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In your view, which of the following initiatives will have the greatest impact on the European payments market?

European Commission proposal for revised Payment Services Directive (PSD2)
European Commission proposal for new Regulation on interchange fees for card-based payment transactions
Work programme of Euro Retail Payments Board, chaired by European Central Bank
SecuRe Pay Forum recommendations for security of internet payments; for payment account access services; for security of mobile payments
Guidelines and technical standards issued by European Banking Authority pursuant to mandate provided by proposed PSD2 (Articles 86, 87)
or show results

 

EPC Newsletter
Issue 4 - October 2009

Get Ready for SEPA

Facing the Facts in October 2009The EPC Newsletter tracks the progress of SEPA implementation

30.10.09 BY Herman Segers

INTRODUCTION AND SUMMARY

To allow all parties concerned, including the business community, public administrations, banks and the political drivers of the SEPA initiative to track the progress of SEPA roll-out, the EPC Newsletter provides the latest data available on the subject. In addition, the EPC Market Uptake Report keeps an eye on the availability of measures put in place by public authorities to facilitate the change-over for customers. Herman Segers presents the latest facts and figures available. As of October 2009 the situation remains essentially unchanged: whilst the payments industry comes through on its committed SEPA deliverables as scheduled, the market is awaiting incentives by the political drivers of SEPA that will ensure planning security for all stakeholders, such as setting a deadline for migration.

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Percentage of banks in SEPA offering SCT services 

As of October 2009, nearly 4500 banks in 32 countries offer SEPA Credit Transfer (SCT) services for euro payments. The payment service providers offering SCT services today represent roughly 95 percent of payment volume in Europe. Due to mergers and acquisitions the absolute number of SCT scheme participants has slightly decreased compared to the SEPA Market Uptake Report featured in the July 2009 edition of this Newsletter.

Percentage of SCT transactions compared to total volume generated by customers

According to the SEPA Indicators compiled by the European Central Bank, the share of SEPA Credit Transfers (SCT) as a percentage of the total volume of credit transfers generated by bank customers amounts to 4.5 per cent as of August 2009 (latest data available). The SCT Scheme was launched in January 2008.

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 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. 

Launch of the SEPA Direct Debit Schemes

The EPC launches the SEPA Core Direct Debit Scheme and the SEPA Business to Business Direct Debit Scheme on 2 November 2009. As of this date, banks throughout SEPA are gradually starting to deliver SEPA Direct Debit services to their customers. All branches of banks in the euro area must be reachable for SEPA Core Direct Debit by 1 November 2010 as mandated by the EU Regulation on cross-border payments in the Community. The EPC confirms a successful kick-off: 2607 banks representing about seventy per cent of SEPA payment volumes have signed up to the new schemes and are ready to roll-out SEPA Direct Debit services from 2 November 2009 onwards. Of those, 2366 banks are offering both SDD Core and SDD B2B services.

SEPA for Cards: tracking EMV roll-out

As reported in the previous issues of the EPC Newsletter, 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 in SEPA is monitored. According to the latest findings of the EPC Cards Working Group, as of end second quarter 2009, EMV compliance is 67 per cent for cards (up from 62 per cent), 73 per cent for POS (up from 68 percent) and 85 per cent for ATMS (up from 83 per cent).

SEPA preparedness of the public sector

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.

As reported in the previous issue of this Newsletter, the First Annual Progress Report on the State of SEPA Migration in 2008 issued by the European Commission in February 2009 concluded: “Since its launch, the uptake of SCT in the public sector has been very limited.”

In July 2009 the Commission Services published the results of the second survey on the preparedness and migration of public administrations to SEPA for the reporting period of March 2009. Key findings of this survey indicate that at this stage general SEPA preparedness of public administrations seems to be progressing at a faster pace than actual migration and consequently a significant increase in SEPA Credit Transfer rates could be expected during the remainder of 2009 and in the course of 2010. A link to the survey analysis is included at the end of this article. Updated figures regarding the SEPA preparedness of the public sector are expected early 2010.

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 SEPA Scheme, even if these do not incidentally meet all the requirements of the SEPA mandate. Where necessary, EU Member States must devise legislative solutions to ensure the continued legal validity of existing mandates under the SEPA Direct Debit Scheme.

According to the First Annual Progress Report on the State of SEPA Migration in 2008 issued by the European Commission in February 2009, the following 13 Member States have found a solution to ensure the continued legal validity of existing direct debit mandates when migrating to SEPA: Austria, Belgium, France, Ireland, Italy, Netherlands, Portugal, Slovakia, Bulgaria, Denmark, Estonia, Romania and Sweden. In his speech at the EPC Direct Debit Launch Event on 13 October 2009 in Brussels EU Commissioner Charlie McCreevy stated: “One remaining obstacle is the absence of guarantees in all Member States on the continued legal validity of existing direct debit mandates when migrating to SEPA Direct Debit. Based on the latest news we have received, with the important exception of Germany, this no longer seems a problem within the euro area”. Direct debits are used twice as much in Germany as in the whole of the European Union.

Setting a deadline for migration to SEPA

At this point, the majority of concerned parties shares the view that one or several end dates need to be defined if SEPA momentum is to be maintained and creating clarity for all stakeholders is to be ensured. The EPC recognises that making public the fact that there will be an end date is actually more important now than selecting the actual end date. The European Central Bank (ECB) observes that “corporations and public administrations (...) still take a cautious approach” towards SEPA implementation. To break that circle of “wait and see”, states the ECB, a migration end date from which point onwards only the European payment instruments will exist is needed. The European Parliament called on the European Commission to set a “clear, appropriate and binding end date, which date should not be later than 31 December 2012, for migrating to SEPA products”.The European Commission believes that an end date would send a strong signal to all stakeholders that SEPA migration is an irreversible process and would provide certainty so that stakeholders could adopt a SEPA strategy and plan necessary investments in the next few years.

In June 2009 the European Commission launched a consultation on whether and how deadlines should be set for the migration of existing payment products – i.e. credit transfers and direct debits – to the new Single Euro Payments Area (SEPA) products. For details on the feedback received during this consultation please refer to the article “Towards a SEPA migration end date? Commission services publish feedback on public consultation on possible end date(s) for SEPA migration” in this Newsletter (see link below). The Commission will discuss this matter with Member States before taking a decision on how best to proceed.

Herman Segers is the Secretary General of the EPC.

 

Related Links:

The results of the second Commission survey on public administrations migration to SEPA are available at the following website: 
http://ec.europa.eu/internal_market/payments/docs/sepa/publ_adm_migration-2009_07_en.pdf

Related Articles:

The X Factor. Are EU governments still committed to making SEPA a reality?

Towards a SEPA migration end date? Commission services publish feedback on public consultation on possible end date(s) for SEPA migration

Public Administrations do not fully meet expectations – yet. Commission services publish latest data on SEPA preparedness of public sector (EPC Newsletter, Issue 3)

SEPA only: the EPC Vision (EPC Newsletter, Issue 2)

 

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