Facing the Facts in April 2011

Facing the Facts in April 2011

The EPC Newsletter tracks the progress of SEPA migration

24 October 12

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Percentage of banks in offering Credit Transfer services

The European Payments Council () launched the Credit Transfer () Scheme in January 2008. As of April 2011, nearly 4500 banks in 32 countries offered services for euro payments. Today, the payment service providers () offering services represent more than 95 percent of payment volumes in Europe. Due to mergers and acquisitions, the absolute number of Scheme participants ( offering services) has slightly decreased compared to previous Single European Payment Area () market uptake reports featured in this newsletter. The Participant Register, which lists scheme participants, is publicly available at http://epc.cbnet.info/content/adherence_database

Percentage of transactions compared to the total volume of credit transfers generated by customers

According to the indicators compiled by the European Central Bank (ECB), the share of SCTs, as a percentage of the total volume of credit transfers generated by bank customers, amounts to 15.7 percent as of February 2011. The ECB Indicators can be viewed at http://www.ecb.europa.eu/paym/sepa/about/indicators/html/index.en.html.

A figure of 100 percent would indicate that only services are used and have fully replaced non- instruments. The Indicators are based on aggregated data provided by clearing and settlement infrastructures in the euro area processing transactions. This data avoids double counting by excluding, for example, transactions sent via links between infrastructures. The data also excludes 'on-us' transactions (SCTs between accounts at the same bank) as well as transactions cleared between banks bilaterally or via correspondent banking. The ECB Indicators also show market uptake by country.

Percentage of banks in offering Direct Debit services

The launched the Core Direct Debit Scheme () and the Business to Business Direct Debit Scheme () on 2 November 2009. As of April 2011, 3909 banks, representing more than 80 percent of payments volume have signed up to the Scheme. Of those, 3381 banks also adhere to the Scheme. The separate Participant Registers for the and the Schemes list the scheme participants taking part in the Direct Debit (SDD) Schemes. These registers are publicly available at http://epc.cbnet.info/content/adherence_database.

All branches of banks in the euro area must be reachable for cross-border direct debits; e.g. , since 1 November 2010 as mandated by Regulation (EC) No 924/2009 (Article 8). In April 2010 the European Commission services published a Note on Application of Article 8 of Regulation (EC) No 924/2009 - Reachabillity for Direct Debit Transactions. This guidance note states that it is the location of the branch of a credit institution (whether it is inside or outside the euro area), and not the location of the parent company, that determines whether the reachability obligation and deadline applies. Furthermore, no distinction should be made between branches with head offices located outside the European Union (EU) and those with head offices inside the EU.

Percentage of SDD transactions compared to the total volume generated by customers

According to the SDD Indicators compiled by the ECB, as of November 2010 the share of , as a percentage of the total volume of direct debits generated by bank customers, amounts to 0.08 percent. The ECB SDD Indicators can be viewed at http://www.ecb.europa.eu/paym/sepa/about/indicators/html/index.en.html.

The figures are based on aggregated data from several clearing and settlement infrastructures/systems located in the euro area. As such, SDD transactions which are cleared bilaterally or processed within the same institution are excluded from this indicator.

for cards: tracking EMV roll-out

As reported in previous issues of the Newsletter, good progress is being made in the realisation of a for cards, which aims to enable a consistent customer experience when making or accepting payments with cards throughout the euro area. The 's Cards Framework (SCF) outlines high level principles and rules which will deliver this consistent experience when implemented by banks and card schemes. The SCF recognises the EMV standard for -wide acceptance of payments with cards at very high levels of security. EMV is an industry standard to implement chip and personal identification number (PIN) security for point of sale (POS) card transactions. An important indicator on the progress in this area is the number of cards, POS and automated teller machines (ATMs) in the market that use chip and PIN for the authorisation of a card payment. More specifically, the percentage of EMV-compliant cards, POS and ATMs in is monitored.

At the end of 2010, 81 percent of cards, 89 percent of POS and 96 percent of ATMs in were EMV-compliant.

The progress of EMV roll-out, based on these findings and other relevant data on the subject, are reflected by the ECB Card Indicators at http://www.ecb.europa.eu/paym/sepa/about/indicators/html/index.en.html.

Public sector: ready?

In February 2011, the European Commission  published its Fourth Survey on Public Administrations´ Preparedness and Migration to (see 'related links' below). The survey reflects migration by the public sector as of October 2010. The main findings of the survey are:

  • Public administrations' (PAs) migration to has accelerated at an impressive pace over the last eight months. For the reporting period, the migration rate for the replying PAs in the euro area was 14.5 percent versus 2.7 percent in the previous survey. For the first time, migration by PAs exceeds the corresponding rate for the overall market (14.5 percent versus 9.6 percent in October 2010).
  • In particular PAs in Finland, Belgium, Austria, Spain, France and Germany have made significant progress over the last eight months.
  • Migration to SDD however, remains marginal due to the fact that in the case of many PAs, direct debits are generally not used. In October 2010, the SDD migration rate for the replying PAs in the euro area was 0.24 percent.
Setting a deadline for migration to

As confirmed by the findings of a study requested by the European Commission in 2007, the benefits for bank customers inherent to the harmonisation exercise are contingent upon swift migration to a single set of payment instruments by both the demand and the supply sides1. The recognises the value of setting a deadline for migration to services. An end date for phasing out legacy euro payment instruments creates awareness, ensures planning security for all market participants and confirms the commitment to making a reality. In line with expectations expressed by EU finance ministers, the European Parliament and the ECB, the believes that end dates must be set for the phasing out of existing national euro credit transfer and euro direct debit schemes to ensure that the high costs of running multiple payment schemes in parallel can be eliminated.

In the Seventh Progress Report on , published by the ECB / Eurosystem in October 2010, it is stated that the 'Eurosystem expects and SDD to become the credit transfer and direct debit schemes used for euro payments in the EU. After the migration end date, they will have replaced national legacy credit transfer and direct debit schemes for euro payments'. The European Parliament called on the European Commission to set a 'clear, appropriate and binding end date, which date should not be later than 31 December 2012, for migrating to products'2. On 2 December 2009, the European Economic and Financial Affairs Council (ECOFIN - comprising the economics and finance ministers of the EU Member States) considered 'that establishing definitive end-dates for SDD and migration would provide the clarity and the incentive needed by the market, ensuring that the substantial benefits of are rapidly achieved and that the high costs of running both legacy and products in parallel can be eliminated'. At its inaugural meeting in June 2010, the Council - bringing together representatives of both the demand and supply sides including the - endorsed a formal declaration stressing 'their strong support for the establishment of end-date(s) for migration to Credit Transfers and Direct Debits by means of legislation at EU level'.

On 16 December 2010, the European Commission published a proposal for a Regulation establishing technical requirements for credit transfers and direct debits in euros. This is commonly referred to as the proposal for the forthcoming Regulation. The explanatory memorandum accompanying the proposal states that 'full integration of the payment market will only be achieved once Union-wide payment instruments replace completely the national legacy instruments'. The proposal clarifies that the end dates to be established for compliance with the technical requirements refer to the point in time when these requirements 'need to be fulfilled by Union-wide credit transfers and direct debits'. The proposal states, in part, that credit transfers shall be carried out in accordance with this Regulation twelve months after it comes into force. Direct debits shall comply 24 months after it comes into force.

This proposal is currently reviewed by the legislative bodies, i.e. the European Parliament and the European Council representing governments (see 'related links' below for more information on the legislative process and relevant sources).

The published its updated response to the European Commission's proposal for a Regulation in March 2011 (see also 'related links' below).

Gerard Hartsink is the Chair of the .

Related links:

Fore more information on co-decision or the 'ordinary legislative procedure' governing the European Union legislative process, click here 

European Commission Proposal for a Regulation Establishing Technical Requirements for Credit Transfers and Direct Debits in Euros (December 2010)

Update March 2011: EPC Response to the European Commission Proposal for a Regulation Establishing Technical Requirements for Credit Transfers and Direct Debits in Euros (December 2010)

Committee on Economic and Monetary Affairs (ECON): Draft Report on the Proposal for a Regulation Establishing Technical Requirements for Credit Transfers and Direct Debits in Euros (March 2011)

Opinion of the European Central Bank on a Proposal for a Regulation Establishing Technical Requirements for Credit Transfers and Direct Debits in Euros (April 2011)

European Commission Services' Fourth Survey on Public Administrations´ Preparedness and Migration to SEPA (February 2011)

The Website features a dedicated page ' Migration - Reports, Case Studies and Indicators'. This page includes Newsletter articles reporting on the migration experience in the different countries. To view this page click here

SEPA Council: Formal Declaration on End-Date(s) (June 2010)

ECOFIN Conclusions on SEPA of December 2009

Regulation (EC) No 924/2009 of the European Parliament and of the Council of 16 September 2009 on cross-border payments in the community and repealing Regulation (EC) No 2560/2001

European Commission: Note on Application of Article 8 of Regulation (EC) No 924/2009 - Reachabillity for Direct Debit Transactions

Related articles in this issue:

The SEPA Regulation - A Progress Report. First reactions by European Parliament and Council of the European Union introduce important improvements to European Commission's proposal for a SEPA Regulation

The Trailblazer. Kela, the Social Insurance Institution of Finland, Completes Migration to the SEPA Credit Transfer

Time to Prepare the Eulogy - 'Six Feet Under' for the Magnetic Stripe in SEPA. Eurosystem recommends migration to chip-only cards

The Magnetic Stripe: Why it is Hard for Americans to Say Good-Bye. In the US, clinging to old-fashioned payment methods is more than just a bad habit

Related article in previous issue:

So What's in a Name? Explaining payment schemes, instruments and systems. Clarity on payment terms is critical in the debate over the approach to setting end dates for migration to SEPA through EU Regulation ( Newsletter, Issue 8, October 2010) 


1: Potential Benefits at Stake (Capgemini) available at http://www.europeanpaymentscouncil.eu/knowledge_bank_detail.cfm?documents_id=283

2European Parliament Resolutions on the Implementation of the Single Euro Payments Area: http://www.europarl.europa.eu/sides/getDoc.do?type=TA&reference=P6-TA-2009-0139&language=EN&ring=B6-2009-0111 (March 2009) and http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+P7-TA-2010-0057+0+DOC+XML+V0//EN (March 2010)



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