Facing the Facts in July 2011

Facing the Facts in July 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 July 2011, nearly 4,500 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 participants ( offering services) has slightly decreased compared to previous Single Euro Payments Area () market uptake reports featured in this newsletter. The EPC SCT Participant Register, which lists scheme participants, is publicly available on the Website. 

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

According to the publicly available SCT 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 19.37percent as of May 2011.

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 July 2011, 3,914 banks, representing more than 80 percent of payments volume have signed up to . Of those, 3,386 banks also adhere to . The separate EPC SDD Core Participant Register and the EPC SDD B2B Participant Register list the scheme participants taking part in these SDD Schemes. These registers are publicly available on the Website.

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 publicly available ECB SDD indicators, as of May 2011 the share of , as a percentage of the total volume of direct debits generated by bank customers, amounts to 0.11 percent.

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 card payments 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 to combat fraud. 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 the first quarter of 2011, 82.55 percent of cards, 91.98 percent of POS and 96.61 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 publicly available ECB SEPA Card Indicators.

Public sector: ready?

In February 2011, the European Commission published its 4th 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 December 2010, the European Commission published a proposal for an EU Regulation establishing technical requirements for credit transfers and direct debits in euros. This proposal states, in part, that credit transfers will 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.

The European Commission's proposal - commonly referred to as the Regulation - was reviewed by the Economic and Monetary Affairs Committee (ECON) of the European Parliament and the European Economic and Financial Affairs Council (ECOFIN, comprising the EU Finance Ministers)2 during the first half of 2011. In a next step, the ECON together with the ECOFIN and the European Commission will engage in a trialogue on this forthcoming legislative act which is expected to be adopted in 2011. The will communicate its positions with regard to the latest proposals for amendments to the Regulation tabled by the ECON and the ECOFIN in due course following further analysis.

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)

It is expected that in July 2011 the Economic and Monetary Affairs Committee (ECON) of the European Parliament will publish its final report on the Proposal for a Regulation Establishing Technical Requirements for Credit Transfers and Direct Debits in Euros. To view reports published by the ECON, click here

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)

European Commission Services' Third Annual Progress Report on the State of SEPA Migration (May 2011)  

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

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

Related articles in this issue:

Arrested Development. Inconsistencies between European Commission's objectives threaten to hamper SEPA progress

Light at the End of the (Harmonisation) Tunnel. 'Third Progress Report on the State of SEPA Migration' prepared by the European Commission Services confirms: mandatory end dates for migration to pan-European payment instruments are required

The Art of Integration. Finnish Government Shared Services Centre for Finance and HR simultaneously migrates to SEPA and new IT systems introduced at central government agencies

Related articles in previous issues:

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 ( Newsletter, Issue 10, April 2011)

The Trailblazer. Kela, the Social Insurance Institution of Finland, Completes Migration to the SEPA Credit Transfer ( Newsletter, Issue 10, April 2011)

Time to Prepare the Eulogy - 'Six Feet Under' for the Magnetic Stripe in SEPA. Eurosystem recommends migration to chip-only cards ( Newsletter, Issue 10, April 2011)

The Magnetic Stripe: Why it's Hard for Americans to Say Good-Bye. In the US, clinging to old-fashioned payment methods is more than just a bad habit ( Newsletter, Issue 10, April 2011)

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.

2The ECOFIN is a configuration of the European Council representing EU Member States.



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