Number of payment service providers in the Single Euro Payments Area ( ) offering Credit Transfer services
The European Payments Council ( ) launched the Credit Transfer ( ) Scheme in January 2008. As of July 2014, 4,612 payment service providers ( ) offer services. The Participant Register, which lists the scheme participants, is publicly available at http://epc.cbnet.info/content/adherence_database.
Number of in offering Direct Debit services
The launched the Direct Debit ( ) Core Scheme and the Business to Business (B2B) Scheme in November 2009. As of July 2014, 3,925 have signed up to the Core Scheme. As of July 2014, 3,477 also adhere to the B2B Scheme. The separate Participant Registers for the Core and B2B Schemes list the participants taking part in these schemes. These registers are publicly available at http://epc.cbnet.info/content/adherence_database. All branches of in the euro area reachable for direct debits at national level must be reachable for cross-border direct debits, e.g. the Core Scheme, since 1 November 2010 as mandated by Article 8 of Regulation (EC) No 924/2009 on cross-border payments in the Community.
European Central Bank quantitative indicators measure the share of and transactions
The quantitative indicators published on the European Central Bank website (see ‘related links’ below) measure the share of and transactions as a percentage of the total volume of credit transfers and direct debits generated by bank customers in the euro area. According to the quantitative indicators, the share of transactions amounts to 96.7 percent as of June 2014, while the share of transactions has reached 95.0 percent.
1 August 2014 marks the end of the migration period in the euro area
In February 2012, the European co-legislators, i.e. the European Parliament and the Council of the European Union ( )1 representing governments, adopted the ‘Regulation ( ) No 260/2012 establishing technical and business requirements for credit transfers and direct debits in euro’, also known as the Regulation. This legislative act effectively mandates migration to and in the euro area by 1 February 2014.
To avoid difficulties for non-compliant market participants, in February 2014 the European Commission, the European Parliament and governments agreed amending the Regulation to give the option to continue processing non- formats in the euro area until 1 August 2014 (see link to ‘Regulation ( ) No 248/2014 amending Regulation ( ) No 260/2012 as regards the migration to Union-wide credit transfers and direct debits’ below).
Different euro area countries decided on different timelines during which they made use of the option to continue processing non- formats (i.e. some countries did so during the full six month additional transition period while others opted for a shorter timeline). The specific migration timelines applicable in the euro area countries were detailed in the article, entitled ‘Don't Count on 1 August 2014: Different Migration Deadlines Apply Across the Euro Area During the “Additional Transition Period” Agreed by the European Commission, the European Parliament and Governments’ published in the April 2014 edition of the Newsletter. (See ‘related articles in previous issues’ below.)
1 August 2014 does not mark the end of the migration process. Get ready for 2016. Act now
However, 1 August 2014 does not mark the end of the migration process. The following deadlines also apply2:
1 February 2016:
- Transitional arrangements in Member States: the Regulation has introduced several possible exemptions regarding the use of the International Bank Account Number (IBAN), the Business Identifier Code (BIC) and the ISO 20022 XML message standards by the February 2014 deadline. Member States have discretion as to whether they will use any or all of the options to derogate from the 1 February 2014 deadline (until 1 February 2016) with regard to the use of the IBAN, the BIC and the ISO 20022 XML message standards by payment service users.
- Niche products, which have been granted an exemption: the Regulation, in particular, stipulates that credit transfer and direct debit transactions with a cumulative market share of less than 10 percent in an Member State must comply with the provisions set out in this legislative act only by 1 February 2016.
31 October 2016: non-euro countries will have to comply with the Regulation by 31 October 2016.
It is important that, following 1 August 2014, countries in- and outside of the euro area do not overlook these other deadlines, but rather actively prepare to ensure that they are ready to meet them on time. The recommendation is to take advantage of the lessons learnt when preparing for 2016.
Preparation is everything and time is of the essence
migration is coordinated at national level. Article 10 (“Competent authorities”) of the Regulation details how this legislative act is to be enforced. It clarifies that Member States must designate the competent authorities at national level responsible for ensuring compliance with this Regulation. The list of designated national authorities responsible for ensuring compliance with the Regulation is available on the European Commission Website (see ‘related links’ below).
Coordination among all stakeholders involved in the migration process at national level is key
Meeting the next deadlines established by the lawmakers requires continued and coordinated efforts by the public authorities driving the process, the representatives of payment service users as well as banks and other service providers. In euro area countries that achieved high migration rates early in the process, the following factors contributed to ensuring an overall smooth transition: engagement and leadership by public authorities, cooperation of stakeholders based on a step-by-step implementation plan and targeted communication to ensure timely launch of migration projects at the level of individual organisations.
These actions are coordinated by National Coordination Committees. The European Central Bank makes available country-specific information including links to national websites and contact information of National Coordination Committees (see ‘related links’ below).
Early and targeted communication is required to raise awareness among payment service users and, in particular, small and medium-sized enterprises (SMEs) on the need to meet compliance requirements
The Regulation defines compliance requirements that have to be met by payment service providers and users, respectively. According to data made available by the European Central Bank, all payment service providers in the euro area were -ready by 1 February 2014. In the majority of euro area countries, payment service providers had already completed preparations in the third quarter of 2013.
The representatives of payment service users, who reported on their successfully completed migration projects in the Newsletter case studies section (see ‘related links’ below), confirm that timely migration to the new payment schemes and technical standards is manageable, feasible and beneficial. They also clarify however, that the scope of change required to ensure compliance is extensive. The data made available by the European Central Bank with regard to migration in the euro area showed that the corporate sector was generally well aware of the legal obligation to achieve compliance early in the process.
However, in May 2013 the Council of the representing governments recognised in its conclusions that – at the time – SMEs, small public administrations and local authorities in the euro area were “the least aware of migration and the least prepared for actual migration.” The Council of the therefore, called upon all Member States to “significantly intensify communication measures primarily at national level to eliminate existing public awareness gaps.” These communication measures, the Council of the stated, should especially target “SMEs, small public administrations and local authorities.” The Council of the proposed, among others, the following actions:
- National central banks, ministries of finance and other competent authorities, national banking federations and individual banks should enhance communication activities on migration through all relevant media channels.
- The European Commission and the European Central Bank should provide assistance and advice to the best of their abilities to fully support the migration process.
Taking into consideration the experience in the euro area, raising awareness among, in particular, SMEs and local public administrations in non-euro countries on the legal obligation to meet forthcoming migration deadlines should be a priority.
Payment service users should avoid the risks of late migration
With its second migration report published in October 2013, the European Central Bank identified, among others, the following risks for payment service users stemming from late migration:
- The limited capacity and bottlenecks at payment service providers and software vendors. Even if many service providers are aware of the increased demand for their services in order to assist with the migration of payment service users by a given compliance date, there may simply not be enough resources if huge numbers of customers concentrate their changeover into a single very tight time frame.
- Insufficient end-to-end testing between end users and payment service providers. Even if systems are prepared for testing several weeks before the deadlines, there may be bottlenecks in resources and bandwidth. Payment service providers’ test systems are, generally-speaking, not designed to process files or data from a very large number of customers at the same time. This could prevent the payment service users from carrying out the proper end-to-end testing required before going live with their own systems.
The European Central Bank also pointed out that the experiences of those stakeholders in the euro area that have already completed migration show that there is a real need for a fine-tuning period after changeover. The recommendation is that the payment service users concerned in euro and non-euro countries plan their migration projects keeping in mind these findings.
It is recommended that payment service providers make available -compliant customer-servicing channels early
In its first migration report published in March 2013, the European Central Bank stated: “There is a causality dilemma between the availability of -compliant customer-servicing channels and payment service users’ ability to complete their internal migration projects, owing to the need to align and test data streams.” The European Central Bank therefore, recommends that payment service providers should make available customer-servicing channels ready for transactions as soon as possible.
Last but not least, payment service users have the opportunity to take advantage of a host of tools offered by banks and other service providers supporting the transition to the payment schemes and technical standards. These include, for example, tools to facilitate the conversion of account data to the IBAN and to adapt to the usage of ISO 20022 XML message standards in the customer-to-bank space in relation to files of payment transactions.
In summary, preparation is everything and time is of the essence. This applies to all parties involved, i.e. public authorities, payment service providers and users – in both euro and non-euro countries.
Get ready for 2016. Act now.
Etienne Goosse is the Secretary General.
European Commission Website: Information on Transitional Arrangements in EU Member States Permissible Under Regulation 260/2012 (the SEPA Regulation) and List of Competent Authorities Responsible for Ensuring Compliance (Items Posted on 23.07.2013)
Related articles in this issue:
SEPA 2.0: an Overview of Regulatory Action Now in the Pipeline Impacting the European Payments Market Going Forward. The European authorities have clarified that migration to harmonised SEPA payment schemes and technical standards does not conclude this EU integration project
Get Ready for 2016 and Get Inspired: the Belgian Experience Shows that Timely Migration to SEPA Is Manageable and Feasible. Best practice identified by the Belgian Steering Committee on the Future Means of Payment chaired by the National Bank of Belgium
Related articles in previous issues:
Don't Count on 1 August 2014: Different SEPA Migration Deadlines Apply Across the Euro Area During the “Additional Transition Period” Agreed by the European Commission, the European Parliament and EU Governments (EPC Newsletter, Issue 22, April 2014)
Migrating Deadlines: Pushing Back the Migration Date for SEPA Credit Transfers and Direct Debits. Will the Amending Regulation cause great confusion in the European payments market? (EPC Newsletter, Issue 22, April 2014)
1 The Council of the is the institution where the national Member States’ government representatives sit, i.e. the ministers of each Member State with responsibility for a given policy area.
2 Refer to Article 16 of the ‘Regulation ( ) No 260/2012 establishing technical and business requirements for credit transfers and direct debits in euro’ (the Regulation).
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