The scheme change management process provides all stakeholders with the opportunity to participate. Learn more and engage.
The European Payments Council () launched the Credit Transfer () Scheme in January 2008 and the Direct Debit () Core and Business to Business (B2B) Schemes in November 2009. The Single Euro Payments Area () payment schemes, as set out in the and Rulebooks, evolve based on a transparent change management process adhered to by the . This evolution reflects changes in market needs and updates of technical standards developed by international standards bodies, such as the International Organization for Standardization (ISO). The principles governing the evolution of the Schemes are set out in section three of the Scheme Management Internal Rules (see ‘related links’ below). For detailed information on the timelines applicable to the scheme change management process, refer to the Website page, entitled ‘ / Rulebook Release Management and Scheme Development’ (see ‘related links’ below).
The scheme change management process provides all stakeholders with the opportunity to participate; i.e. to introduce suggestions for changes to the schemes. All interested parties had been invited to submit suggestions for changes proposed to be incorporated into the next version of the and Rulebooks, ( Rulebook version 8.0, Core Rulebook version 8.0 and B2B Rulebook version 6.0), by 28 February 2014 (see ‘related articles in previous issues’ below). All suggestions for rulebook changes received by this date will be taken into consideration with regard to the rulebook versions to be published in November 2014. These rulebook versions will then take effect in November 2015. In accordance with industry best practice, all stakeholders and their suppliers therefore have sufficient lead time to address rulebook updates prior to such changes taking effect.
Suggestions for possible modifications to the and Rulebooks received: an overview of the initiators
By 28 February 2014, the had received 88 suggestions for possible modifications to the rulebooks from these stakeholder groups representing both the demand and supply sides of the euro payments market. (The number in brackets indentifies the number of suggestions submitted by the stakeholder.)
Suggestions were received from representatives of the following payment service users, and IT and vendor communities:
- ACE European Group Ltd (1).
- Association Française des Trésoriers d’Entreprises (4).
- BITKOM Germany (12).
- Caterpillar Financial Services (1).
- Coalition for Electronic Mandates (Germany) (1).
- Connective (1).
- European Fundraising Association (1).
- Fundraising Verband Austria (1).
- Laya Healthcare (1).
- Médecins sans Frontières (AT and DE) (2).
- Payment Advisory Group (1).
- Sentenial (1).
- World Wide Fund Germany (1).
- Worldline (3).
Suggestions were received on behalf of the following payment institutions and individual payment service providers:
- European Payment Institutions Federation (5).
- PayPal (1).
Suggestions were received from the following national banking communities:
- Austria (1).
- Belgium (3).
- Germany (3).
- Netherlands (8).
- Portugal (8).
- Slovakia (2).
- Slovenia (1).
- Spain (4).
- Sweden (1).
Suggestions were submitted by the ( Secretariat and working and support groups):
- Secretariat (12).
- Payment Schemes Working Group (7).
- Legal Support Group (1).
Main topics covered with the suggestions for possible modifications to the and Rulebooks received: an overview
Many of the suggestions for possible modifications to the and Rulebooks received by 28 February 2014 from all stakeholders listed above address one or several of the following topics:
Core standard time cycle: make current option to use a shorter time cycle for the presentation of first, recurrent and one-off direct debit payments mandatory?
To give some background: the standard time cycle of the Core Rulebook is: the payer’s bank must receive the request for a first direct debit collection or for a one-off direct debit collection at least five business days prior to the due date (‘D-5’). For subsequent direct debit collections, the payer’s bank must receive such a request at least two business days prior to the due date (‘D-2’). The due date1 (‘D’) is assigned by the biller and should be agreed with the payer in the contract underlying a direct debit collection (a newsletter subscription, for example)2.
The Core Rulebook includes the possibility of using a shorter time cycle for the presentation of first, recurrent and one off direct debit payments by allowing the biller’s bank to send the payments to the payer's bank at least one inter-bank business day3 prior to the due date (‘D-1’). This option, (which is often referred to as ‘ COR1’), caters for the needs of certain businesses which require a shorter time cycle for direct debit payments than the standard cycle. It allows for time critical business transactions, e.g. security related transactions and insurance collections, for example. (It should be noted that all payment service providers participating in the Core Scheme must continue to support the standard time cycle of the Core Scheme, irrespective of any agreements to use the optional shorter time cycle.)
Billers should contact their bank to learn more about the possibilities of using these shorter timelines, as certain banks or communities of banks may agree to operate under these timelines, while other banks may not support this option. To learn which payment service providers, or communities thereof, have advised the that they are making use of the optional shorter time cycle, refer to the Website, entitled ‘Use of Core Options’ (see ‘related links’ below).
Several of the stakeholders who submitted suggestions for modifications to the Core Rulebook suggested making the currently optional shorter time cycle for the presentation of first, recurrent and one off direct debit payments mandatory thereby replacing the current D-5, D-2 time cycle.
: simplify sequence types?
To give some background: the Rulebooks require that the payment message used to request a direct debit collection specifies whether the transaction is a first, one-off, recurrent or last collection. (These specifications are also referred to as ‘sequence types’.) For further information on the subject of sequence types, refer to the ‘ Clarification Paper: Credit Transfer and Direct Debit’ (see ‘related links’ below).
Several of the stakeholders who submitted suggestions for modifications to the Rulebooks indicated that the various sequence types that must be observed should be simplified.
: introduce more flexibility regarding the use of electronic mandates?
To give some background: the Schemes allow a biller to collect funds from a payer's account, provided that a signed mandate has been granted by the payer to the biller. A mandate is signed by the payer to authorise the biller to collect a payment and to instruct the payer's bank to pay those collections. The Rulebooks provide the possibility to issue mandates created through the use of electronic channels – often referred to as electronic mandates.
It is widely recognised that the efficient handling and the acceptance of electronic mandates is a very important element in the context of a successful migration to and for the further development of the Core and B2B Schemes. In October 2013, the published a clarification letter (see ‘related link’ below), which highlights that the signature methods as described in section 4.1 of the Core and B2B Rulebooks are not exhaustive. scheme participants, (i.e. payment service providers that have formally adhered to the Schemes), may consider allowing continued usage of other legally binding methods of signature including those that were used under the local legacy scheme rules.
Several of the stakeholders who submitted suggestions for modifications to the Rulebooks indicated that a higher degree of flexibility regarding the use of legacy as well as future electronic mandate solutions should be introduced into the Rulebooks.
and : introduce longer remittance information?
To give some background: the and Schemes permit the end-to-end carrying of remittance data on a structured or unstructured basis. The scheme rules allow for up to 140 characters to be included with the remittance information. Payment service providers are obliged to pass on the full remittance information through the payment processing chain.
The provisions in the scheme rulebooks to date regarding the number of characters to be included with the remittance information are based on the following considerations of the :
- It is standard practice throughout Europe and in many other parts of the world for all processing chains to allow for 140 characters in the remittance data field. Experience shows that over 95 percent of credit transfers can be validly reconciled with less than 140 characters of remittance information.
- The annual public consultations carried out by the on the evolution of the payment schemes to date have not identified support by a broad majority of all market participants for an extended number of characters to be carried with the remittance information.
- Allowing for up to 1000 characters or more in would force European payment service providers and corporates to maintain different processing applications and IT systems for and non- transactions. The therefore recommends keeping the remittance information at 140 characters to ensure full remittance information is processed end-to-end through the different account information channels for mass payments.
Several stakeholders representing, in particular, the corporate community had suggested with the previous scheme change management cycle that rolled out in 2012 leading to the release of the rulebook versions that took effect on 1 February 2014 (see ‘related links’ below), to increase the number of characters that can be included with the remittance information.
At the time, the considered that it was not feasible to incorporate this change into the scheme for the following reason: in 2012, all market participants in the euro area were required to meet the 1 February 2014 deadline for compliance with the core provisions of the ‘Regulation (EU) No 260/2012 establishing technical and business requirements for credit transfers and direct debits in euro’ (the Regulation, see ‘related links’ below). Many systems and operations had already been aligned or were being aligned with, among other things, the current standard 140 character remittance information. Introducing such a significant change with the rulebook versions to take effect on 1 February 2014; i.e. extending the number of characters carried with the remittance information, would have required all market participants, (i.e. payers, payees, payment service providers, payment service users and clearing and settlement mechanisms), to make further significant investments in their IT systems, rendering previous developments obsolete. (For further information, refer also to the ‘related articles in previous issues’ below.)
Several of the stakeholders who submitted suggestions for modifications to the rulebooks with regard to the rulebook versions to be published in November 2014 indicated that the current standard 140 character remittance information should be re-considered.
Have your say: the three-month public consultation on possible modifications to the next generation and Rulebooks starts on 19 May 2014
All suggestions for changes to the rulebooks that were received by 28 February 2014 are evaluated by the Payment Schemes Working Group and are consolidated into a single change request document per rulebook. As with previous scheme change cycles, all proposed changes to the schemes will be released with the change request documents for a three-month public consultation (this time between 19 May and 15 August 2014). For details on previous consultations, refer to the link ‘ Consultations’ below).
The links to the change requests with regard to the , the Core and the B2B Rulebooks to be submitted to the 2014 public consultation will be added with the ‘related links’ included at the end of this article once published.
Proposed changes to the schemes that find broad acceptance in the entire stakeholder community and are technically and legally feasible are taken forward. Proposed changes that lack such broad support are not – regardless of whether such a change is proposed by a payment service provider or by a user representative. This ensures that the and Schemes evolve in line with the requirements of the majority of all market participants.
Regulation () No 260/2012 (the Regulation) empowers the European Commission to amend the technical requirements applicable to and
The and Schemes have to comply with the technical requirements detailed in Article 5 and in the Annex to Regulation () No 260/2012, also known as the Regulation. Article 13 of the Regulation empowers the European Commission (the Commission) to amend the technical requirements set out in the Annex to the Regulation through delegated acts (see also Article 14). For more information, refer to the Newsletter article, entitled: ‘The New European Decision-Making Landscape: How the European Commission Rules Through ‘Delegated Acts’ (see ‘related articles in previous issues’ below).
The has stressed that any future changes to the Schemes mandated by the Commission should be based on adequate market consultation and reflect broad consensus among all stakeholders. The timelines for such amendments determined by the Commission to take effect should be aligned with the timelines governing the and Rulebook release schedule and the investment cycles of market participants. To date, the Commission has not made publicly available information around whether it plans to amend the technical requirements set out in the Annex to the Regulation, and if so, when this might happen.
It remains the ’s objective to ensure that the and Rulebooks evolve in response to proven market needs, based on a predictable release schedule. The must, however, clarify that moving forward, it may be required to adapt the rulebook release schedule at short notice to ensure compliance with technical requirements set out in the Annex to the Regulation as amended by the Commission or with any other relevant legislation.
Jean-Yves Jacquelin is the Chair of the Payment Schemes Working Group.
EPC Blog (December 2012): SEPA Credit Transfer and SEPA Direct Debit Rulebooks: Next Scheme Change Management Cycle Takes Place in 2014. Rulebooks to be Published in November 2014 Will Take Effect in November 2015
Related article in this issue:
Related articles in previous issues:
SEPA Direct Debit for Billers: the SDD Core Scheme Timelines. EPC Newsletter series provides support for billers preparing migration to the SDD Schemes ( Newsletter, Issue 12, October 2011)
Join the Debate: European Association of Corporate Treasurers´ Proposals Regarding Remittance Information. Corporates expect that migration to SEPA will improve automatic payment reconciliation ( Newsletter, Issue 15, July 2012)
The New European Decision-Making Landscape: How the European Commission Rules Through ‘Delegated Acts’. SEPA Regulation empowers the European Commission to mandate technical requirements applicable to SEPA payment schemes ( Newsletter, Issue 13, January 2012)
1 The Schemes allow payers and billers to anticipate the precise date (due date), when their account will be debited or credited, respectively. The due date may be later than the date agreed between the payer and the biller if the due date is not a banking business day or in case of other exceptional circumstances.
2 The technical terms used in the Rulebooks refer to the payer as ‘debtor’ and the biller as ‘creditor’.
3 An inter-bank business day is when banks are open for business between banks. The 'Trans-European Automated Real-time Gross Settlement Express Transfer System' (TARGET) calendar is used to identify inter-bank business days. To avoid frequent changes to TARGET closing days, due to national holidays for example and thus the introduction of uncertainties into financial markets, a long-term calendar for TARGET closing days has been established and applied since 2002. This calendar is published by the European Central Bank. Settlement of funds, resulting from direct debit payments always takes place on an inter-bank business day.
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