In the Summer of 2013, the European Payments Council ( ) reached out to all stakeholders via the Newsletter (see ‘related links’ 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. A summary of the discussions at the workshop was agreed with the workshop participants and published on the Website (see ‘related links’ below).
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 ( ) ‘Regulation ( ) 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 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 legislator, i.e. the European Parliament and the Council of the (made up of representatives of the 28 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 ( ) 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 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 Rulebooks version 7.0, the Core Rulebook version 7.0, and the B2B Rulebook version 5.0 to take effect on 1 February 2014, where necessary with the Regulation. (For more information on the and Rulebook versions to take effect on 1 February 2014, refer to the Blog published on 30 November 2012 included with the 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 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 mechanism 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
The workshop participants noted the following points (as mentioned above, the full summary of the workshop is available with the links below):
- 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 payments.
- Which countries still cause data feed issues to close the remaining data ‘grey zones’.
- 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.
- 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 Organizations (NASOs) could also be used to get the missing information. (NASOs participate in the adherence process with a view to ensuring the effective, efficient adherence of to the and Schemes.)
- 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).
- 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.
- will formally communicate on the outcome of this workshop.
No follow-up meeting has been determined.
- Summary of Workshop on Minimum Requirements for Cross-Border BIC from IBAN Derivation Solutions (24 September 2013)
- EPC Newsletter (July 2013): Let's Get Together: EPC Invites Stakeholders to Jointly Develop Minimum Requirements for 'BIC from IBAN Derivation' Solutions for Cross-Border SEPA Transactions
- Regulation (EU) No 260/2012 establishing technical and business requirements for credit transfers and direct debits in euro (the SEPA Regulation)
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