The establishment of the Scheme Management Board
The principles governing the administration and evolution of the Credit Transfer () and Direct Debit (SDD) Schemes are set out in the Scheme Management Internal Rules (SMIRs), which are included as an Annex to the , and SDD Business-to-Business (B2B) rulebooks. The SMIRs are binding on both the European Payments Council () and the scheme participants, i.e. payment service providers () that have formally adhered to the and SDD schemes.
On 31 October 2014, the launched a 90-day consultation among scheme participants on the draft revised SMIRs amended in line with the new governance model. The draft revised SMIRs reflected certain changes to governance aspects of the and SDD Schemes and the establishment of the Scheme Management Board (SMB).
Following a 90-day public consultation, which was concluded on 30 January 2015, the published amended SMIRs on 3 April 2015 which came into force the same day (see ‘related links’ below). As of 3 April 2015, the SMB became responsible for performing the functions of the Scheme Management. The work of the SMB relies on preparatory work carried out by the Scheme Evolution and Maintenance Working Group, which represents scheme participant communities. The overview below gives the Scheme Management structure in the overall structure.
The establishment of stakeholder forums
Having called for candidates between 17 April 2015 and 15 May 2015, the SMB agreed on the composition of both the Scheme End-User Forum (SEUF) and the Scheme Technical Forum (ESTF).
In 2014, the resolved to adapt its governance model (see link to Blog under ‘related links’ below). The new governance model became operational with the publication of the revised Charter in February 2015 followed by the publication of the amended SMIRs in April 2015. The adjustments to its governance model are of an evolutionary, rather than a revolutionary, nature.
Dialogue with representatives of payment service users had previously taken place in the ’s Customer Stakeholder Forum which was established in 2007. This cooperation is now further enhanced and formalised with the SEUF. This forum is composed of representatives from European associations representing the demand side of the payments market. It is anticipated that the SEUF will meet either physically, or by telephone conference, at least twice a year.
In order to strengthen the dialogue between the and the scheme-compliant clearing and settlement mechanisms (CSMs), the Clearing and Settlement Forum was created in 2011. With the new governance model operational, the Clearing and Settlement Forum has been replaced by the ESTF. The scope of the ESTF has been expanded to foster communication with representatives of CSMs as well as with technology and service providers developing technical solutions. The ESTF will meet either physically, or by telephone conference, at least twice a year.
There are still seats available for representatives of European end-user associations in the SEUF. Technical players that are active in multiple countries or are from European associations of technical players that provide services and products which facilitate the processing of and/or SDD instructions or offer value-added and/or SDD services in the interbank, customer-to-bank (C2B) or in the bank-to-customer (B2C) spaces can still apply to become a member in the ESTF.
More information about the criteria for membership in the SEUF and in the ESTF as well as the email addresses where the SEUF and ESTF application letters can be submitted, can be found in ‘related links’ below.
The Euro Retail Payments Board’s recommendations
The SMB also acted to meet recommendations made by the Euro Retail Payments Board (). The , a high-level entity chaired by the European Central Bank (ECB) brings together the supply and the demand side of the industry to address strategic questions relating to euro retail payments. Following its meeting of 1 December 2014, the issued a statement which made a number of recommendations to the with respect to -SDD post-migration issues and pan-European electronic mandates for SDD, related to the following: the possibility of mandatory implementation guidelines () for the C2B and/or B2C spaces; the potential use of the legal entity identifier (LEI) in the three Scheme Rulebooks; the use of electronic mandate solutions; and the reachability of the SDD business-to-business (B2B) scheme.
The possibility of mandatory implementation guidelines for the customer-to-bank space
The recommends further harmonisation of the Extensible Markup Language (XML) message formats in the C2B domain of the and SDD transactions.
Various countries and scheme participants have created their own configurations (‘flavours’) of the XML-based payment messages in the C2B space. Corporate customers that transact in various countries and/or with different partners will also need to implement these C2B interface ‘flavours’.
Harmonising XML formats in the C2B space would reduce costs for corporate payment service users () in establishing and maintaining different interfaces with their and also increase competition by making the process of changing easier. The recommends making the ’s C2B mandatory in the next rulebook change management cycle.
The SMB has started reviewing obstacles in the current C2B versus the XML Schema Definition (XSD) schemas and analysing approaches on how an scheme participant would be obliged to accept at least, but not exclusively, C2B payment message files based on the ’s C2B scheme .
The SEUF and the ESTF will be asked to share their views on this matter in the third quarter of 2015. The SMB will work out a proposal in the fourth quarter of 2015.
The possibility of mandatory implementation guidelines for the bank-to-customer space
Corporate have indicated that basic account statements in XML message format should be offered in the B2C space. A harmonisation of XML formats in the B2C space would reduce costs for corporate in establishing and maintaining different interfaces with their and increase competition by making the process of changing easier. The recommendation is that the makes the B2C implementation guidelines mandatory in the next rulebook change management cycle.
The SMB has started to investigate the possibilities for mandatory scheme B2C for , and . The SEUF and the ESTF will be contacted in the third quarter of 2015 for their views about the possibilities for scheme B2C . The SMB will draw its conclusions at the end of the third quarter of 2015 as there are currently no B2C available.
The potential added value of the use of the Legal Entity Identifier
Due to the absence of central Creditor Identifier (CI) issuance or harmonisation in the issuance of CIs, some difficulties have been reported that may hinder the cross-border use of SDD. The recommendation is to include in the document ‘Creditor Identifier Overview’ (EPC262-08) clarifications about the possible use of a single CI across . The document will also include contact details of the department at the national institution in charge of CI issuance in those countries where CIs are issued by a single authority. The SMB published an updated version of the document in June 2015 (see ‘related links’ below).
The also recommended finding more appropriate attributes in a long term perspective (e.g., Legal Entity Identifier (LEI) as a unique entity identifier) to identify an SDD creditor. After consultation of the SEUF and the ESTF on the LEI, the SMB will determine its position concerning the potential added value of the LEI in the SDD and the schemes during the fourth quarter of 2015.
The use of electronic mandate solutions
The has again highlighted the importance that all creditors using SDD, should have a clear understanding of the consequences of their choice regarding electronic mandate solutions. The recommendation is to develop, and make publicly available (alongside the SDD rulebooks), a clarification paper which will explain to the creditor the possible risks (liabilities) of not being able to prove to the debtor that a legally binding electronic signature method was used. The SMB published its own clarification paper on the subject in May 2015 (see ‘related links’ below).
The reachability of the scheme
As an optional scheme, the scheme has less of a reach than the scheme. Creditors and/or creditor banks have to check if the debtor bank is already an scheme participant or not.
In June 2015, the SMB approached those scheme participants that are not scheme participants to reconsider adhering to the scheme when offering services to businesses.
In addition to the above, the SMB also made decisions on the following matters, unrelated to the .
and SDD investigations and recalls with regard to the Scheme Rulebooks
The SMB has been informed about previous discussions between scheme participants with regard to inquiries about and SDD transactions in general and about inquiries for recalls in particular. So far, the scheme rulebooks do not cover general inquiry processes. If these specific processes were to be included in future rulebooks, a dedicated chapter with process descriptions, response timelines and specific messages would be required.
The SMB has commenced analysing all aspects relevant for and SDD investigations and recalls in the concerned rulebooks and will prepare a proposal in the fourth quarter of 2015.
SDD R-transaction reason codes
One of the main benefits of the SDD schemes is that the scheme rules streamline exception handling at the process and dataset levels. This allows straight-through-processing and end-to-end automated exception handling. Possible exceptions to the normal execution of a direct debit collection include refunds, returns, rejects, refusals and reversals (commonly referenced as ‘R-transactions’ and described in detail in the SDD Rulebooks).
The and B2B Rulebooks specify elements that trigger an R-transaction, i.e. data elements required to convey information to the payee (biller) with regard to the R-transaction. These data elements, which are referred to as ‘reason codes’, identify the type of the R-transaction; name the initiator of the R-transaction; and specify the reason for the R-transaction.
The correct application of these reason codes by a debtor bank (the bank of the payer) informing a creditor bank (the bank of the biller) about a failed SDD collection, is crucial as the codes allow the biller to determine its reaction.
The SMB has approved the publication of an updated version of the SDD R-transaction reason code guide (see ‘related links’ below).
To ensure that the SDD R-transaction reason codes are correctly used, the SMB has started to investigate to what extent the contents of the current guide can be made mandatory for all concerned SDD participants. The SMB will debate on a possible approach in the third quarter of 2015.
Review of the Scheme Rulebook change management description in the SMIRs
In the past, several stakeholders expressed the need to have greater stakeholder involvement during the rulebook change management cycle. The SMIRs already outline the role of the SEUF and the ESTF which would be invited to provide comments on the submitted change proposals. As yet, the current SMIRs do not fully specify the formal involvement of the SEUF and the ESTF in the rulebook change management cycle.
The SMB has started working out and formalising changes to the SMIRs which will enable stakeholders to become more involved in the rulebook change management cycle. Concrete change proposals will be made at the end of the third quarter of 2015.
Upcoming activities under the responsibility of the SMB
The SMB will also determine the overall 2016 Scheme Management Work Plan, the related 2016 budget and the level of the 2016 Scheme participation fees. Scheme participants will be updated on these matters in the coming months.
The SMB will keep all scheme participants (i.e. institutions which are participating to the scheme, the scheme and/or the scheme) fully informed on all relevant developments through a regularly published bulletin.
Participants in the scheme who wish to receive this bulletin are invited to send their name and first name, name of institution, department name, corporate title and e-mail address to SMB@epc-cep.eu.
Gilles Leflambe is the Chair of the Scheme Management Board.
Website: Extension of deadline to submit applications: EPC calls for candidates seeking appointment to the EPC Scheme End-User Forum or the EPC Scheme Technical Forum. Applications are invited by 15 May 2015.
Website: EPC publishes ‘Clarification Paper on the Use of Electronic Mandate Solutions’. This paper is relevant, in particular, to creditors and debtors using electronic mandate solutions under the SEPA Direct Debit Schemes
Website: EPC publishes an updated version of the document ‘Guidance on Reason Codes for SEPA Direct Debit R-transactions’. This technical document is addressed to payment service providers participating in the SEPA Direct Debit Schemes
European Central Bank Website: Information about Euro Retail Payments Board (ERPB)
European Central Bank Website: ERPB Statement 1 December 2014
Related article in this issue:
Related articles in previous issues:
European Payments Council 2.0 Is Now Operational: Stakeholders Are Invited to Stay Engaged in the Evolution of the SEPA Credit Transfer and SEPA Direct Debit Schemes Going Forward ( Newsletter, Issue 26, April 2015)
EPC Plenary Meeting Update ( Newsletter, Issue 25, January 2015)
Next Steps Agreed by the ERPB with Regard to SCT and SDD Post-migration Issues, pan-European Electronic Mandate Solutions and Instant Payments ( Newsletter, Issue 25, January 2015)
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 ( Newsletter, Issue 23, July 2014)
Next Generation SCT and SDD Rulebooks: Three-Month Public Consultation Starts on 19 May 2014. All stakeholders are invited to provide feedback on possible modifications to the SCT and SDD Rulebooks ( Newsletter, Issue 22, April 2014)
Join the Debate on the Further Evolution of the SCT and SDD Schemes: Less Flexibility, More Harmonisation? An overview of the options, variations, exceptions and exemptions possible in SEPA today ( Newsletter, Issue 22, April 2014)
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