The Scheme Change Management Cycle
The Credit Transfer () and Direct Debit () Schemes, developed by the European Payments Council () in close dialogue with the payment service user community, evolve over time. The annual scheme change management process is based on the following principles:
- Any stakeholder may introduce suggestions for changes to the and Rulebooks.
- All suggestions for changes to the rulebooks are evaluated by the Payment Schemes Working Group (SPS WG) and are consolidated into a single change request per rulebook. This year, the change requests were released on 16 May 2012 for the annual three-month public consultation.
- Proposed changes detailed in the change requests, which are broadly accepted by all stakeholders, are taken forward.
Together with the new rulebook versions ( Rulebook version 7.0; Core Rulebook version 7.0 and B2B Rulebook version 5.0) and associated implementation guidelines to be released in November 2012, the publishes the feedback received from stakeholders during the annual public consultation on the Website.
Rulebooks have been aligned with Regulation () 260/2012 which defines mandatory deadlines for migration to
In February 2012, the European legislator adopted the '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' (see 'related links' below) (the Regulation), which defines 1 February 2014 as the deadline in the euro area for compliance with the core provisions of this Regulation. Effectively, this means that as of this date, existing national euro credit transfer and direct debit schemes will be replaced by and .
The and Schemes have to comply with the technical requirements detailed in Article 5 and in the Annex to the Regulation. The wording of the Rulebook version 7.0, the Core Rulebook version 7.0 and the B2B Rulebook version 5.0 has been aligned where necessary with the Regulation.
The Regulation stipulates the timelines for application of the so-called 'International Bank Account Number (IBAN) only' rule. This provision is relevant for both payment service providers () and payment service users (). Article 5 (7) of the Regulation states: "After 1 February 2014 for national payment transactions and after 1 February 2016 for cross-border payment transactions, shall not require to indicate the BIC (Business Identifier Code) of the of a payer or of the of a payee." Article 16 (6) however, provides European Union (EU) Member States with the option to defer application of the 'IBAN only' rule for national transactions to 1 February 2016.
The updated versions of the Rulebooks have been amended to make it optional to provide the BIC of the payer's bank with the mandate1 except if the mandate is issued in an Member State which opts to make use of the derogation permissible under Article 16 (6) with regard to national transactions2.
The updated version of the Rulebook was also amended to specify that the BIC has to be provided in line with the provisions of the Regulation.
Article 13 of the Regulation empowers the European Commission to amend the technical requirements set out in the Annex to the Regulation through delegated acts (see also Article 14). 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, the 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 European Commission.
New elements introduced into the Rulebook
To further improve straight-through-processing (STP) of payments, the Rulebook version 7.0 includes two additional reject reason codes which specify why a payment was not accepted:
- Originator bank not registered under this BIC with the clearing and settlement mechanism (CSM).
- Beneficiary bank not registered under this BIC with the CSM.
New elements introduced into the Rulebooks
The Core Rulebook version 7.0 and the B2B Rulebook version 5.0 have been amended to make the provision of the payer's3 address optional with a paper-based mandate, the dematerialised mandate as well as with e-mandates and with the optional Advance Mandate Information (AMI) procedure.
The Core Rulebook version 7.0 and the B2B Rulebook version 5.0, have been updated to clarify that, subject to national legal regime, it is permissible to store mandates in digitised form and the use of electronic signatures is allowed under the Schemes.
As was done for the Rulebook version 7.0 (see above), the updated versions of the Core and B2B Rulebooks have been enhanced to include these two additional reject reason codes:
- Debtor bank not registered under this BIC with the CSM.
- Creditor bank not registered under this BIC with the CSM.
In addition, the Core Rulebook version 7.0 was amended as follows to include a specific scheme rule in case of a card data generated mandate (CDGM) as per the Regulation's Article 5 in conjunction with its Annex paragraph 3 (a)(iv): "In case of a mandate generated using data from a payment card at the point of sale which results in a direct debit to and from a payment account, and where the name of the Debtor is not available, the attribute 'name of Debtor' must be filled in with 'CDGM', followed by the card number, the sequence number and the expiry date of the card or, if these data elements are not available, by any other data element(s) that would uniquely identify the Debtor to the Debtor Bank."
Updated implementation guidelines will also be published in November 2012
The implementation guidelines () related to the Rulebook version 7.0, the Core Rulebook version 7.0 and the B2B Rulebook version 5.0 will also be published in November 2012. These will be based on the 2009 version of ISO 20022.
The rulebook versions and associated published in November 2012 take effect on 1 February 2014
To ensure planning security for all market participants, publication of updated versions of the and Rulebooks, together with the associated , follows an established change and release management cycle. The normally publishes updated versions of the rulebooks once annually, in November of each year. These updated versions normally take effect in the third week of November of the following year. In accordance with industry best practice, and their suppliers therefore have sufficient lead time to address rulebook updates prior to such changes taking effect. Based on the established release management cycle, the updated versions of the rulebooks would normally take effect on 16 November 2013.
stakeholders however, are currently working towards achieving compliance with the Regulation, which defines 1 February 2014 as the deadline in the euro area for compliance with the core provisions of this Regulation. As a result, and as communicated in June 2012 (see 'related links' below), the decided to postpone the effective date for the Rulebook version 7.0, the Core Rulebook version 7.0 and the B2B Rulebook version 5.0 and associated , from 16 November 2013 to 1 February 2014. This allows market participants sufficient time to adapt their systems and operations to comply with both the Regulation and the updated versions of the rulebooks.
Get ready for by 1.2.2014. Act now!
The experience of early movers handling major payment volumes indicates that migration to Schemes and technical standards is beneficial but requires careful planning. Organisations which still have to adapt systems and operations to achieve compliance with the Regulation by 1 February 2014 must become active immediately. The relevant actions and resources should be identified now. The makes available comprehensive information to help market participants manage the transition. These sources are included with the 'related links' at the end of this article (refer to the ' Migration Tool Kit').
José Vicente is the Acting Chair of the Payment Schemes Working Group.
Related articles in this issue:
Time is of the Essence: Get Ready for SEPA. Act Now! Market participants in the euro area must achieve compliance with the core provisions of the European Union Regulation (EU) 260/2012 by 1 February 2014
TUI Travel PLC: "SEPA Direct Debit Scheme Is Another Step Forward Towards Treasury Efficiency". The TUI Travel Accommodation & Destinations (TUI Travel A&D) sector's Finance Service Centre completed migration to SEPA Direct Debit Business to Business in February 2012
Related articles in previous issues:
1 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 mandate can be issued in paper form or electronically.
2 European Union Member States must notify the European Commission of the derogations that they intend to use by 1 February 2013 (see Article 16 (7) of the 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.
3 The technical terms used in the Direct Debit Rulebooks refer to the payer as 'debtor' and to the biller as 'creditor'.
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