Help is Here: Payments Regulatory Expert Group (PREG) Publishes Guidan...

Help is Here: Payments Regulatory Expert Group (PREG) Publishes Guidance Document on SEPA Regulation

Readers are invited to share questions on the SEPA Regulation to be addressed in ‘FAQ´ being developed by the PREG

02 August 12

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Recap: key elements of the Regulation

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 Regulation) was published in the Official Journal of the on 30 March 2012. The Regulation stipulates the mandatory deadlines for compliance with its rules for euro credit transfer and direct debit transactions. In the euro area, this will be 1 February 2014, subject to certain limited exemptions mentioned in the Regulation. Consequently, payment service providers ( ) and payment service users ( ) need to evaluate its impact on their day-to-day operations.

Other key provisions included within the Regulation beyond the deadlines for compliance with the technical requirements set out in Article 5 and the Annex to the Regulation, are:

Niche products: Article 16 (3) states that Member States may allow their competent authorities to waive until 1 February 2016 all or some of the requirements outlined within the Regulation for those credit transfer or direct debit transactions representing less than 10 percent of national credit transfer or direct debit payment volumes. A slight complication arises here, as these 'niche schemes' have yet to be identified by the respective national authorities. The deadline for Member States to come forward with their list of 'niche schemes' that would have to meet the extended 1 February 2016 deadline, is 1 February 2013. This creates some uncertainty in the market as it prepares for migration to the Regulation today.

Multilateral interchange fee (MIF): The practice of paying a MIF by the payee's bank to the payer's bank in relation to the execution of a direct debit collection (an existing practice in some countries) must cease  by 1 November 2012 for cross-border direct debits and by 1 February 2017 for national direct debits. The provisions regarding MIFs set out in Regulation (EC) No 924/2009 will be amended in accordance with the Regulation.

ISO 20022 XML message standards: have the obligation to ensure that non-consumer payers submit ISO 20022 XML compliant payment files to the payment processing engine of the . Member States have the discretion to apply the exemption from this requirement to micro-enterprises. In this context any conversion either offered by the or a third party provider to the sending customer, will need to take place as a separate process before the payment file is transmitted to the 's payments processing engine.

International Bank Account Number (IBAN) and Business Identifier Code (BIC): The current requirement for to provide the BIC as well as the IBAN as part of their payment instructions is to be completely phased out by 1 February 2016. This provision represents a change to the legal text, which the legislator introduced in the final stages of negotiations on the Regulation. This rule aims to achieve greater consumer protection. Any non-consumer that would like to provide payment instructions to their with only the IBAN of the beneficiary will have to contractually agree this with their , in particular in the context of the liability of the for executing a payment correctly. This liability is governed by the Payment Services Directive (PSD).

Balance of payment reporting requirements: The Regulation stipulates that Regulation (EC) No 924/2009 will be amended to ensure that those countries which still maintain settlement based balance of payments reporting requirements for with regard to payments over 50,000 euros will have to phase these out by 1 February 2016.  Cross-border payments in euro exceeding 50,000 euros will be subject to the existing Regulation (EC) No 924/2009 requirement which stipulates that such transactions must be charged the same as the corresponding national transfer.

The Payments Regulatory Expert Group developed its industry implementation guidance document

The European Banking Federation's Payments Regulatory Expert Group (PREG), which also includes representatives from the European Payments Council ( ), MasterCard, Visa and the European Association of Co-operative Banks, developed its industry implementation guidance document, which provides clarity to and on a range of practical questions related to the Regulation. The link to the guidance document was added to this article on 2 August 2012 (see ‘related links’ below). 

Following the model applied to develop the PSD guide published by this expert group in 2009, the PREG's Regulation guidance document reflects in-depth dialogue with the industry as well as other key stakeholders and institutions.

The structure of this most recent guidance document allows a step by step analysis of each article included within the Regulation. Where the Regulation offers limited insight into  how certain situations should be dealt with, the guidance document provides an interpretation as to what is being intended with the respective provision.

'Frequently Asked Questions and Answers' document with regard to the Regulation in preparation: log your questions here!

In addition to this, the PREG is currently developing a 'Frequently Asked Questions and Answers' (FAQ) document with regard to the Regulation. This will be a living document intended to support all market participants required to achieve compliance with the Regulation. These forthcoming FAQ will be regularly updated. Once finalised, the latest version of the FAQ will be available from the Website. Follow the on Twitter and join the on LinkedIn to receive notification when the FAQ is published.

Everyone is invited to share their questions with regard to the Regulation using the comment function below. Please note that such questions will not be answered directly here, but will be logged by the PREG to be addressed in the FAQ document now in preparation.

Ruth Wandhöfer chairs the PREG. She also chairs the Information Security Support Group.

Related links:

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 

Payments Regulatory Expert Group (PREG): Practical Guidance for the Implementation of 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


Related article in this issue:

SEPA Migration: Facts and Figures. The state-of-play in July 2012   

Related articles in previous issues:

The Time to Act is Now: Impact of the SEPA Regulation on Payment Service Users The SEPA Regulation includes provisions relevant for both the demand and supply sides of the payments market ( Newsletter, Issue 14, January 2012)

EPC Newsletter: All Articles Published in the 'Legal and Regulatory Issues' Section

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