For the purposes of this blog it is necessary to repeat the obvious: the European Union ( ) Regulation No. 260/2012 establishing technical and business requirements for credit transfers and direct debits in euro and amending Regulation EC No. 924/2009 (the Single Euro Payments Area ( ) Regulation) stipulates the mandatory deadlines for compliance with its rules for credit transfer and direct debit transactions. Article 6 (1) and (2) of the Regulation mandate that credit transfers and direct debits shall be carried out in accordance with the relevant requirements set out in Article 5 and in the Annex to the Regulation by 1 February 2014, subject to certain limited exemptions mentioned in the Regulation. Effectively, this means that as of this date, existing national euro credit transfer and direct debit schemes will be replaced by Credit Transfer and Direct Debit. Article 16 (8) clarifies that non-euro countries will have to make the transition to by 31 October 2016.
Recent public debate regarding the project seems to increasingly entertain the idea that the deadlines for compliance with the Regulation (see ‘related links' below), might not apply due to the ongoing euro debt crisis. To give just one example of many: on 2 August 2012, journalist Michiel Willems blogged an interview with Dr Nathalie Moreno (see ‘related links' below) who stated: "It is hard to see the deadline of spring 2014 not being moved. The euro crisis is developing at such a rate in 2012 that nobody can predict what will happen, and the impacts of increased lending and bailouts to keep the euro afloat will surely affect the ability of these economies to make a certain decision on the future of . 's focus is on payment harmonisation and modernisation but with all the turmoil of the Eurozone as a whole it is difficult to see how this can be kept a reality without the need for new and added thoughts on 's development process which keep up with key market developments."
In light of such comments, it appears that some clarification is required. Firstly and most importantly, the legal obligation to comply with the 1 February 2014 deadline; i.e. Article 6 (1) and (2) of the Regulation, is not subject to the "ability" of individual "economies to make a certain decision on the future of ." The decision on the future of was made by the legislator - that is the Council of the representing the 27 Member States and the European Parliament. The European Parliament adopted the Regulation on 14 February 2012; the Council of the adopted this legislative act on 28 February 2012. Under the ordinary legislative procedure (formerly known as co-decision), legislation is adopted by the Council of the and the European Parliament. The Regulation was published in the Official Journal of the on 30 March 2012 and came into force on 31 March 2012.
Consequently, the only party empowered to amend the Regulation is the legislator. The question is whether there are any indications that the legislator intends to change Article 6 (1) and (2) of the Regulation as a result of the euro debt crisis at this stage in the process. In asking this question, the following should be considered: the euro debt crisis has evolved since late 2009. The European Commission (the Commission) tabled a first discussion paper detailing, among other things, the option to establish mandatory deadlines for migration to harmonised payment instruments through regulation in March 2010. The Commission introduced its proposal for the Regulation in December 2010. This proposal was then considered by the Council of the and the European Parliament throughout 2011. As mentioned above, both legislative bodies adopted the Regulation in February 2012. In other words, the determination of lawmakers to establish a timely deadline for compliance with the Regulation was not deterred at any stage in the legislative process which evolved in parallel with the deepening of the euro debt crisis.
In a press release published on 28 February 2012 (see ‘related links' below), the Council of the reiterated that the Regulation establishes deadlines for compliance with "common standards and general technical requirements", aimed at the "simplification of payment processes. For consumers, standardised cross-border payments will remove the need to maintain accounts in different countries. For payment service providers and payment processors, economies of scale and common standards will make payments more efficient." Article 5 of the Regulation details the technical and business requirements that should be observed when carrying out credit transfer and direct debit transactions. These requirements relate to, among other things, the use of the International Bank Account Number (IBAN) and the ISO 20022 XML message standards. Article 5 also references the data elements detailed in the Annex to the Regulation that should be provided with a credit transfer and a direct debit payment. Last but not least, Article 5 sets out the rights of consumers with regard to direct debit collections, which are also relevant for payees (billers). Establishing these requirements serves the purpose of harmonising the way electronic payments are carried out in the . There does not appear to be any dependency between the euro debt crisis and the use of, for example, the IBAN by payment service providers and payment service users in accordance with the provisions - and deadlines - established with the Regulation.
The European authorities driving forward the programme frequently pointed out that the integration of the euro payments market strengthens the euro currency and the internal market. Commenting on the agreement of the 1 February 2014 deadline to be established with the Regulation, Member of the European Parliament Sari Essayah, rapporteur for this legislative act, said: " is a fundamental element of the internal market. The internal market cannot function well without . Moreover will provide the basis for other developments in the single market." Sharon Bowles, Chair of the Parliament's Economic and Monetary Affairs Committee, confirmed that the agreement on this deadline demonstrates that "even as we grapple with the crisis, the institutions continue to work diligently to deepen the internal market in financial services, with the euro at its core. This agreement is a vote of confidence in the euro, and I am convinced that it will be a good deal for consumers and businesses." (See press release of the European Parliament of 20 December 2011 under ‘related links' below).
As communicated already in the 's online media briefing held in October 2011 (see ‘related links' below), the shares the opinion that contributes towards a solution for the current euro crisis. In line with statements from other market participants, the believes that the current situation reinforces the need for swift migration to harmonised payment schemes. It is therefore positive that the European legislator established clear deadlines for migration to . It is the view of the that the 1 February 2014 deadline for migration in the euro area mandated with the Regulation should not be delayed.
Clearly, the euro crisis impacts the economic actors in the internal market. This is however no reason to procrastinate the actions required to achieving compliance with the Regulation. Unless the legislator would decide otherwise, payment service providers and payment service users such as business and public entities in the euro area must comply with the Regulation by 1 February 2014.
Consequently, the maintains that payment service providers and payment service users need to evaluate the impact of the Regulation on their day-to-day operations. The also reiterates that the experience of early movers handling major payment volumes indicates that migration to Schemes and technical standards is beneficial but requires careful planning. The relevant actions and resources should be identified as soon as possible.
The time to act is now.
- Regulation (EU) No 260/2012 establishing technical and business requirements for credit transfers and direct debits in euro and amending Regulation (EC) No 924/2009
- European Parliament Press Release of 20 December 2011: ‘Cheaper, Faster and Safer Cross-border Payment Services'
- Council of the European Union Press Release of 28 February 2012: ‘SEPA: Council Adopts Regulation on Credit Transfers and Direct Debits'
- EPC Newsletter (follow this link to log your questions on the SEPA Regulation!): ‘Help is Here: Payments Regulatory Expert Group (PREG) Publishes Guidance Document on Regulation'
- EPC Blog Series (Parts I-V): Get Ready for SEPA by February 2014. Early Movers on the Customer Side Share Lessons Learnt
- EPC Video ‘SEPA for Billers. The Time to Act is Now': This Film is Available with Subtitles in the EU Languages
- EPC Webcast: EPC Media Briefing October 2011 (view and hear Q&A on euro debt crisis starting at minute 49 of the webcast)
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