European Union Regulation sets deadline for migration to the Single Euro Payments Area
As previously reported, on 30 March 2012, the 'Regulation () No 260/2012 establishing technical and business requirements for credit transfers and direct debits in euro and amending Regulation (EC) No 924/2009', was published in the Official Journal of the European Union (). This legislative act is commonly referenced as the Single Euro Payments Area () Regulation (see 'related links' below). The Regulation defines 1 February 2014 as the deadline in the euro area for compliance with its core provisions. 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 (SDD). The Regulation affects not only payment service providers (), but also payment service users ().
Qualitative indicators measure the level of preparedness of different stakeholder groups in each country
In March 2013, the Eurosystem, which is comprised of the European Central Bank (ECB) and the national central banks of countries that have adopted the euro, published the first qualitative indicators to assess preparedness across the transaction chain in each country (see 'related links' below). The qualitative indicators take into account the specificities of the respective country with regard to migration progress by 'big billers', public adminstrations and . The ECB Website states: "Although the qualitative indicators are based on a common approach, they are, primarily, meant to indicate the level of preparedness of the different stakeholder groups within the respective country and are less of an indication for doing any cross-referencing between the various individual countries. The Eurosystem performed these qualitative assessments on a best effort basis. It cannot be excluded that the preparation level of the individual stakeholders diverges from the general overall assessment." Non-euro area EU countries participate in this exercise on a voluntary basis only. The qualitative indicators will be updated quarterly by the national central banks. The assessment is based on a 'traffic light system'.
The qualitative indicators published in March 2013 measure the level of preparedness by stakeholder groups at country level as of the fourth quarter of 2012. At that time, the vast majority of stakeholder groups across the euro area was expected to complete migration to and SDD on time by 1 February 2014 as mandated by the Regulation. With regard to migration to , some countries already completed the exercise. According to the qualitative indicators, at the end of 2012, only big billers and public administrations in Estonia have not yet commenced and/or are not expected to meet the deadline with regard to migration to both and SDD. In Luxembourg and France, big billers and public administrations were reported as lagging behind with their migration to SDD.
Concerning migration in France, specifically, it should be noted however that a different source indicates that French businesses will be ready for SDD by 1 February 2014. As reported in the previous edition of this newsletter, in December 2012 Steria published the freely available report ': Will European Businesses be Ready for the Transformation?' (see 'related links' below) prepared in collaboration with Edgar, Dunn & Company. The report focuses on corporate SDD readiness. The findings are based on a phone survey of 300 businesses with 250 to 5,000 employees in France, Germany and the UK and more than 15 in-depth interviews among large corporates and payments experts in Europe. The Steria report found that at the time of the survey 30 percent of French (and German) businesses had not yet started to work on migration to at all. Among the participants in the Steria study, all French businesses issuing direct debits and a large majority of German businesses issuing direct debits (85 percent) stated that they will be compliant by 1 February 2014.
The first qualitative indicators demonstrate that progress, in particular by the corporate sector, is promising. The first migration report also published by the Eurosystem in March 2013, (see 'related links' below) however shows that further efforts are required at country level to ensure compliance by small and medium-sized enterprises and local administrations. For more information, refer to the 'related articles in this issue' below.
Public sector readiness
The first ECB migration report states: "Public administrations, and, in particular, central administrative authorities have taken the lead when it comes to migration, and, in many cases have already completed the migration process to the scheme (e.g. Belgium, Luxembourg, and Finland). (...) Public administrations either use direct debits to a rather limited extent or not at all, and are therefore unable to provide the market with the same kind of impetus as for the scheme. It has to be said, however, that public administrations are not a homogeneous group. When it comes to municipalities or regional authorities, awareness of the project in general and the level of preparedness are pretty low." For more information, refer to the article ' Migration - Don't Count on a Plan B. European Central Bank publishes first Migration Report and warns against risks of late migration' (see 'related articles in this issue' below).
As previously reported, in November 2012, the European Commission (the Commission) published the 6th survey on public administrations' preparedness and migration to (see 'related links' below). The report finds that "migration to has accelerated since the last survey with the migration rate increasing from 24.9 percent in June 2011 to 34.8 percent in May 2012." The migration to by public administrations in a number of EU Member States in the euro area significantly increased during the reporting period, "the most notable ones being Austria (from 60 to 87 percent), Greece (from 0.01 to 65.4 percent) and Portugal (from 12.56 to 33.02 percent)." In line with the ECB migration report, the Commission survey finds: "SDD migration rates are mostly still at zero or only marginal." The Commission however also stresses that direct debits are used by public administrations only "to a very limited extent or not at all."
In addition to the survey on public administrations' preparedness and migration to , the Commission publishes separate annual progress reports on the state of migration as requested by the Economic and Financial Affairs Council (ECOFIN), which is comprised of the Finance Ministers. The Commission released its third annual progress report on the state of migration in May 2011. No further updates have been made available.
Percentage of banks in offering services
The European Payments Council () launched the Scheme in January 2008. As of April 2013, 4,516 in 32 countries offer services. Today, the delivering services represent more than 95 percent of payment volumes in Europe. The Participant Register, which lists the scheme participants, is publicly available at http://epc.cbnet.info/content/adherence_database. The absolute number of adhering to the Scheme has decreased slightly compared to previous reports due to merger and acquisition (M&A) activity.
Percentage of banks in offering SDD services
The launched the Scheme and the SDD Business to Business Direct Debit (B2B) Scheme on 2 November 2009. As of April 2013, 3,867 , representing more than 80 percent of payments volume have signed up to the Scheme. As of April 2013, 3,413 also adhere to the Scheme. The separate Participant Registers for the and Schemes list the participants taking part in these schemes. These registers are publicly available at http://epc.cbnet.info/content/adherence_database. All branches of banks in the euro area reachable for direct debits at national level must be reachable for cross-border direct debits, i.e. the Scheme, since 1 November 2010 as mandated by Article 8 of Regulation (EC) No 924/2009 on cross-border payments in the Community. The absolute number of adhering to the SDD Schemes has decreased slightly compared to previous reports due to M&A activity.
Quantitative indicators measure the share of and SDD transactions and migration to EMV
The quantitative indicators also published on the ECB Website (see 'related links' below) measure the share of and SDD transactions as a percentage of the total volume of credit transfers and direct debits generated by bank customers in the euro area. According to the quantitative indicators, the share of transactions amounts to 38.2 percent as of February 2013; and the share of SDD transactions has reached 2.3 percent.
As reported in previous issues of the Newsletter, good progress has been achieved in the realisation of for cards. The 's Cards Framework (SCF) outlines high level principles and rules that when implemented by the card industry, will deliver a consistent user experience to both cardholders and merchants when making or accepting euro payments or cash withdrawals. The SCF recognises the EMV standard for -wide acceptance of card payments. EMV is an industry standard to implement chip and personal identification number (PIN) security for card transactions to combat fraud. Migration to EMV in Europe is essentially complete: according to the quantitative indicators, EMV transactions in the euro area (as a percentage of total transactions at POS terminals) reached 82.1 percent in June 2012 (latest data available).
ECB warns against risks of late migration
On 21 March 2013 the Eurosystem published its first report on the migration towards (see 'related links' and 'related articles in this issue' below). According to the ECB press release of 21 March 2013, the report "shows that most corporations have already completed the planning phase and know what will mean for them in practical terms. However, when it comes to the actual implementation, a number of companies have adopted very late internal deadlines, even as far as to the end of 2013. This is a source of concern in particular when it comes to the migration to the direct debit scheme." The Eurosystem "strongly advocates that all stakeholders (...) migrate at the earliest stage possible, preferably by the third quarter of 2013 at the latest, in order to avoid risks which could impact the wider supply chain and would put migration at risk." Adapting to "involves adjusting a lot of technical and business procedures over a limited period of time. Projects of this kind should not be left to the last moment," said Benoît Cœuré, Member of the Executive Board of the ECB. "I hope that all stakeholders will take migration to payment instruments as a top priority."
There is only Plan A. Get ready for by 1 February 2014. Act now.
The representatives of early movers on the demand side, who have reported on their successfully completed migration projects in this newsletter since April 2011 (see 'related articles in this and previous issues' below), unanimously recommended that organisations which still have to achieve compliance become active as soon as possible. In October 2012, the alerted market participants that this is no longer a recommendation but an imperative; i.e. there is no time to procrastinate further. It has to be noted that the deadline will not move from 1 February 2014. For more information, refer again to the article ' Migration - Don't Count on a Plan B. European Central Bank publishes first Migration Report and warns against risks of late migration' (see 'related articles in this issue' below). Market participants in the euro area that fail to comply with the core provisions of the Regulation by the 1 February 2014 deadline risk infringing EU law. The April 2013 edition of the Newsletter features a report on the migration experience of the company UNION TANK Eckstein GmbH & Co. KG (UTA). It implemented, in a first step, the Scheme followed by the and the Schemes (see 'related articles in in this issue' below). Thomas Wolpert, UTA Senior Credit and Project Manager, comments: "Late movers now working to meet the 1 February 2014 deadline should focus, as a first step, on achieving basic compliance, then seek to realise further efficiencies to be generated with the implementation of the harmonised payment schemes and technical standards." For information on how to achieve readiness, refer also to the article 'If You Have Not Migrated to Yet - Get Ready and Get Inspired: Pioneers on the Demand Side Share Best Practice' in this edition of the Newsletter and additional sources included with the links at the end of this article.
Etienne Goosse is the Secretary General.
Related articles in this issue:
Learn to Love SEPA: the 1 February 2014 Migration Deadline Mandated by European Union Law Will Not Go Away. The focus must now be on joining forces to ensure that every market participant in the euro area required to achieve SEPA compliance will meet this deadline
If You Have Not Migrated to SEPA Yet - Get Ready and Get Inspired: SEPA Pioneers on the Demand Side Share Best Practice. The SEPA deadline will not move from 1 February 2014 so act today to ensure your compliance
UNION TANK Eckstein: "SEPA Credit Transfer and SEPA Direct Debit Allow Everyone to Do More and Better Business across Europe". This company looks forward to 1 February 2014 when migration to SEPA will be completed in the euro area
Related articles in previous issues:
If you would like to comment on this article, please identify yourself with your first and last name. Your name will appear next to your comment. Email addresses will not be published. Please note that by accessing or contributing to the discussion you agree to abide by the EPC website conditions of use.