As reported in my blog, 17 November 2011, the forthcoming European Union ( ) ‘Regulation Establishing Technical Requirements for Credit Transfers and Direct Debits in Euro' (the Regulation), will confer the responsibility of managing the payment schemes upon the European Commission. Moving forward, it will therefore be the European Commission's task to reconcile distinct - and occasionally mutually exclusive - customer requirements articulated with regard to the Credit Transfer ( ) and Direct Debit ( ) Schemes. The is happy to share lessons learnt with the European Commission on how to align the Schemes with proven market needs.
Each annual scheme change management cycle demonstrates that the requirements of payment service users in the 32 countries differ widely across and within the various customer segments. Payment service users are not only divided into payers and payees (whose payment needs are different), but also encompass a wide range of interest groups including consumers, public administrations, corporates and small and medium-sized enterprises (SMEs). Corporates and SMEs may be active domestically, regionally or globally, which translates into diverse expectations with regard to the and Schemes. In a multi-country environment such as , even within a specific Europe-wide customer segment there are opposing or mutually exclusive schools of thought as to which specific features should be included in the Schemes or not. Consequently, it is virtually impossible to translate the expectations of each and every single interest group into mandatory elements of the Schemes.
To illustrate the point: corporate practices with regard to the timelines governing the Scheme are just one example of different expectations within the same customer segment. Corporates in one country are used to an extended timeline for the execution of a direct debit collection, whereas corporates in another country demand that a direct debit can be initiated and collected on a same-day basis. The Scheme must therefore strike a balance between these mutually exclusive expectations articulated around the same feature. According to the standard time cycle mandated with the scheme rules, 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. For subsequent direct debit collections, the payer's bank must receive such a request at least two business days prior to the due date. The updated Scheme Rulebook version 6.0, which will take effect in November 2012 however, will include the option to use a shorter time cycle for the presentation of both first and recurrent direct debit payments as outlined above.
It is a standard exercise to bridge different customer expectations throughout the painstaking process of forging agreements on the countless technical and procedural details that make up a European payment scheme. To ensure broad market acceptance, scheme design has adhered to the following principles: the basic scheme model must meet the proven requirements of the majority of payment service users. At the same time, the model must be flexible enough to include optional extras on demand. This concept provides maximum choice to customers while avoiding that a majority of customers have to buy features that they do not need.
The European Commission, which will assume Scheme management in the future, has yet to enlighten us on how it identifies the needs of stakeholders. The general criteria, if any, applied by the European Commission to either strike a compromise or rule in favour of one user group against another in case of mutually exclusive expectations around the same feature, also remain a mystery. We do, however, continue to be hopeful that the European Commission will share such details with the market at some point.
In the meantime, members, who are engaged in daily dialogue with customers, will continue to consult the entire payment community (demand and supply sides) on the evolution of the and Schemes. The results will be shared with the European Commission for consideration.
For information on how to engage in the scheme change management process refer to these links:
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