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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 7 - July 2010

Focus: SEPA Migration

Promoting the SEPA VisionEuropean Commission and ECB establish the SEPA Council

19.07.10 BY Gerard Hartsink

INTRODUCTION AND SUMMARY

The objective of the SEPA Council recently established by the European Commission and the European Central Bank is to promote the realisation of an integrated euro retail payments market by fostering consensus between all major stakeholders on the next steps towards the full realisation of SEPA. At its inaugural meeting in June 2010, the SEPA Council - bringing together representatives of both the demand and supply sides including the EPC - endorsed a formal declaration stressing "their strong support for the establishment of end-date(s) for migration to SEPA Credit Transfers and SEPA Direct Debits by means of legislation at EU level". Gerard Hartsink outlines the specific objectives of the SEPA Council. The open question at this point is whether its members actually share a common SEPA vision.

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The mission of the SEPA Council

The EPC welcomes the establishment of the SEPA Council. The EPC hopes that this initiative will clarify that the EPC is not responsible for the over-all management of the SEPA process nor is it the task of the EPC to drive forward concerted migration to SEPA on both the supply and demand sides, as is sometimes - mistakenly - assumed. Self-regulatory efforts by the European banking industry cooperating in the EPC are exclusively aimed at defining the business rules and standards governing the SEPA Schemes and Frameworks in close dialogue with the entire user community and to engage the banking industry in the process of implementing these Schemes and standards.

The EPC is fully committed to achieving - together with all members of the SEPA Council, in particular the representatives of consumers, SMEs, retailers, corporates and public administrations - the agreed objectives of the SEPA Council. The specific aims of the SEPA Council are:

  • To promote the realisation of the SEPA vision and provide a strategic direction for EU retail payments;
  • To monitor and support the SEPA migration process; and
  • To ensure accountability and transparency of the SEPA process.

The SEPA Council may provide guidance and / or statements, where possible on a consensual basis. As such it will not be an official decision making body. Its role is: (i) to foster a consensus among all stakeholders involved on the future direction of the SEPA project and on the possible initiatives to be taken by the relevant actors; (ii) to ensure a proper implementation of the positions it has taken through appropriate follow-up actions. Members are expected to commit and engage the sectors they represent, and ensure that an appropriate follow-up is given to their deliberations. The SEPA Council shall have no powers to impose binding measures.

The set-up and good functioning of the SEPA Council is seen by market participants as a prerequisite for proper governance and a successful and timely implementation of the SEPA project.

All members of the SEPA Council stress "their strong support for the establishment of end-date(s) for migration to SEPA Credit Transfers and SEPA Direct Debits by means of legislation at EU level"

In a formal declaration (see link below), all the members of the SEPA Council present at its inaugural meeting in June 2010, stressed their "strong support for the establishment of end-date(s) for migration to SEPA Credit Transfers and SEPA Direct Debits by means of legislation at EU level and welcomed the intention of the European Commission to come forward with a legislative proposal in close cooperation with the European Central Bank".

The Members of the SEPA Council further considered that "a number of important framework conditions need satisfactory and urgent resolution. These include: targeted communication efforts by the national authorities; the banking industry and the national SEPA Coordination Committees to improve the general perception of the project and to facilitate user-friendly market migration; accelerated migration by high volume payment users, in particular public authorities; the offer of attractive pan-European SEPA payment products meeting customers' expectations; and ensuring an economically viable model for all stakeholders for SEPA Direct Debits".

Last but not least, the members of the SEPA Council "commit to cooperate amongst themselves on the prompt realisation of these framework conditions to ensure rapid and full migration to SEPA with the support of the European Central Bank and the European Commission".

The devil is in the details

The formal declaration of the SEPA Council outlined above exemplifies the challenge at hand: the fact of the matter is that the vast majority of stakeholders on both the demand and supply sides realised already some years ago that binding deadlines must be set for migration to SEPA through legislation at EU level. In this light, the related declaration of the SEPA Council loses some of its glamour. It also needs to be kept in mind that currently it is not clear whether all the members of the SEPA Council share a common vision of what "the establishment of end-date(s) for migration to SEPA Credit Transfers and SEPA Direct Debits" actually means.

The Commission services recently tabled a first outline of a possible legislative intervention setting end dates for compliance of euro credit transfer and euro direct debit schemes with so-called "essential requirements". In the view of the EPC, this forthcoming piece of legislation, as currently envisaged, would fail to achieve the SEPA objectives endorsed also by the SEPA Council. For details on this matter, refer to the article "On Payments and Light Bulbs. Is the Commission ready to write off SEPA via EU legislation" in this Newsletter (a link is included below).

The EPC fully supports the call of the European Parliament, the Economic and Financial Affairs Council (ECOFIN)1, the European Central Bank and the SEPA Council to establish end-date(s) for migration to SEPA Credit Transfers and SEPA Direct Debits by means of legislation at EU level. The European Parliament in March 2010 again called "on the Commission to set a clear, appropriate and binding end-date, which should be no later than 31 December 2012, for migrating to SEPA instruments"2. On 2 December 2009, the ECOFIN concluded that "establishing definitive end-dates for migration [to SEPA Credit Transfer and SEPA Direct Debit] would provide the clarity and the incentive needed by the market, ensuring that the substantial benefits of SEPA are rapidly achieved and that the high costs of running both legacy and SEPA products in parallel can be eliminated"3. The ECB / Eurosystem continues to strongly support the creation of an integrated euro payments market where "individuals and companies are able to make cashless payments throughout the euro area from a single payment account anywhere in the euro area, using a single set of payment instruments as easily, efficiently and safely as they can make them today at the national level"4.

The EPC proposes to set a binding end date for migration to the SEPA Schemes developed by the EPC in close dialogue with the customer community through EU Regulation. Such a Regulation must stipulate end dates for the phasing out of existing national euro credit transfer and euro direct debit schemes. This option has the advantage of a concrete and tangible basis for speedy migration. It also reflects the expectations expressed by regulators throughout the past decade5 to create an integrated euro payments market based on a single set of SEPA Schemes.

The EPC assumes that this is the SEPA vision which the SEPA Council will promote.

Gerard Hartsink is the Chair of the European Payments Council.

Related link:

SEPA Council: Formal Declaration on End-Date(s)

Related articles in this issue:

On Payments and Light Bulbs. Commission ready to write off SEPA via EU legislation?

Why change? Why me? Why now? The political mismanagement of the SEPA process reinforces resistance to change

SEPA in the Context of the Financial Crisis. Retail payments business proves to be resilient

Related articles in previous issues:

On SEPA and US Health Care Reform. The EC paper 'SEPA Migration End-Date': a commentary (EPC Newsletter, Issue 6, April 2010; this article analyses a Discussion Paper tabled by the European Commission in March 2010 outlining alternative approaches, including regulatory intervention, aimed at ensuring migration to SEPA)

The Art of communicating SEPA (EPC Newsletter, Issue 6, April 2010)

Clarity and Incentives needed. ECOFIN conclusions of December 2009 on setting an end date for migration to SEPA (EPC Newsletter, Issue 5, January 2010)

The X Factor. Are EU governments still committed to making SEPA a reality? (EPC Newsletter, Issue 4, October 2009)

 


1The ECOFIN comprises the Finance and Economic Ministers of EU Member States.

2European Parliament Resolution of March 2010 on the Implementation of the Single Euro Payments Area:
http://www.europarl.europa.eu/sides/getDoc.do?type=TA&reference=P6-TA-2009-0139&...

3ECOFIN Conclusions on SEPA of December 2009 available at http://www.europeanpaymentscouncil.eu/knowledge_bank_detail.cfm?documents_id=343

4Speech Gertrude Tumpel-Gugerell, Member of the Executive Board of the European Central Bank, at the EPC SEPA Direct Debit Launch Event on 13 October 2009 in Brussels: "Payments are becoming European" available at  http://www.europeanpaymentscouncil.eu/knowledge_bank_detail.cfm?documents_id=293

5For extensive, if not exhaustive, references of statements by European public authorities including the European Commission calling for the replacement of national legacy euro payment schemes by a single set of SEPA Payment Schemes developed by the EPC refer to the article "On SEPA and US Health Care Reform" (EPC Newsletter, issue 6, April 2010): http://www.europeanpaymentscouncil.eu/article.cfm?articles_uuid=3A0930B5-EB05-B21D-9E35D23E2721C3F1

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