Conclusions Agreed at Multi-Stakeholder Workshop to Discuss Minimum Re...

Conclusions Agreed at Multi-Stakeholder Workshop to Discuss Minimum Requirements for 'BIC from IBAN Derivation' Solutions for Cross-Border SEPA Transactions

European law mandates transition to the 'IBAN only' SEPA environment by February 2016

30 October 13

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The multi-stakeholder workshop to discuss minimum requirements for ‘BIC from IBAN derivation’ solutions for cross-border transactions took place on 24 September 2013

In the Summer of 2013, the European Payments Council () reached out to all stakeholders via the Newsletter (see ‘related articles in previous issues’ below) and other communication platforms to indicate whether there would be interest to initiate a dialogue on the minimum requirements for cross-border ‘Business Identifier Code (BIC) from International Bank Account Number (IBAN) derivation’ solutions. The offered to host a related workshop open to any interested party subject to sufficient interest being expressed by both the demand and the supply sides in the Single Euro Payments Area () to jointly work on the minimum requirements for any reliable cross-border ‘BIC from IBAN derivation’ solutions. This workshop with more than 50 participants representing solution providers, corporate payment service users, national central banks, the European Central Bank (ECB), the European Commission and payment service providers () took place on 24 September 2013 in Brussels.

Recap of the subject matter addressed at the multi-stakeholder workshop

The ‘IBAN only’ rule established with Regulation () 260/2012, also known as the Regulation

The European Union (EU) ‘Regulation (EU) No 260/2012 establishing technical and business requirements for credit transfers and direct debits in euro’ (the Regulation) stipulates the timeline for application of the so-called ‘IBAN only’ rule. This provision is relevant for both and payment service users (). Article 5 (7) of the Regulation, states: “After 1 February 2014 for national payment transactions and after 1 February 2016 for cross-border payment transactions, shall not require to indicate the BIC of the of a payer or of the of a payee.” Article 16 (6) however, provides EU Member States in the euro area with the option to defer application of the ‘IBAN only’ rule for national transactions to 1 February 2016. Outside the euro area the deadline for national and cross-border transactions is 31 October 2016. The EU legislator, i.e. the European Parliament and the Council of the EU (made up of representatives of the 28 EU Member States), introduced the ‘IBAN only’ rule at the last stage of the legislative process leading to the adoption of the Regulation in February 2012. Recital (8) of the Regulation simply states that “in the vast majority of payment transactions in the [European] Union, it is possible to identify a unique payment account using only IBAN without additionally specifying BIC.” However, for payments, a “vast majority” – as stated in Recital 8 – is not enough for ; they need as close as possible to 100 percent reliability when determining the of the receiver in order to ensure timely and proper execution of the payment instruction.

Impact of the ‘IBAN only’ rule with regard to the processing of Credit Transfer and Direct Debit transactions

The Credit Transfer () and Direct Debit (SDD) Schemes developed by the in close dialogue with the customer community have to comply with the technical requirements detailed in Article 5 and in the Annex to the Regulation. The and SDD Schemes have relied on the provision of both the IBAN and the BIC since their inception. With the introduction of the ‘IBAN only’ rule however, (i.e. Article 5 (7) of the Regulation), the legislator has effectively removed this requirement. Consequently, the has aligned the wording of the and SDD Rulebooks version 7.0, the Rulebook version 7.0, and the SDD Business to Business Rulebook version 5.0 to take effect on 1 February 2014, where necessary with the Regulation. (For more information on the and SDD Rulebook versions to take effect on 1 February 2014, refer to the Blog published on 30 November 2012 included in the ‘related links’ below).

will however have to indicate the BIC when executing a payment transaction on behalf of a in the interbank space; i.e. when moving funds (money) from account A to account B. The IBAN identifies the account that should be debited or credited; the BIC identifies the bank (branch) where this account is held. As a result, offering and SDD services will need a tool which allows them to derive the BIC from the IBAN. This will then enable the of the party originating the payment to add the mandatory BIC information required to send the ISO 20022 payment message to the clearing and settlement mechanism1 or directly to the of the beneficiary. An internal survey carried out by the at the end of 2012 indicated that no mature solution seemed to be in place which allows deriving the BIC from any IBAN with regard to cross-border transactions.

Conclusions agreed at the multi-stakeholder workshop to discuss minimum requirements for ‘BIC from IBAN derivation’ solutions for cross-border transactions

A summary of the discussions at the workshop was agreed with the workshop participants and published on the Website (see ‘related links’ below). The workshop participants noted the following points:

  1.  The BIC from IBAN derivation solution providers (in attendance) will provide to the ECB:
    • The concrete data elements these solution providers need from the national issuing and/or managing authorities in charge of bank/sort code issuance and maintenance for and SDD payments.
    • Which countries still cause data feed issues to close the remaining data ‘grey zones’.
  2.  Through various channels, the ECB shall seek to compile the list of the 33 national issuing and/or managing authorities in charge of bank/sort code issuance and maintenance in each country. This list can then be made available to any interested party.
  3. In case the ECB would be unsuccessful in providing the complete list of all 33 national issuing and/or managing authorities, the alternative route to obtain these details could be via the ISO Working Group responsible for the maintenance of ISO 13616 (Financial services - International Bank Account Number (IBAN)). The National Adherence Support Organisations (NASOs)2 could also be used to get the missing information.
  4.  The concerned interested solution providers and the national issuing and/or managing authorities in charge of bank/sort code issuance and maintenance have to agree among themselves about the technical specifications for any BIC from IBAN derivation solutions (including any exceptions).
  5.  The will examine whether there is any need to implement in the Scheme Rulebooks a provision for the to provide the data necessary for BIC from IBAN derivation solutions and – if so – to which party.
  6.   will formally communicate on the outcome of this workshop.

No follow-up meeting has been determined.

Jean-Yves Jacquelin is the Chair of the Payment Schemes Working Group.

 

Related links:

Summary of Workshop on Minimum Requirements for Cross-Border BIC from IBAN Derivation Solutions (24 September 2013)

Regulation (EU) No 260/2012 establishing technical and business requirements for credit transfers and direct debits in euro and amending Regulation (EC) No 924/2009

EPC Website: IBAN and BIC

SEPA Council Page of the European Central Bank

European Commission Website: see PDF, entitled: ‘Usage of Member States options’ (Article 16)

European Central Bank Website: Fact Sheets Providing Country-Specific Information Related to Regulation (EU) 260/2012

EPC Blog (15 March 2012): Get Ready for SEPA by February 2014 - Early Movers on the Customer Side Share Lessons Learnt. Why IBAN and BIC Remain Important for Bank Customers

EPC Blog (30 November 2012): SEPA Credit Transfer Rulebook Version 7.0, SEPA Direct Debit (SDD) Core Rulebook Version 7.0, SDD Business to Business Rulebook Version 5.0 and Associated Implementation Guidelines to Take Effect on 1 February 2014 Published

    

Related articles in previous issues:

Let's Get Together: EPC Invites Stakeholders to Jointly Develop Minimum Requirements for 'BIC from IBAN Derivation' Solutions for Cross-Border SEPA Transactions. European law mandates transition to the 'IBAN only' SEPA environment by February 2016 ( Newsletter, Issue 19, July 2013)

The Long Road to Harmonisation: Transitional Arrangements in European Union Member States Permissible Under Regulation 260/2012 (the SEPA Regulation). European Commission and European Central Bank provide information on national derogations ( Newsletter, Issue 18, April 2013)

Newsletter: Articles Published in the Section ‘SEPA Credit Transfer (SCT) and SEPA Direct Debit (SDD)’



1 The term payment system as defined in the Payment Services Directive (PSD), means a funds transfer system with formal and standardised arrangements and common rules for the processing, clearing and / or settlement of payment transactions. In other words, a funds transfer system enables the exchange of funds (money) and messages between two executing a payment transaction. These funds transfer systems can be as well as separate business - public or private - entities (which may or may not be owned by banks). In the SEPA context, a payment system which is a ‘funds transfer system’ is referred to as a clearing and settlement mechanism (CSM).

2 National adherence organisations (NASOs) participate in the adherence process with a view to ensuring the effective, efficient adherence of payment service providers to the and SDD Schemes.



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