Recap: the mandate and composition of the Euro Retail Payments Board ( )
The European Payments Council ( ), (which is not part of the European Union ( ) institutional framework), has frequently pointed out that the Single Euro Payments Area ( ) is an integration initiative pursued by the institutions. These are the European Commission, the European Parliament, the Council of the representing governments and the ECB. The European Commission and the ECB, respectively, have established several dedicated bodies to facilitate the dialogue on the process with market participants representing various stakeholder groups. (To obtain an overview of the institutional landscape, i.e. the actors involved in the process at the European level and their interaction, visit the infographic ‘ at a Glance’.)
On 19 December 2013 the ECB announced the launch of the , which helps foster “the development of an integrated, innovative and competitive market for retail payments in euro in the ”. The ’s work consists mainly of identifying strategic issues and work priorities (including business practices, requirements and standards) and ensuring they are addressed. Seven representatives from the demand side (e.g. consumers, retailers and corporations) and seven from the supply side (banks and payment and e-money institutions) sit on the Board. They are joined by five representatives from the euro area national central banks and one representative from the non-euro area national central banks (all on a rotating basis). The is chaired by the ECB. The European Commission participates as an observer. The is a member of the .
The fosters interaction among stakeholders, including the , to contribute and facilitate solutions in a multi-stakeholder environment
When the governments and institutions first launched the process in the late 1990s, they pursued the further integration of the market for electronic euro payments with a clear division of labour in mind: while the authorities focused on creating the legal and regulatory conditions facilitating the transition of millions of payment service users and thousands of providers to harmonised payment schemes, they requested the banking industry to contribute the expertise and resources required to develop payment schemes for electronic euro credit transfers and direct debits. This approach reflected practices established in the pre- era at domestic level where national banking communities were primarily responsible for managing local payment schemes.
In response to these expectations, the European banking sector created the in 2002. In close dialogue with the stakeholder community, the developed, among other things, the Credit Transfer ( ) and Direct Debit ( ) Schemes. The carries out the scheme management function subject to legal and regulatory conditions defined by the authorities. (For detailed information, refer to the Newsletter article entitled ‘Evolution and Oversight of the and Schemes: the Role of the European Commission and of the European Central Bank’.)
Fast forward to the present, the main change with regard to the development of harmonised solutions outside the competitive environment is this: today, the authorities expect that related efforts are the result of multi-stakeholder endeavours involving, essentially, representatives of all impacted parties on the demand, supply and regulatory sides. The dialogue on the process taking place within a dedicated multi-stakeholder body such as the , chaired by the ECB, facilitates this approach.
The looks forward to the continued dialogue with all stakeholders on the most appropriate next steps to ensure an efficient and secure landscape that responds to market needs.
At its second meeting held on 1 December 2014, the agreed next steps with regard to the following topics, among others: and post-migration issues; pan-European electronic mandate solutions and instant payments in euro. Documentation related to these topics published by the ECB following the second meeting of the is included in the ‘related links’ below.
recommendations on and post-migration issues
To ensure that any implementation and functioning issues which might prevent the payment schemes from delivering their full potential going forward are addressed, the set up a working group on post-migration issues relating to the and Schemes in May 2014. It was co-chaired by the and the European Association of Corporate Treasurers (EACT) / BusinessEurope.
As outlined in the statement published following the 1 December 2014 meeting, on the basis of a report of the working group, the members agreed on the following main recommendations:
- Harmonise further the XML message formats in the customer-to-bank and bank-to-customer domain of and transactions in order to improve the efficiency benefits for payment service users.
- Increase awareness among payers and payees that payers have the freedom to use non-domestic payment accounts, irrespective of the location of the payee and as stipulated by European law (Article 9 of Regulation ( ) No 260/2012).
- Increase the availability of up-to-date information on valid bank identifiers used in international bank account numbers (IBANs) and corresponding business identifier codes (BICs); this will facilitate the use of the IBAN as the unique identifier also for cross-border transactions as of 1 February 2016, as required by European law (Article 9 of Regulation ( ) No 260/2012).
- Investigate further alternative ways to meet the demand for extended remittance information to be used by payment service users in the and Schemes.
The also endorsed a set of more technical recommendations related to migration and the functioning of the and Schemes and outlined ways forward on these. The full set of recommendations made by the on and post-migration issues, (including the addressees of the recommendations), is detailed in Annex 1 included in the statement published following its 1 December 2014 meeting.
recommendations on pan-European electronic mandate solutions
In May 2014, the established the working group on pan-European electronic mandate solutions, which was co-chaired by the and E-commerce Europe. The working group had been mandated to put forward high level recommendations to address legal, technical or any other issues which prevent pan-European electronic mandate solutions from emerging and being used. As a first step, the working group gathered and analysed information from market participants, (payment service providers and users, on both the creditor and the debtor side), for their considerations on using or not using electronic mandates for both in the national and cross-border context.
On the basis of a report prepared by the working group, the members agreed at the 1 December 2014 meeting on recommendations, which relate to the issuance, acceptance and maintenance of electronic mandates for at the pan-European level. The main ones are summarised below:
- The choice of which electronic mandate solution to use should be free (subject to article 54 of the Payment Services Directive – PSD) and there is no need for a full harmonisation of electronic mandate solutions in .
- Creditors (billers) should handle electronic mandates in such a way that debtors (payers) have the freedom to use non-domestic payment accounts, as stipulated by European law (Article 9 of Regulation ( ) No 260/2012).
- While preserving the choice for debtors and creditors about the way in which they give and accept electronic mandates, there is a clear incentive for creditors to move generally towards solutions with proper debtor authentication, i.e. with a lower risk of refund claims related to unauthorised transactions.
- It should be clear to all stakeholders that the burden of proof lies with the creditor in the event that an unauthorised direct debit collection is claimed by the debtor after the initial eight-week ‘no-questions-asked’ refund period for the Scheme has elapsed. In this regard, it is important that debtor banks (which have the final say in judging such claims) have a good and harmonised understanding of the level of customer authentication that was used when the mandate was given.
- Electronic mandate solutions providers are urged to be open to interoperability requests by other solution providers and, if feasible, make use of the technical description provided in Annex VII of the Scheme Rulebooks.
The full set of recommendations made by the on pan-European electronic mandates for , (including the addressees of the recommendations), is detailed in Annex 2 included in the statement published following its 1 December 2014 meeting.
Instant payments in euro: next steps
The members of the agreed that ‘instant payments’ are defined as electronic retail payment solutions available 24/7/365 and resulting in the immediate or close-to-immediate interbank clearing of the transaction and crediting of the payee’s account with confirmation to the payer (within seconds of payment initiation). This is irrespective of the underlying payment instrument used (credit transfer, direct debit or payment card) and of the underlying arrangements for clearing (whether bilateral interbank clearing or clearing via infrastructures) and settlement (e.g. with guarantees or in real time) that make this possible.
In a competitive market, providers should not adopt a ‘silo’ approach offering closed-loop, non-interoperable, instant payment solutions. Instead, a ‘layered’ approach should be taken by developing solutions for end-users to make payments with increased speed, leveraging on the current payment instruments (first layer) and the underlying clearing and settlement infrastructures (second and third layers). Such solutions should take advantage, where possible, of the harmonisation and integration already achieved with the project, preventing the emergence of a fragmented European market for instant payments in euro. The members of the understand that offerings of, for example, person-to-person mobile payments in euro may depend significantly on the availability of instant clearing services.
Therefore, taking into account emerging national solutions and to prevent market fragmentation, the members of the agreed on:
- The need for at least one pan-European instant payment solution for euro open to any payment service provider in the .
- Inviting the supply side of the industry, (in close cooperation with the demand side and with the active involvement of the as a potential scheme developer), to make an assessment of the issues related to pan-European instant payment solutions in euro to be presented at the meeting in June 2015.
At its December 2014 meeting, the also decided to set up a new working group focusing on person-to-person mobile payments as well as a new working group on mobile and card-based contactless proximity payments. For detailed information on the mandate and purpose of these working groups, refer to the ‘related articles in this issue’ below.
Jean-Yves Jacquelin is the Chair of the Payment Schemes Working Group.
EPC Website: SEPA at a Glance – the Infographic (this infographic provides an overview of the actors involved in the process at the European level and their interaction)
European Central Bank Website: Governance (includes detailed information on the Euro Retail Payments Board ( ) and related documentation)
Related articles in this issue:
In January 2015 the EPC Published the SDD Core Rulebook Version 9.0 and SDD Business to Business (B2B) Rulebook Version 7.0 to Take Effect in November 2016. The SDD Core Rulebook version 9.0 includes a shorter standard time cycle; both the SDD Core Rulebook version 9.0 and SDD B2B Rulebook version 7.0 feature simplified use of sequence types
New ERPB Working Groups on Mobile Payments and Publication of the Second Edition of the EPC’s ‘Overview of Mobile Payments Initiatives’. New ERPB working groups address person-to-person mobile payments and mobile and card-based contactless proximity payments. Second edition of EPC report includes mobile payments initiatives launched between June 2014 and October 2014
Related articles in previous issues:
SEPA Migration (Euro Area) Round Up: the Transition has been a Success Throughout the Region. Market participants comment on the 1 August 2014 deadline and next steps in the process ( Newsletter, Issue 24, October 2014)
Evolution and Oversight of the SCT and SDD Schemes: the Role of the European Commission and of the European Central Bank ( Newsletter, Issue 23, July 2014)
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