Recap: the role of the European Payments Council ( ) in the Single Euro Payments Area ( ) process
As frequently pointed out in this newsletter, is a European Union ( ) 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.
When the governments and institutions first launched the process in the late 1990s, the authorities expected the banking industry to contribute the resources required to develop European instruments for electronic euro payments. 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.”1
In response to these expectations repeatedly articulated by the authorities, the European banking2 sector created the European Payments Council ( ) in 2002. The has come through on its commitment to deliver the payment schemes which help to realise the political vision. In close dialogue with the stakeholder community, the developed, among other things, the Credit Transfer ( ) and Direct Debit ( ) Schemes. The launched the Scheme in January 2008 and the Core and Business to Business (B2B) Schemes in November 2009. The vast majority of payment service providers ( ) in started rolling out services based on the and Schemes on a voluntary basis long before the lawmaker adopted the ‘Regulation ( ) No 260/2012 establishing technical and business requirements for credit transfers and direct debits in euro’3 (the Regulation), which effectively defines mandatory deadlines for migration to and .
It is important to note that the is not part of the institutional framework. The has, therefore, no role in the adoption of any laws or other regulatory initiatives establishing compliance requirements.
For more information on the role of specific actors involved in the process at the European level and their interaction, refer to the infographic ‘ at a Glance’ included in the ‘related links’ below.
The confirms its purpose: support and promote European payments integration and development, notably
The purpose of the is to support and promote European payments integration and development, notably . Consequently, the remains committed to contribute 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.
The pursues this purpose through the development and management of pan-European payment schemes4 and the formulation of positions and proposals on European payment issues in constant dialogue with other stakeholders and regulators at the European level; taking a strategic and holistic perspective. The offers one focal point and voice for the ’ sector on all European payment issues, driven by a single vision.
Adjustments to the structure: enhanced governance and stakeholder involvement contribute to ensuring that the meets its purpose, taking into consideration the agreed scope of activities
With migration to harmonised payment schemes in the euro area complete5, the resolved in October 2014 to adapt its current structure to further enhance governance and stakeholder involvement.
The points out that the adjustments are of an evolutionary rather than a revolutionary nature. They contribute to ensuring that the meets its purpose, taking into consideration the agreed scope of activities:
- The primary objective of this process is to ensure that the continues to be best equipped to carry out its main function, i.e. to manage the administration and evolution of the and Schemes, in an efficient and transparent manner.
- The also develops positions on behalf of members, representing , vis-à-vis the institutions, public authorities, international organisations, and the general public on European payment issues as well as on policies, legislation and regulations impacting payments in the . The authorities driving the process have clarified that migration to harmonised payment schemes does not conclude this integration project. is “more than just credit transfers and direct debits. It is also about card payments and might also cover internet and mobile payments. It will contribute to the further harmonisation of retail payments in the internal market”, former Vice-President of the European Commission Michel Barnier stated on 1 August 2014. Consequently, further regulatory action intended to bring about ‘ 2.0’ is now in the pipeline. (For more information, refer to the Newsletter article, entitled ‘ 2.0: an Overview of Regulatory Action Now in the Pipeline Impacting the European Payments Market Going Forward’ included in the ‘related articles in previous issues’ below.)
This article provides an overview of key features of the new organisational structure of the and introduces new bodies to be integrated into the governance model.
The legal form of the remains unchanged: the is an international not-for-profit association
The remains an international not-for-profit association governed by the provisions of Title III of the law of 27 June 1921 of the Kingdom of Belgium on non-profit associations, international non-profit associations and foundations.
The 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.
Membership of the : the represent
members represent organisations of all sizes and sectors of the European sector. Changes to the governance model have no impact on the membership of entities that are currently members of the , i.e. these entities will continue to be members of the once the revised Charter takes effect.
membership will be open to any legal entity which has received an authorisation from a competent authority of the European Economic Area and is regulated as a ‘payment service provider’ as defined in the Payment Services Directive (including in its future amended version currently under review by the co-legislators)6; or has received an equivalent authorisation from an equivalent competent authority established in another country or territory included within the geographical scope of the Schemes7. membership is also open to a legal entity representing and, directly or indirectly, having as members, and being established in a country or territory included in the geographical scope of the Schemes, (i.e. banking associations).
Representation of members within the association: the establishes the new General Assembly and the new Board
To date, the Plenary, representing all members and supported by the Coordination Committee, serves as the main decision-making body. The Plenary and Coordination Committee will cease to exist once the new General Assembly and the new Board become operational.
The General Assembly is composed of all members. It is supported in its role by, among other bodies, the new Board. The General Assembly elects the members of the Board.
The members of the Board are representatives from members. The Board, which reports to the General Assembly, has all powers necessary to accomplish the purpose 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 Board is supported by working groups, support groups and the task forces that it may establish and revoke from time to time.
The Chair and Vice-Chair, respectively, serve as the Chair and Vice-Chair of the General Assembly and the Board.
The evolution of the payment schemes in a multi-stakeholder environment: recap of who does what at the European level
As mentioned above, 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 labor 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 domestic level where national banking communities were primarily responsible for managing local payment schemes.
Fast forward to the present, the main change with regard to the development of harmonised solutions outside the competitive environment is this: today, the authorities expect that related efforts are the result of multi-stakeholder endeavours involving, essentially, representatives of all impacted parties on the demand, supply and regulatory sides. With regard to the further evolution of, specifically, the and 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.
In particular, the European Commission and the ECB, respectively, have established several dedicated bodies to facilitate the dialogue on the process with market participants representing various stakeholder groups. The dialogue taking place within these bodies also addresses – and, consequently, impacts – the evolution of the and Schemes managed by the .
The role of the European Commission and the co-legislators: the and 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. (For detailed information, refer to the Blog, entitled ‘The New European Commission is Expected to Take Office on 1 November 2014. A Recap of the Role of the European Commission in the Evolution of Credit Transfer and Direct Debit’ included in the ‘related links’ below).
The role of the ECB: in 2010, the European Commission together with the ECB established the Council, which brought together representatives from both the demand and supply sides with a view to promoting the realisation of an integrated euro retail payments market by ensuring high level stakeholder involvement. On 19 December 2013, the ECB announced the launch of the Euro Retail Payments Board ( ), which replaces the Council. The , chaired by the ECB, will “help foster the development of an integrated, innovative and competitive market for retail payments in euro in the ”. members represent the demand and supply sides of the payments market. (The is a member of the .) national central banks also participate in the . The Commission acts as an observer. (For detailed information, refer to the ‘related links’ below and the Newsletter article, entitled ‘Learn More About Work Items Related to Credit Transfer and Direct Debit Addressed by the New Euro Retail Payments Board ( ) Chaired by the European Central Bank’ included in the ‘related articles in this edition’ below.)
The role of the : the payment schemes, as set out in the and 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. As mentioned above, the carries out the scheme management function subject to legal and regulatory conditions defined by the authorities. (For detailed information, refer also to the ‘related articles’ in this and previous Newsletter editions listed below.)
and scheme management within the going forward
The resolved to adapt its structure with regard to scheme management to further enhance the involvement of stakeholders and to ensure that the administration and evolution of the schemes continue to be carried out in an efficient and transparent manner. With these objectives in mind, the following new bodies are created:
The Scheme Participants Assembly is composed of that have formally adhered to the and Schemes. It endorses the nomination of candidates for the scheme participants’ seats on the Scheme Management Board. The Scheme Participants Assembly receives regular information from the Scheme Management Board about its activity.
The Scheme Management Board will be responsible for performing the following two functions of scheme management upon delegation from the Board:
- The first function is the administration of the and 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 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 Schemes. In carrying out this function, the Scheme Management Board will be supported by the Scheme Evolution and Maintenance Working Group.
Details on the structure of the Scheme Adherents Participants Assembly, the Scheme Management Board, the Compliance and Adherence Committee and the Appeals Committee as well as their internal organisation, rules and processes are set out in sections 2 and 3 of the draft new Scheme Management Internal Rules (subject to public consultation) included in the ‘related links’ below. Details on the Scheme Evolution and Maintenance Working Group are described in section 4 of the draft new Scheme Management Internal Rules.
The role of independent members of the new scheme management governance bodies
Ensuring that the and 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 bank 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). Bank 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 on the Scheme Management Board, the Compliance and Adherence Committee and the Appeals Committee, respectively, will be held by independent members. ‘Independent’ means that candidates should not be employed or be otherwise affiliated with a scheme participant, i.e. a that has formally adhered to the and Schemes; a community represented in the ; other service providers or a payment services user group or user association. (For further details, refer to the profile of an independent member of the Scheme Management Board, the Compliance and Adherence Committee and the Appeals Committee included in the ‘related links’ below.)
calls for independent candidates seeking appointment to one of the following newly to be established bodies: the Scheme Management Board, the Compliance and Adherence Committee and the Appeals Committee. Applications are invited by 12 November 2014
On 16 October 2014, the launched a call for independent candidates seeking appointment to one of the following newly to be established scheme management governance bodies, effective first quarter of 2015:
- Scheme Management Board: the vacancies are for the three seats available to independent members (including the Chair of the Scheme Management Board).
- Compliance and Adherence Committee: the vacancies are for the two seats available to independent members.
- Appeals Committee: the vacancies are for the two seats available to independent members.
For details on the application process, refer to the ‘ News’ of 16 October 2014 included in the ‘related links’ below. Applications are invited by 12 November 2014.
Dialogue with payment service users and technology and service providers
Last but not least, the evolution of the and Schemes relies on close dialogue of the with 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 scheme manager and the -compliant clearing and settlement mechanisms (CSMs)8, 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.
Details on the Scheme End-User Forum and the Scheme Technical Forum are described in section 4.4 of the draft new Scheme Management Internal Rules. The Scheme End-User Forum and Scheme Technical Forum are expected to be constituted in the course of the first half of 2015 subject to amended Scheme Management Internal Rules to take effect following public consultation.
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
The new governance model will become operational in the first quarter of 2015 once the revised Charter takes effect subject to procedures to be observed under Belgian law and the new Scheme Management Internal Rules come into force.
The has emphasised that completing migration to harmonised payment schemes and technical standards in the euro area, as mandated by law, reflects an important achievement. Meeting this milestone has been a tremendous effort for everybody on the demand and supply sides. The industry is proud to have contributed, together with all other stakeholders, to realising this unique integration project launched by the institutions and governments with the introduction of the euro currency in 1999.
This said, 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.
Javier Santamaría is the Chair of the .
EPC News (16 October 2014): EPC calls for independent candidates seeking appointment to one of the following newly to be established bodies: the Scheme Management Board, the Compliance and Adherence Committee and the Appeals Committee. Applications are invited by 12 November 2014
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)
EPC Blog (30 September 2014): The New European Commission is Expected to Take Office on 1 November 2014. A Recap of the Role of the European Commission in the Evolution of SEPA Credit Transfer and SEPA Direct Debit
European Central Bank Website: Governance (includes detailed information on the Euro Retail Payments Board ( ) and related documentation)
Related articles in this issue:
SCT and SDD Rulebooks: Modifications to the Rulebooks to Take Effect in November 2015 and November 2016, Respectively. Based on feedback received during the 2014 public consultation on changes to the rulebooks, the EPC resolved to update the release schedule applicable to the next rulebooks generations
Learn More About Work Items Related to SEPA Credit Transfer and SEPA Direct Debit Addressed by the New Euro Retail Payments Board (ERPB) Chaired by the European Central Bank. The ERPB represents the demand and supply sides of the payments market with participation of national central banks
The New European Commission: a Closer Look at President Juncker’s Vision for the EU Internal Market and Economic and Monetary Union. The European Commission will continue to play a principal role in the SEPA process going forward
Related articles in previous 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 ( 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)
1 Keynote address of Mr. Tommaso Padoa-Schioppa, Member of the Executive Board of the European Central Bank, at the Commission conference Payments in euro in the Internal Market Brussels, 24 September 2001 http://www.ecb.europa.eu/press/key/date/2001/html/sp010924.en.html.
2 The term ‘banking’ is used in a non-discriminatory fashion and includes payment institutions.
3 In February 2012, the co-legislators, i.e. the European Parliament and the Council of the representing governments, adopted the 'Regulation ( ) No 260/2012 establishing technical and business requirements for credit transfers and direct debits in euro’. It defines 1 February 2014 as the deadline in the euro area for compliance with the core provisions of this Regulation. In non-euro countries, the deadline will be 31 October 2016. Effectively, this means that as of these dates, existing national euro credit transfer and direct debit schemes will be replaced by Credit Transfer and Direct Debit.
4 For more information, refer to the Website page ‘What is a Payment Scheme?’ http://www.europeanpaymentscouncil.eu/index.cfm/sepa-customers/what-is-a-payment-scheme/.
5 It is important to keep in mind that, following 1 August 2014, countries in- and outside of the euro area ensure that they are ready to meet compliance requirements applicable in 2016 mandated by law. 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. Non-euro countries will have to comply with the Regulation by 31 October 2016. For more information, refer to the Blog, entitled ‘1 August 2014 Does Not Mark the End of the Migration Process. Get Ready for 2016. Act Now’ http://www.europeanpaymentscouncil.eu/index.cfm/blog/1-august-2014-does-not-mark-the-end-of-the-migration-process-get-ready-for-sepa-2016-act-now/.
6 The European Commission published its proposal for a revised Payment Services Directive ( ) on 24 July 2013. This proposal remains under review by the European Union ( ) co-legislators, i.e. the European Parliament and the Council of the representing governments. The formal title of the proposed is “Proposal for a Directive of the European Parliament and of the Council [of the ] on payment services in the internal market and amending Directives 2002/65/EC, 2013/36/ and 2009/110/EC and repealing Directive 2007/64/EC”. For more information, refer to the ‘Legal and Regulatory Issues’ section in this newsletter: http://www.europeanpaymentscouncil.eu/index.cfm/newsletter/archive/?category=7.
7 The jurisdictional scope of the Schemes currently consists of the 28 Member States plus Iceland, Norway, Liechtenstein, Switzerland, Monaco and San Marino http://www.europeanpaymentscouncil.eu/index.cfm/knowledge-bank/epc-documents/epc-list-of-sepa-scheme-countries/.
8 Clearing and settlement mechanisms (CSMs) enable the exchange of funds (money) and messages between two payment service providers ( ) executing a payment transaction. Services offered by competing CSMs, based on the Credit Transfer ( ) and Direct Debit ( ) Schemes, are governed by market forces and are outside the scope of the European Payments Council ( ).
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