As previously reported, with the main phase of the migration to harmonised Single Euro Payments Area () payment schemes in the euro area complete, the European Payments Council () resolved in October 2014 to adapt its structure to further enhance governance and stakeholder involvement. In December 2014, the approved its revised Charter which has now become effective and was published in February 2015 (see ‘related links’ below). The revised Charter reflects the new governance model.
The points out that the adjustments to its governance model are of an evolutionary rather than a revolutionary nature. They contribute to ensuring that the meets its purpose, which is to support and promote European payments integration and development, notably . The primary objective of this evolution is to ensure that the continues to be best equipped to perform its main task, i.e. to manage the Credit Transfer () and Direct Debit (SDD) Schemes, in an efficient and transparent manner.
The is committed to contributing to safe, reliable, efficient, convenient, economically balanced and sustainable payments, which meet the needs of payment service users and support the goals of competitiveness and innovation in an integrated European economy. Considering that the European Union (EU) authorities driving the process have clarified that migration to harmonised payment schemes does not conclude this EU integration project, the adjusted structure will also facilitate developing positions on behalf of members, representing payment service providers (), vis-à-vis the EU institutions, public authorities, international organisations, and the general public on European payment issues as well as on policies, legislation and regulations impacting payments.
membership is open to any eligible or association representing . members are represented in the General Assembly, which elects the members of the Board. The Board has the powers necessary to accomplish the purpose and mission of the , except for the powers that are specifically granted to other bodies of the (e.g. the General Assembly) by law or the Charter.
The remains an international not-for-profit association established under, and governed by, Belgian law which makes all of its deliverables, including the Scheme Rulebooks and adjacent documentation, available to download free of charge on the Website. In this context, it is important to keep in mind that the particular payment products and services – based on a particular payment scheme – offered to the customer are developed by individual operating in a competitive environment. The development of payment products based on the payment schemes including all product-related features is outside the scope of the . The does not supply technology, goods or services.
This blog reiterates key features of the new governance model relevant, in particular, to the management of the and SDD Schemes going forward.
The evolution of the payment schemes in a multi-stakeholder environment: recap of who does what at the European level
As frequently pointed out, is an integration initiative pursued by the governments and the institutions, i.e. the European Commission, the European Parliament, the Council of the representing governments and the European Central Bank (ECB). compliance requirements that must be met by payment service users and providers are determined by the institutions in accordance with their specific competences. (It is important to note that the is not part of the institutional framework. The therefore, has no role in the adoption of any laws or other regulatory initiatives establishing compliance requirements.)
When the governments and institutions first launched the process in the late 1990s, they pursued the further integration of the market for electronic euro payments with a clear division of labour in mind: while the authorities focused on creating the legal and regulatory conditions facilitating the transition of millions of payment service users and thousands of providers to harmonised payment schemes, they requested the banking industry to contribute the expertise and resources required to develop payment schemes for electronic euro credit transfers and direct debits. This approach reflected practices established in the pre- era at the domestic level where national banking communities were primarily responsible for managing local payment schemes. In 2001, the ECB reiterated: “Like the [European] Commission and the [European] Parliament, the ECB is fully committed to the objective of creating a single payment area for the euro (...) pressure should be kept on the banking industry to obtain the necessary improvements.”
In response to these expectations, the European banking sector created the in 2002. In close dialogue with the stakeholder community, the developed, among other things, the and SDD Schemes.
Fast forward to the present, the authorities expect that developments are facilitated by multi-stakeholder interaction involving, essentially, representatives of all impacted parties on the demand, supply and regulatory sides. With regard to the further evolution of, specifically, the and SDD Schemes going forward, it is therefore, important to keep in mind the roles performed by various actors, (including, but not limited to, the ), at the European level.
The role of the European Commission and the EU co-legislators: the and SDD Schemes must comply with the relevant requirements set out in Article 5 of, and in the Annex to, the ‘Regulation () No 260/2012 establishing technical and business requirements for credit transfers and direct debits in euro’ (the Regulation) adopted by the co-legislators, i.e. the European Parliament and the Council of the representing governments, in February 2012. Article 13 of the Regulation empowers the European Commission to amend the technical requirements detailed in the Annex to the Regulation through delegated acts.
The role of the ECB: as a catalyst for the integration of the euro payments market and in line with its mandate to promote the smooth operation of payment systems, the ECB has closely monitored and steered the process since its inception. In December 2013, the ECB created the Euro Retail Payments Board (). The is a multi-stakeholder body which helps foster “the development of an integrated, innovative and competitive market for retail payments in euro” in the EU. The ’s work consists mainly of identifying strategic issues and work priorities (including business practices, requirements and standards) and ensuring they are addressed. Seven representatives from the demand side (e.g. consumers, retailers and corporations) and seven from the supply side (banks and payment and e-money institutions) sit on the Board. They are joined by five representatives from the euro area national central banks and one representative from the non-euro area EU national central banks (all on a rotating basis). The is chaired by the ECB. The European Commission participates as an observer. The is a member of the .
The role of the : the payment schemes, as set out in the and SDD Rulebooks, continue to evolve based on a transparent change management process adhered to by the which provides any interested party with the opportunity to participate. This evolution reflects changes in market needs and updates of technical standards developed by international standards bodies, such as the International Organization for Standardization. The carries out the scheme management function subject to legal and regulatory conditions defined by the authorities.
(For more information, refer to the Newsletter article entitled ‘Evolution and Oversight of the and SDD Schemes: the Role of the European Commission and of the European Central Bank’ included in the ‘related links’ below.)
and SDD scheme management within the going forward
The new governance model further enhances the involvement of stakeholders in scheme management and ensures that the administration and evolution of the schemes continues to be carried out in an efficient and transparent manner. With these objectives in mind, the following new bodies will be created in April 2015:
The Scheme Participants Assembly solely relies on electronic means and is composed of all that have formally adhered to the and/or SDD Schemes. It regularly receives information from the Scheme Management Board and endorses the nomination of candidates for the scheme participants’ seats on the Scheme Management Board.
The Scheme Management Board is responsible for performing the following two functions of scheme management upon delegation from the Board:
- The first function is the administration of the and SDD Schemes. This includes approval of applications from to adhere to the schemes and the process of ensuring compliance with the rules as laid down in the and SDD Rulebooks, i.e. handling of complaints, conciliation cases and appeals. In carrying out this function, the Scheme Management Board will be supported by the Compliance and Adherence Committee and the Appeals Committee.
- The second function involves managing the development and evolution of the and SDD Schemes. In carrying out this function, the Scheme Management Board will be supported by the Scheme Evolution and Maintenance Working Group.
The role of independent members of the new scheme management governance bodies
Ensuring that the and SDD Schemes continue to meet market needs requires identifying those elements and features catering to the vast majority of stakeholders across - today - 34 countries.
Dialogue with stakeholders across frequently demonstrates that the requirements of customers, with regard to the payment schemes, differ widely across and within the various customer segments and countries. As regards the latter, it has to also be kept in mind that 98 percent of all retail payments are made within national borders. Payment service users are not only divided into payers and payees, (whose payment needs are different). customers encompass a wide range of interest groups including consumers, public administrations, corporates and small and medium-sized enterprises (SMEs). Corporates and SMEs may be active domestically, regionally or globally. In a multi-country environment such as , even within a specific customer segment, there exist very different schools of thought as to which specific features should be included in a payment scheme or not.
In line with governance best practice and to ensure proper consideration of the interests of all stakeholders, i.e. payment service users and providers, a number of seats (including the Chair) on the Scheme Management Board will be held by independent members. Independent members are not employed or otherwise affiliated with a scheme participant, i.e. a that has formally adhered to the and SDD Schemes; a community represented in the ; other service providers or a payment services user group or user association.
Dialogue with payment service users and technology and service providers
Last but not least, the evolution of the and SDD Schemes relies on close dialogue between the and the representatives of the demand side of the payments market as well as with providers developing technical solutions which help the market to fully reap the benefits. The therefore, plans to constitute the following two new bodies:
Scheme End-User Forum: dialogue with representatives of payment service users to date takes place in the ’s Customer Stakeholder Forum founded in 2007. This cooperation will be further enhanced and formalised with the creation of the new Scheme End-User Forum.
Scheme Technical Forum: to strengthen the dialogue between the as the and SDD scheme manager and the -compliant clearing and settlement mechanisms (CSMs), the ‘ Clearing and Settlement Forum’ was created in 2011. The scope of the new Scheme Technical Forum will be expanded to allow the dialogue with CSMs as well as representatives of technology and service providers.
The new bodies described above are expected to be constituted in the course of the first half of 2015 subject to amended Scheme Management Internal Rules (SMIRs) to take effect. (The SMIRs are an integral part of the and SDD Rulebooks. The draft amended SMIRs were released for a 90-day public consultation which concluded on 30 January 2015.) Once the new SMIRs are in force, the will reach out in due course to invite interested organisations to apply for participation in the Scheme End User Forum or the Scheme Technical Forum, respectively.
remains a work in progress. The is ready and looks forward to making the next steps in the process in close dialogue with all stakeholders.
Additional detailed information on the new governance model is made available with the article, entitled ‘European Payments Council 2.0: with Migration (Euro Area) Complete, the Adapts its Structure to Further Enhance Governance and Stakeholder Involvement’ published with the October 2014 edition of the Newsletter (see ‘related links’ below).
- EPC Newsletter (October 2014): European Payments Council 2.0: with SEPA Migration (Euro Area) Complete, the EPC Adapts its Structure to Further Enhance Governance and Stakeholder Involvement. The new EPC governance model will become operational in the first quarter of 2015
- EPC Website: EPC Charter
- EPC Website: EPC List of SEPA Scheme Countries
- EPC Website: SCT / SDD Rulebook Release Management and Scheme Development
- EPC Newsletter (July 2014): Evolution and Oversight of the SCT and SDD Schemes: the Role of the European Commission and of the European Central Bank. The SEPA payment schemes in the legal and regulatory context
- EPC Website: SEPA at a Glance – the Infographic (this infographic provides an overview of the actors involved in the process at the European level and their interaction)
- Regulation (EU) No 260/2012 establishing technical and business requirements for credit transfers and direct debits in euro (the SEPA Regulation)
- European Commission Website: Commission’s Role in SEPA
- European Central Bank Website: Governance (includes detailed information on the Euro Retail Payments Board () and related documentation)
- EPC Newsletter (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
- EPC Newsletter (July 2014): SEPA 2.0: an Overview of Regulatory Action Now in the Pipeline Impacting the European Payments Market Going Forward
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