairs Council – ECOFIN) adopted a Regulation “amending Regulation (EU) No 260/2012 as regards the migration to Union-wide credit transfers and direct debits”. This legislative act states, among other things: “In Article 16 of Regulation (EU) No 260/2012, paragraph 1 is replaced by the following: (...) By way of derogation from Article 6(1) and (2), PSPs [payment service providers] may continue, until 1 August 2014, to process payment transactions in euro in formats that are different from those required for credit transfers and direct debits pursuant to this Regulation. Member States shall apply the rules on the penalties applicable to infringements of Article 6(1) and (2), laid down in accordance with Article 11, from 2 August 2014. (...)”.

20 March 2014: Publication of Regulation (EU) No 248/2014 amending Regulation (EU) No 260/2012 as regards the migration to Union-wide credit transfers and direct debits in the Official Journal of the EU. Article 2 of Regulation (EU) No 248/2014 states: “This Regulation shall enter into force on the day following that of its publication in the Official Journal of the European Union. It shall apply, with retroactive effect, from 31 January 2014.”  

 

Readers are invited to be mindful that different euro area countries might decide on different timelines during which they would make use of the option to continue processing non-SEPA formats (i.e. some countries might do so during the full six months additional transition period envisaged by the European Commission, the European Parliament and the Council of the EU while others might settle for a shorter timeline). The European Central Bank makes available country-specific SEPA information with ‘Fact Sheets on Regulation 260/2012’. These fact sheets now also feature information obtained from Eurosystem national central banks concerning migration timelines envisaged at national level in each euro area country during the additional transition period. (The Eurosystem comprises the European Central Bank and the national central banks of EU Member States whose currency is the euro).

(Please note: the European Payments Council (EPC), representing the European banking industry in relation to payments, is not an EU legislative body. More generally, the EPC is not part of the EU institutional framework. The EPC has therefore, no role in the adoption or modification of any EU laws.)

 

Key Information in this Article

In December 2011, the European Commission commented on the agreement by the European Union (EU) co-legislators, (i.e. the European Parliament and the Council of the EU representing EU Member States), on the 1 February 2014 deadline for migration to SEPA: “The reasonable transition periods applied will allow customers and banks to get used to the adjustments in domestic payment transactions, provide legal certainty, avoid the cost of operating dual payments systems and bring forward the substantial future benefits of SEPA.”

In January 2014, the European Central Bank confirmed: “The December [2013] figures show that, if the current pace of migration continues, the vast majority of stakeholders will complete their migration by 1 February 2014.”

The legislative proposal introduced by the European Commission on 9 January 2014 for a new EU Regulation amending ‘Regulation (EU) No 260/2012 establishing technical and business requirements for credit transfers and direct debits in euro’ to “give an extra transition period of six months during which payments which differ from the SEPA format can still be accepted” after 1 February 2014 has sparked an intense debate across Europe. This article provides a snapshot of the range of opinions articulated in the debate.

The European Central Bank commented in its legal opinion on the European Commission proposal for a new EU Regulation amending Regulation (EU) No 260/2012: “The proposed [new] regulation has given rise to confusion in the markets on the deadline for migration (...). A further concern is the lack of legal certainty in the event that the proposed regulation [amending Regulation (EU) No 260/2012] is only adopted after the current deadline, i.e. 1 February 2014. (...) It is therefore of the utmost importance to reinstate legal certainty, reduce the confusion in the markets and provide them with clear guidance about the deadline.”

On 30 January 2014, it is clear that the EU co-legislators, (i.e. the European Parliament and the Council of the EU representing EU Member States), are incapable of formalising the amendment of Regulation (EU) 260/2012 as proposed by the European Commission on 9 January 2014 before 1 February 2014.

Consequently, payment service users and providers in the euro area are forced to determine their course of action as of 1 February 2014 based on the assumption that the EU co-legislators will amend Regulation (EU) No 260/2012 to effectively delay the migration deadline in the euro area to 1 August 2014 and application of penalties for processing payments that do not comply with this Regulation to 2 August 2014. Market participants will also have to rely on the assumption that a new EU Regulation amending Regulation (EU) No 260/2012 will “have a retroactive effect as from 31 January 2014” as proposed by the European Commission.

The EPC calls on the European Parliament and EU governments represented in the Council of the EU to provide clarity on SEPA compliance requirements as soon as possible.

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Get Ready for SEPA

SEPA Facts and Figures (January 2014): “If the Current Pace of Migration Continues, the Vast Majority of Stakeholders Will Complete Their Migration by 1 February 2014,” Says European Central BankEPC recommends that organisations in the euro area still working towards achieving SEPA readiness complete the migration process as soon as possible

30.01.14 By Etienne Goosse

In a press release, entitled ‘New statistics show SEPA migration gathers pace in December’ issued on 20 January 2014, the European Central Bank commented: “According to the latest figures provided by national central banks, 74 percent of credit transfers in the euro area were already SEPA-compliant at the end of December [2013] (from 64 percent in November). For direct debits, the figure stands at 41 percent, a very steep increase from the 26 percent registered in November. The December figures show that, if the current pace of migration continues, the vast majority of stakeholders will complete their migration by 1 February 2014.” The European Commission and the European Union (EU) co-legislators, (i.e. the European Parliament and the Council of the EU representing EU Member States), are now considering enforcing compliance with the ‘Regulation (EU) No 260/2012 establishing technical and business requirements for credit transfers and direct debits in euro’ (the SEPA Regulation) in the euro area by 1 August 2014. The European Payments Council (EPC) recommends that organisations in the euro area still working towards achieving compliance with the SEPA Regulation aim to finalise the migration process as soon as possible. Banks and other service providers are standing ready to support payment service users to complete the transition. Etienne Goosse reports the latest facts and figures reflecting the progress of SEPA migration.

Key Information in this Article Data reflecting the progress of migration to SEPA cited in this article represents the latest figures available at the time of EPC Newsletter publication (30 January 2014). According to the quantitative SEPA indicators published by the European Central Bank (ECB), the share of SEPA Credit Transfer (SCT) transactions amounts to 74 percent as of December 2013 and the share of SEPA Direct Debit (SDD) transactions has reached 41 percent. The quantitative SEPA indicators measure the share of SCT and SDD transactions as a percentage of the total volume of credit transfers and direct debits generated by bank customers in the euro area. The most recent quantitative SEPA indicators confirm the outlook provided with the latest qualitative SEPA indicators published by the ECB in January 2014. These qualitative indicators measure the level of SEPA preparedness by stakeholder groups at country level. They reflect the assessment by national central banks as of end-January 2014 with regard to SEPA readiness of payment service providers, corporates, small and medium-sized enterprises and public administrations in the 18 euro area countries. These most recent qualitative indicators showed that a large majority of stakeholders in the euro area are expected to meet the formal 1 February 2014 deadline to achieve compliance with the European Union (EU) ‘Regulation (EU) No 260/2012 establishing technical and business requirements for credit transfers and direct debits in euro’ (the SEPA Regulation). (Latvia joined the euro area on 1 January 2014 however, with a specific migration timeline according to Regulation (EU) No 260/2012, namely 1 January 2015.) The European Commission communicated on 9 January 2014 that it proposes to modify the Regulation (EU) No 260/2012 to “give an extra transition period of six months during which payments which differ from the SEPA format can still be accepted” after 1 February 2014. In order for this additional transition period to become effective, this proposal introduced by the European Commission must be formally adopted by the EU co-legislators, i.e. the European Parliament and the Council of the EU representing EU Member States. Latest information on the related legislative process is detailed in the article ‘SEPA 2014: EPC Calls on European Parliament and EU Governments Represented in the Council of the European Union to Provide Clarity on SEPA Compliance Requirements As Soon As Possible’, published in the January 2014 edition of the EPC Newsletter. (See the ‘related articles in this issue’ at the end of this article.)

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Legal and Regulatory Issues

PSD2: EPC Key Considerations Address Aspects Related to Third Party Payment Service Providers and Article 67 (Refund Rights for Direct Debits) EPC identifies considerable scope for amendments to European Commission PSD2 proposal

30.01.14 By Gijs Boudewijn

In a previous edition of this newsletter, the European Payments Council (EPC) observed in the article, entitled ‘On the Difference between Innovation and the Wild West: How to Ensure the Security of Bank Customers’ Funds and Data with Payment Account Access Services’: Convenience is a priority. Security is indispensable. Promoting payment innovation to the benefit of both payers and payees requires combining the two. Anyone with an interest in incentivising payers and payees to embrace new payment solutions, (regardless of whether these are offered by ‘banks’ or ‘non-banks’), should adhere to the principle of ‘safety first’. Consequently, the EPC has emphasised the need for the future revised Payment Services Directive (PSD2) (and other legislative and regulatory initiatives) to address key requirements related to payment account access services such as supervision and licensing, security, consumer and data protection, transparency, liability allocation and the need for explicit consent. Following a detailed analysis of the European Commission’s (the Commission's) proposal for PSD2, the EPC has identified considerable scope for amendment of the proposed new set of rules related to the activity of so-called third party payment service providers offering payment initiation or payment account information services.  The EPC also calls attention to the fact that PSD2 will continue to be of particular relevance with respect to SEPA Direct Debit services due to the fact that it defines common rules for the authorisation and the refund of direct debits. The EPC sees a pressing need for a review of the proposed new Article 67, (entitled ‘Refunds for payment transactions initiated by or through a payee’), regarding the details of the unconditional refund right for direct debits. In this article, Gijs Boudewijn provides an overview of the EPC’s key considerations on the Commission’s proposal for PSD2.

Key Information in this Article This article addresses the following key considerations of the European Payments Council (EPC) with regard to the European Commission's (the Commission's) proposal for a revised Payment Services Directive (PSD2). Aspects of PSD2 related to third party payment service providers (TPPs) While it is widely recognised that the inclusion of TPPs within the scope of PSD2 is the right step to take, the EPC has identified the following areas of concern: Access to accounts: the EPC strongly disapproves of TPPs using the personal security credentials of the payment service user (PSU, i.e. the account holder) to effectuate access to the PSU account. Such use risks being in breach of the duty of the PSU to keep its personalised security features safe. Furthermore, it is of the utmost importance that TPPs would authenticate themselves in an unequivocal manner towards the account servicing payment service provider (AS PSP) when accessing a PSU’s account. Liability: the EPC has noted with surprise that PSD2 provides for a liability for AS PSPs in the event of a payer’s decision to make use of a TPP for payment initiation services. The EPC is of the opinion that under no circumstances should the AS PSP be held liable for the TPP’s mistakes, failures or for specific risks resulting from the TPPs’ sphere or activities. Authorisation: the EPC recommends that all TPPs be subject to authorisation prior to commencing the provision of their services. Under no circumstances should the need for a comprehensive licensing or authorisation regime of TPPs be linked to the total amount of payment transactions, wherever the limits are set. The mere fact that a third party directly intervenes in the payment transaction chain shows that TPPs should be subject to the same licensing and prudential regime as other PSPs in the chain. Moreover, an interim solution would be required to address the current lack of legal framework regarding the licensing of TPPs. Scope of ‘account information services’: in the view of the EPC, ‘account information services’ should not be presented as a ‘payment service’ in the strict sense as these are not necessarily linked to payment transactions. Given that any account information is of an extremely delicate nature, (in the context of data protection, for example), the EPC proposes certain amendments to the Commission’s proposed definition of ‘account information services’. Article 67 – refund rights for direct debits Article 67(1) of the Commission’s proposal for PSD2 contains a new (last) paragraph regarding the payer’s refund rights in case of direct debits. The EPC appreciates the Commission’s apparent intention to align the applicable legal framework with the SEPA Direct Debit (SDD) Core Rulebook, which already provides an unconditional refund right for direct debits. Upon closer review of the proposed new last sentence of Article 67(1), it appears however that the text risks missing its goal. The existing ‘no-questions asked’ refund right under the SDD Core Rulebook would be undermined by such provision, which effectively allows the payee to unilaterally limit the refund right of the payer when the payee has fulfilled its contractual obligations and the payer has received the related services or consumed the related goods. The proposed Article 67(1) PSD2 also has some undesirable practical effects. The EPC therefore suggests amended wording for Article 67 (1), last subparagraph PSD2. (The wording proposed by the EPC is included in the body of the text.) Jargon buster:
  • PSP – payment service provider.
  • PSU – payment service user.
  • AS PSP – account servicing payment service provider.
  • TPP – third party payment service provider – also referred to in other documents as TPPSP.

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Legal and Regulatory Issues

Card Interchange Fees Regulation: What is the Right Question? A commentary on the European Commission proposal for a new Regulation on interchange fees for card-based payment transactions

30.01.14 By Norbert Bielefeld

On 24 July 2013 the European Commission (the Commission) published a ‘payments legislative package’, which includes the Commission proposals for a revised Payment Services Directive (PSD2) and a new Regulation on interchange fees for card-based payment transactions (the interchange fees (IFs) Regulation). The Commission stated that the IFs Regulation, “combined with the revised PSD, will introduce maximum levels of interchange fees for transactions based on consumer debit and credit cards and ban surcharges on these types of cards.” The Commission further commented: “The level of the interchange fees varies widely between the [European Union (EU)] Member States, which suggests that they do not have a clear justification and create an important barrier between the national payment markets.” (Commission press release, entitled ‘New rules on payment services for the benefit of consumers and retailers’, 24 July 2013.) In this article, Norbert Bielefeld analyses the stated rationale (i.e. alleged market failure) for and the effectiveness of the proposed IFs Regulation to achieve the outcome (i.e. further integration of the EU payments market) pursued by the Commission. Taking into consideration relevant developments globally, this author concludes: card interchange fees do not cause market failure – at least as far as debit cards are concerned. If one truly wanted to pursue a ‘single market’ goal, which in this respect would translate into similar or at least more homogeneous usage rates for debit cards across EU Member States, one would have to look at a number of factors other than card interchange fees.

The views expressed in this article are solely those of the author and should not be attributed to the European Payments Council. 

Key Information in this Article In this commentary on the European Commission (the Commission) proposal for a new Regulation on interchange fees for card-based payment transactions (the interchange fees (IFs) Regulation), the author finds: Available data indicates that the greater or lesser acceptance of debit cards is neither the outcome of a lower nor a higher level of interchange fees. Card interchange fees therefore, are not the cause for market fragmentation (which translates into ‘market failure’ in the view of the Commission) – at least as far as debit cards are concerned. If further integration of the European Union (EU) payments market is the political objective, it is questionable whether the proposed IFs Regulation can be instrumental to harmonise other factors relevant in this regard, i.e. legacy legislation and practices for all payment instruments and their respective pricing or cross-subsidisation, market structure, the role of cash including the size of the grey economy, and consumer behaviour and preferences across the EU Member States. It should also be noted that the setting of a similar cap for debit card interchange applying across all EU Member States, for example, will have vastly different impacts not only on the use of debit cards, but also on other payment instruments, in each of the Member States. The interchange fee regulation debate in the EU, as with much of the payments legislation debate, tends unfortunately to take place in isolation from developments outside Europe. Taking into consideration global developments suggests that payment systems are more efficient in countries outside the EU which are less encumbered by payments legislation.

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Focus: On Integration and Innovation

Research by the European Central Bank Explores the Progress of Payment Integration in EuropeMain findings of the European Central Bank report 'Convergence in European retail payments'

30.01.14 By Emmi Martikainen, Heiko Schmiedel and Tuomas Takalo

In October 2013, Mario Draghi, President of the European Central Bank (ECB), reiterated: “The advantages of SEPA are considerable for the euro area (...) in particular, the SEPA project is an important element for the integration of financial services in Europe. The Eurosystem, under its mandate, is committed to supporting the SEPA project to promote the smooth operation of payment systems, both as a contribution to the efficiency of the euro area economy and as a way to support continued trust in the euro” (ECB SEPA e-Brochure, October 2013). The Eurosystem comprises the European Central Bank and the national central banks of the European Union (EU) Member States whose currency is the euro. Based on economic theory and empirical evidence, financial integration promotes competition, efficiency and growth. As a result, the convergence of retail payments has many implications for the overall performance of the economy. The progress of payment integration is explored within the research paper released by the ECB, entitled ‘Convergence in European retail payments’. The authors Emmi Martikainen, Heiko Schmiedel and Tuomas Takalo find that retail payment integration in the euro area – and in Europe – has made progress however, considerable efforts are still required to further promote this development. Currently there is evidence of cross-country convergence in the euro area with regard to payment behaviours, especially for card payments, direct debits and credit transfers, and the speed of integration has accelerated for most of the payment instruments studied since the introduction of the single currency. The paper intends to aid policy-makers and market stakeholders in assessing the current and expected level of integration and future developments in the European retail payments market. This article summarises the main findings of the paper ‘Convergence in European retail payments’. 

Key Information in this Article The European Central Bank (ECB) Occasional Paper ‘Convergence in European retail payments’ includes the following key findings:

  • The positive financial integration process in the retail payments market seems to have continued regardless of the period of financial turmoil.
  • There is evidence of convergence for the payment behaviours in European countries, and the convergence process has accelerated since the introduction of the single currency.
  • However, payment behaviours have been slow to change and there are significant cross-country differences for card payments, credit transfers and direct debits.
  • Despite this, it can be concluded that the European Union (EU) payment markets are now less fragmented than they were before the introduction of the single currency and the creation of SEPA.

This research increases the general understanding of how integration has evolved since the introduction of the euro, the creation of SEPA and during the recent economic crisis. The link to the paper ‘Convergence in European retail payments’ is included in the ‘related links’ at the end of this article.

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SEPA Credit Transfer (SCT) & SEPA Direct Debit (SDD)

Next Generation SCT and SDD Rulebooks Will be Published in November 2014 to Take Effect in November 2015. EPC Invites Suggestions for Changes by 28 February 2014Payment service providers participating in the SCT and SDD Schemes are reminded that new rulebook versions and implementation guidelines take effect on 1 February 2014

30.01.14 By Jean-Yves Jacquelin

As previously reported, the SEPA Credit Transfer (SCT) and SEPA Direct Debit (SDD) Schemes, as set out in the SCT and SDD Rulebooks, evolve based on a transparent change management process adhered to by the European Payments Council (EPC). This evolution reflects changes in market needs and updates of technical standards developed by international standards bodies, such as the International Organization for Standardization (ISO). The next generation rulebooks and associated implementation guidelines will be published in November 2014. These rulebook versions will then take effect in November 2015. The scheme change management process provides all stakeholders with the opportunity to participate; i.e. to introduce suggestions for changes to the schemes. With this article, the EPC emphasises again that all interested parties are invited to submit suggestions for changes proposed to be incorporated into the next version of the SCT and SDD Rulebooks by 28 February 2014. Payment service providers participating in the SCT and SDD Schemes are reminded that new rulebook versions and implementation guidelines take effect on 1 February 2014. The SCT Rulebook version 7.0, SDD Core Rulebook version 7.0 and SDD (Business to Business) B2B Rulebook version 5.0 published in November 2012 have been updated to include a few editorial amendments. The rulebook versions that take effect on 1 February 2014 are therefore, the SCT Rulebook version 7.1, the SDD Core Rulebook version 7.1 and the SDD B2B Rulebook version 5.1. The updated rulebook versions to take effect on 1 February 2014 remain unchanged from a functional or technical point of view; i.e. changes introduced into the updated versions are of a purely administrative nature and have no operational impact whatsoever. Details on the rulebook versions to take effect on 1 February 2014 are set out in the second information box included in this article. Jean-Yves Jacquelin reports.

Key Information in this Article SEPA Credit Transfer (SCT) and SEPA Direct Debit (SDD) Scheme change management cycle 2014/2015: The European Payments Council (EPC) encourages all stakeholders and interested parties to engage in the change management process governing the evolution of the SCT and SDD Schemes. This article reiterates information first published in October 2013 with a related EPC Newsletter article and an EPC Blog.

  • The next generation rulebooks (SCT Rulebook version 8.0, SDD Core Rulebook version 8.0 and SDD Business to Business Rulebook version 6.0) and associated implementation guidelines will be published in November 2014 to take effect in November 2015.
  • All interested parties are invited to submit suggestions for changes proposed to be incorporated into the next version of the SCT and SDD Rulebooks by 28 February 2014. The template to submit a suggestion for modifications to the rulebooks is included in the ‘related links’ at the end of this article.
  • It remains the EPC’s objective to ensure that the SCT and SDD Rulebooks evolve in response to proven market needs, based on a predictable release schedule. The EPC must, however, clarify that moving forward, the EPC may be required to adapt the rulebook release schedule at short notice to ensure compliance with technical requirements set out in the Annex to the European Union (EU) 'Regulation (EU) No 260/2012 establishing technical and business requirements for credit transfers and direct debits in euro', also known as the SEPA Regulation, as amended by the European Commission.
 

Alert to Payment Service Providers Participating in the SEPA Credit Transfer and the SEPA Direct Debit Schemes: New SEPA Credit Transfer and SEPA Direct Debit Rulebooks Take Effect on 1 February 2014. (Please note: the European Commission communicated on 9 January 2014 that it proposes to modify ‘the European Union (EU) 'Regulation (EU) No 260/2012 establishing technical and business requirements for credit transfers and direct debits in euro’ to “give an extra transition period of six months during which payments which differ from the SEPA format can still be accepted” after 1 February 2014. According to the European Commission, “the proposal does not change the formal deadline for migration of 1 February 2014.” This proposal does not impact the SEPA Credit Transfer and SEPA Direct Debit Rulebook release management.) In November 2012, the European Payments Council (EPC) published:

  • The SEPA Credit Transfer (SCT) Rulebook version 7.0.
  • The SEPA Direct Debit (SDD) Core Rulebook version 7.0.
  • The SDD Business to Business (B2B) Rulebook version 5.0.
As communicated in 2012, the EPC decided to postpone the effective date for the SCT Rulebook version 7.0, SDD Core Rulebook version 7.0 and SDD B2B Rulebook version 5.0 published in November 2012, from 16 November 2013 to 1 February 2014. This allows market participants to adapt their systems and operations to comply with both the Regulation (EU) No 260/2012, which effectively mandates migration to SCT and SDD in the euro area by 1 February 2014, and new rulebook versions. The SCT Rulebook version 7.0, SDD Core Rulebook version 7.0 and SDD B2B Rulebook version 5.0 published in November 2012 have been updated to include a few editorial amendments. The updated rulebook versions to take effect on 1 February 2014 remain unchanged from a functional or technical point of view; i.e. changes introduced into the updated versions are of a purely administrative nature and have no operational impact whatsoever. As a main change, the updated rulebook versions no longer reference the concept of a ‘Pan-European Automated Clearing House (PE-ACH)’ nor the EPC document, entitled ‘PE-ACH/Clearing and Settlement Mechanism (CSM) Framework’. The EPC resolved to withdraw the document ‘PE-ACH/Clearing and Settlement Mechanism (CSM) Framework’, which was first published in January 2007, from publication, because it is no longer required at this stage in the SEPA process. The rulebook versions that take effect on 1 February 2014 are therefore, the SCT Rulebook version 7.1, the SDD Core Rulebook version 7.1 and the SDD B2B Rulebook version 5.1. The interbank and customer-to-bank implementation guidelines related to the SCT and SDD Schemes published in November 2012 remain unchanged and will also take effect on 1 February 2014. The rulebook versions and associated implementation guidelines taking effect on 1 February 2014 are available here:

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EPC Latest News

EPC Plenary Meeting UpdateMain decisions taken in December 2013

30.01.14 By Javier Santamaría

The Plenary is the decision-making body of the European Payments Council (EPC). In this article, Javier Santamaría, Chair of the EPC, summarises the main items agreed in the EPC Plenary meeting, which took place in December 2013. The Plenary approved the updated version of the document ‘Improving the Efficiency of the Handling of Cash - Cash Cycle Models’, the SEPA Cards Standardisation Volume version 7.0 ready for market implementation, the final version of the EPC white paper on mobile wallet payments, and the EPC analysis regarding aspects related to third party payment service providers and Article 67 (refund rights for direct debits) included with the European Commission’s proposal for the revised Payment Services Directive. The Plenary also approved the SEPA Credit Transfer Rulebook version 7.1, SEPA Direct Debit (SDD) Core Rulebook version 7.1 and SDD Business to Business Rulebook version 5.1 taking effect on 1 February 2014. These updated rulebook versions remain unchanged from a functional or technical point of view compared to the versions published in November 2012; i.e. changes introduced into the updated versions are of a purely administrative nature and have no operational impact whatsoever. The Plenary agreed to extend the jurisdictional scope of the SEPA Schemes to eligible banks or payment service providers from San Marino effective 1 February 2014.

Key Information in this Article Main items addressed by the European Payments Council (EPC) Plenary in December 2013:

  • Updated version of the document ‘Improving the Efficiency of the Handling of Cash - Cash Cycle Models’: the document, which is included in the ‘related links’ at the end of this article, aims to create awareness among participants in the commercial cash cycles established at national level on how to improve existing processes and reduce the overall cost of cash.
  • SEPA Cards Standardisation Volume (the SCS Volume) version 7.0 ready for market implementation: this document was developed by the Cards Stakeholders Group (CSG), a multi-stakeholder body representing retailers, vendors, processors, card schemes and the EPC. The SCS Volume version 7.0 covers a set of requirements applicable to card-present (face-to-face) transactions to allow investment decisions and implementation based on stable requirements. All stakeholders and interested parties active in the SEPA cards domain are encouraged to roll out services and products in line with the requirements set out in version 7.0 of the SCS Volume in a three-year period, i.e. by January 2017. The documentation pertaining to the SCS Volume version is included in the ‘related links’ at the end of this article.
  • Final version of the EPC white paper on mobile wallet payments: this document outlines among other things, how trust in, (and availability of), a wide range of easy to use services offered with mobile wallets may be seen as a facilitator for mobile payments. Following stakeholder review of the first draft of the white paper in 2013, the Plenary final version of the white paper which is included in the ‘related links’ at the end of this article.
  • EPC analysis regarding aspects related to third party payment service providers and Article 67 (refund rights for direct debits) included with the European Commission’s proposal for the revised Payment Services Directive: the EPC has identified considerable scope for amendment of the proposed new set of rules related to the activity of so-called third party payment service providers offering payment initiation or payment account information services. The EPC also sees a pressing need for review of the proposed new Article 67, (entitled ‘Refunds for payment transactions initiated by or through a payee’), regarding the details of the unconditional refund right for direct debits. The detailed EPC analysis is set out in a dedicated article in this EPC Newsletter edition.
  • Approval of the SEPA Credit Transfer (SCT) Rulebook version 7.1, SEPA Direct Debit (SDD) Core Rulebook version 7.1 and SDD Business to Business (B2B) Rulebook version 5.1 taking effect on 1 February 2014: the updated rulebook versions to take effect on 1 February 2014 remain unchanged from a functional or technical point of view compared to the versions published in November 2012; i.e. changes introduced into the updated versions are of a purely administrative nature and have no operational impact whatsoever. As a main change, the updated rulebook versions no longer reference the concept of a ‘Pan-European Automated Clearing House (PE-ACH)’ nor the EPC document, entitled ‘PE-ACH/Clearing and Settlement Mechanism (CSM) Framework’. The interbank and customer-to-bank implementation guidelines related to the SCT and SDD Schemes published in November 2012 remain unchanged and will also take effect on 1 February 2014.
  • Extension of the jurisdictional scope of the SEPA Schemes to eligible banks or payment service providers from San Marino effective 1 February 2014: the duly amended EPC List of SEPA Scheme countries is made available in the ‘related links’ at the end of this article.

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SEPA Case Studies

University of Barcelona: “Early Migration to SEPA Has Led to More Agile and Effective Account Reconciliation and Faster Processing of Payments”The University implemented SEPA Credit Transfer in 2008 and will complete migration to SEPA Direct Debit by the end of January 2014

30.01.14 By Resu Rozas i Liras (Interview)

In April 2011, the EPC Newsletter launched the series reporting on the SEPA migration experience of individual businesses, public administrations and government agencies, which have successfully completed migration to SEPA Credit Transfer (SCT) and SEPA Direct Debit (SDD). At the start of 2012 and again early in 2013, the EPC published a series of blogs summarising lessons learnt by these early adopters. Payment service users still working towards achieving compliance with the European Union (EU) 'Regulation (EU) No 260/2012 establishing technical and business requirements for credit transfers and direct debits in euro' are invited to take advantage of the advice shared by their peers. (The links to these and other sources are included with the link to the ‘EPC Migration Tool Kit’ at the end of this article.) The University of Barcelona is also a SEPA pioneer on the demand side of the payments market: this public entity began its SEPA migration project in April 2008. It implemented SCT in a first step and then moved on to SDD payments. The University will finalise implementation of the SDD Core and the SDD Business to Business Schemes by the end of January 2014. Resu Rozas i Liras, Head of the Treasury Department at the University of Barcelona says: “Implementing SEPA has led to account reconciliation becoming more agile and effective, and many providers appreciated the faster processing of payments.”

Key Information in this Article The University of Barcelona processed 2,632 SEPA transactions in 2013, amounting to a value of almost four million euro. These represent payments to suppliers located outside Spain (the University migrated, in a first step, cross-border payments). The University of Barcelona identifies, among others, the following advantages of migrating to SEPA:
  • Given that the University processes a high proportion of cross-border payments, the introduction of the SCT Scheme is a major advantage because it significantly reduces complexity and, consequently, leads to cost reductions.
  • Account reconciliation is more agile and effective, and many providers appreciate the faster processing of payments.
The main challenges throughout the SCT implementation phase were unrelated to the particulars of the SCT Scheme. Automated booking and reconciliation of incoming payments was the most important challenge during the initial project phase due to the fact that many European banks the University was doing business with in 2008 had not yet adapted their systems accordingly at that point. (The SCT Scheme was launched in January 2008.) Resu Rozas i Liras, Head of the Treasury Department at the University of Barcelona concurs with the other representatives of corporates, small and medium-sized enterprises, public administrations and government agencies, who reported on their successfully completed SEPA migration projects in the EPC Newsletter: the scope of change required to ensure SEPA compliance is extensive however, timely migration to the new SEPA payment schemes and technical standards is manageable, feasible and beneficial.

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Legal and Regulatory Issues

PSD2: European Parliament Economic and Monetary Affairs Committee (ECON) Draft Report Introduces Improvements and Reveals the Need for Further Clarifications, Says Payments Regulatory Expert Group Recommendation is to allocate sufficient time for the EU decision-making process on the PSD2 proposal to ensure best possible outcome

30.01.14 By Ruth Wandhöfer

In July 2013, the European Commission (the Commission) published its proposal for the second version of the Payment Services Directive (PSD2). The Commission counts on the European Union (EU) legislative bodies, i.e. the European Parliament and the Council of the EU representing EU Member States, to reach agreement on its proposal before the summer of 2014. The EU decision making has quickly gained pace with the European Parliament Economic and Monetary Affairs Committee (ECON) due to agree its position on the PSD2 text in February 2014. Some proposed changes to the text included with the related ECON draft report published in November 2013 appear to be key improvements. However, other draft amendments to the text considered by the ECON are less clear cut and in some areas the possibility for improving the PSD2 proposal has not yet been embraced. In this article, Ruth Wandhöfer, Chair of the European Banking Federation’s Payments Regulatory Expert Group (PREG), re-examines some of the key PSD2 provisions in light of the ECON draft report. Against the backdrop of the overall EU decision-making timetable, which could be seen to be ambitious, it is unclear whether some of the complex stumbling blocks in PSD2 can be properly resolved in time. The risk of agreeing headline requirements in the Directive without having a plan around executing compliance is high. This author suggests some potential solutions to key issues identified with PSD2 and hopes more time will be allocated to confirm the details of this important regulatory piece. The views expressed in this article are solely those of the author and should not be attributed to the European Payments Council.

Key Information in this Article The proposal for a revised Payment Services Directive (PSD2) published by the European Commission (the Commission) in July 2013 is currently being reviewed by both European Union (EU) legislative bodies, i.e. the European Parliament and the Council of the EU representing EU Member States. Member of the European Parliament (MEP) Diogo Feio is the Rapporteur of the European Parliament’s Economic and Monetary Affairs Committee (ECON) for PSD2. In November 2013, MEP Feio issued the ECON draft report including suggested amendments of the Commission’s proposed text for the PSD2. This article reflects the analysis of the European Banking Federation’s Payments Regulatory Expert Group (PREG) of the ECON draft report on PSD2. The PREG welcomes important improvements to the PSD2 text introduced with the ECON draft report. However, it also identified a number of areas of concern and need for further clarification in relation to, inter alia:
  • Third party payment service providers.
  • Authentication.
  • The concept of a ‘Single European Interface’ introduced with the ECON draft report.
  • One-leg-out transactions.
  • The Share-Charging-Principle.
  • Direct debit refund right.
  • International Bank Account Numbers on debit cards.
  • Non-execution, defective or late execution.
This article details the PREG proposals for further revision of the PSD2 text with regard to these aspects. The ECON will submit its report on PSD2 for vote by the European Parliament. In parallel, the Council of the EU representing EU Member States is reviewing the text for the PSD2 introduced by the Commission. In a next step of the co-legislative process, the European Parliament and the Council of the EU, together with the European Commission, will have to agree on the final version of the PSD2 text. Sources providing detailed information on the EU legislative process and the ECON draft report on PSD2 are included in the ‘related links’ at the end of this article. Jargon buster:
  • ECON – European Parliament Economic and Monetary Affairs Committee.
  • PSP – payment service provider.
  • PSU – payment service user.
  • AS PSP – account servicing payment service provider.
  • TPP – third party payment service provider – also referred to in other documents as TPPSP.
  • PIS TPP – third party payment service provider that offers payment initiation services.
  • AIS TPP – third party payment service provider that offers account information services.

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Opinion and Editorial

The Concept of an Open Standard Interface for Controlled Access to Payment Services (CAPS)A commentary: “Access to accounts – why banks should embrace an open future.”

30.01.14 By Michael Salmony

In this article, Michael Salmony provides a fresh perspective on the recent access to accounts initiative proposed by the European Commission (the Commission). Considering the history of success of open versus closed systems, (e.g. IBM, telecoms, etc), the regulator is of the opinion that it is now the banks’ turn to open up. As it is better to disrupt yourself rather than letting others disrupt you, the author proposes an open standard interface for controlled access to payment services (CAPS). The proposal for a revised Payment Services Directive (PSD2) introduced by the Commission in July 2013 provides some of the necessary prerequisites of such an approach. However, many questions remain to be answered and severe changes need to be made if the success of other industries is to be replicated here. Open access to bank accounts has the potential to lead to an explosion of innovation, competition and new services. New revenue streams will evolve and the banks themselves could even be one of the main beneficiaries from this dynamic environment - if they position themselves in a timely and proactive manner. The access to accounts will be a reality in the not too distant future - the regulator will enforce this (although he still has to set some boundary conditions for success). So banks should now prepare to shape this business opportunity to their advantage. This can lead to a situation where banks and other payment service providers, merchants and customers (payers) are markedly better off than today. The views expressed in this article are solely those of the author and should not be attributed to the European Payments Council.

Key Information in this Article In this commentary, the author outlines his concept of an open standard interface for controlled access to payment services (CAPS): CAPS are in contrast to current practices where the users’, i.e. payers’, full online banking credentials are passed on to third party service providers (TPPs) allowing them potentially full access to everything on the account: past history, salary incomes, security settings etc. It cannot be in the interests of the user and of a secure financial ecosystem to allow access to an account (often referenced as ‘XS2A’), this author argues. Instead, one should insist only on certain secure CAPS. Several options exist to physically implement such a standard interface, ranging from a pan-European standard application programming interface (API) across all banks to local solutions. In the interest of TPP developers and in line with the SEPA vision, the variability of standards across Europe should be minimised. A developer should be able to write an application that works across all European banks in a harmonised way (avoiding individual interfaces for each of the approximately 7,000 banks). The TPP should contract with contract aggregators, speaking for and bundling banking groups across Europe, to avoid having to negotiate with each bank individually. CAPS can provide some cornerstones of a framework within which the full potential can be unlocked. The following prerequisites must be met to make CAPS a success:

  • Third parties need to be certified and regulated, e.g. by the forthcoming revised Payment Services Directive (PSD2). (The European Commission introduced its proposal for PSD2 in July 2013.)
  • There need to be contracts with banks and merchants in place that clarify the liability partitions.
  • The system needs to be secure, handling access to accounts in a controlled way with authentication being given only for specific accesses.
  • Transactions need to be entirely controlled by consumers to avoid a situation where consumer account data is exploited without permission.
  • There needs to be a fee to be determined by market forces attractive enough for all parties, including merchants, banks and TPPs, to provide the infrastructure, develop innovative services and offer customer support.
The author concludes:
  • It is better to disrupt yourself rather than to let others disrupt you.
  • It is not about fighting for a larger slice of a given pie, but about jointly growing the cake with the potential to make all parties better off.
  • Let a fair and safe infrastructure develop and everybody wins.
This article was first commissioned by the Journal of Payments Strategy and Systems (JPSS). The European Payments Council (EPC) wishes to thank Henry Stewart Publications for the permission to publish this article in the EPC Newsletter.

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SEPA for Cards

EPC and Cards Stakeholders Group Publish the SEPA Cards Standardisation Volume Ready for Market Implementation Stakeholders active in the SEPA cards domain are encouraged to align services and products with version 7.0 of the SEPA Cards Standardisation Volume by January 2017

30.01.14 By Ugo Bechis

The European Union authorities driving forward the SEPA programme identified the need to create harmonised cards standardisation requirements throughout all countries across SEPA early in the process of integrating the market for electronic euro payments. In response to these expectations retailers, vendors, processors, card schemes and the European Payments Council (EPC) jointly created the Cards Stakeholders Group (CSG) in 2009. The CSG develops and maintains the SEPA Cards Standardisation Volume (the SCS Volume). This document defines a standard set of requirements to ensure an interoperable and scalable card and terminal infrastructure across SEPA, based on open international card standards. Following the public consultation on its provisionary version 6.5 in June and July 2013, the CSG has processed more than 2,000 comments received from market participants. On 7 January 2014, the EPC together with the CSG published version 7.0 of the SCS Volume, ready for market implementation. The six books of the SCS Volume version 7.0 cover a set of requirements applicable to card-present (face-to-face) transactions to allow investment decisions and implementation based on stable requirements. All stakeholders and interested parties active in the SEPA cards domain are encouraged to roll out services and products in line with the requirements set out in version 7.0 of the SCS Volume in a three-year period, i.e. by January 2017. In this article, Ugo Bechis outlines the content of the SCS Volume version 7.0 and the principles governing its future development.

Key Information in this Article The SEPA Cards Standardisation Volume (the SCS Volume) version 7.0 is a major achievement which reflects a unique multi-stakeholder effort in the area of cards. The Cards Stakeholders Group (CSG) specifically opted for the concept of conformance rather than compliance considering that alignment in SEPA with the SCS Volume is a voluntary decision by players active in the cards domain, and is not an obligation. The structure of the SCS Volume including separate books will facilitate future issuing of updated versions with amendments only to individual books as required. It also provides for the option to integrate further books addressing aspects other than those reflected in version 7.0. The SCS Volume leads to various benefits for the different groups involved in the SEPA cards domain. For retailers, vendors and payment service providers:
  • Benefits to the planning and stability of investments on terminals and on cards by market players.
  • Cost savings and stability will lead to cheaper, easier and broader acceptance both at national and cross border levels.
For consumers:
  • Increased security, transparency and indirect cost reduction is expected from standardisation.
  • Improved interoperability will facilitate a consistent customer payment card experience.
The SCS Volume security requirements for remote payments were on a separate public consultation in July to August 2013. It is planned to include card-not-present functional and security requirements in an SCS Volume related books update in 2015. This is in line with feedback received during the public consultation indicating the need for further in-depth dialogue on the topic. This approach also ensures consistency with new rules expected to be defined by the European authorities in the course of 2014.

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SEPA for Mobile

EPC Publishes Updated Mobile Wallet Payments White Paper The revised white paper was released in January 2014 following stakeholder review

30.01.14 By Dag-Inge Flatraaker

With mobile devices having achieved near full market penetration and increasingly rich functionality they are an ideal channel for SEPA payment instruments. Creating ease, convenience and trust for end-customers (payers/consumers and beneficiaries/merchants) is regarded as critical for the further development of mobile payments (m-payments). Since a mobile wallet may be considered a key tool to address these challenges, the European Payments Council (EPC) has decided to devote a white paper to this concept in relation to m-payments. This document outlines among other things, how trust in, (and availability of), a wide range of easy to use services offered with mobile wallets may be seen as a facilitator for m-payments. In July 2013 the EPC issued a first draft of the white paper on mobile wallet payments to seek comments from all interested parties and received feedback from 18 different stakeholders. Subsequent to careful analysis of the contributions received, the EPC has now published a final version of the white paper.

Key Information in this Article A white paper on mobile wallet payments has been published by the European Payments Council (EPC) which endeavours to:

  • Inform stakeholders about the EPC’s commitment to mobile payments (m-payments) in SEPA and the potential of the mobile channel to build on SEPA payment instruments. (Note that the concepts described in the white paper may also be applied to non SEPA areas.)
  • Inform on the new convenient, homogenous and seamless services access and new business opportunities enabled by the use of a mobile wallet to perform m-payment transactions.
  • Provide examples of the usage of a mobile wallet for mobile payments.
  • Outline the mobile wallet ecosystem and the different existing models for mobile wallets.
The white paper has been written in a non-technical style to inform payment service providers, their customers and all the stakeholders involved in the payments value chain about the EPC's views on the usage of mobile wallets as an enabler for m-payments in SEPA.

The document was made available for stakeholder review in July 2013 and incorporates feedback from 18 different stakeholders.

The newly published white paper is intended to be a useful resource for any stakeholders engaged in the debate around mobile wallets and their role in the payments landscape.

The link to the EPC white paper on mobile wallet payments is included in the ‘related links’ at the end of this article.

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