UNION TANK Eckstein: “SEPA Credit Transfer and SEPA Direct Debit Allow...

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

26 April 13

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UNION TANK Eckstein GmbH & Co. KG (UTA): providing en-route service to commercial transport companies

For fifty years, UNION TANK Eckstein GmbH & Co. KG (UTA) has offered comprehensive services tailored to meet the needs of companies transporting passengers and goods by road. More than 300 UTA employees located in several European countries provide around the clock customer support. In the event of a breakdown, the multi-lingual staff at the UTA service centre coordinates on-site interventions by specialist mechanics. The UTA service card gives access to a Europe-wide supply and cashless settlement system ensuring expedient assistance in all areas relevant to transport by road. Drivers can use the UTA Service Card System to refuel at over 32,000 multi-brand diesel service stations in 38 countries and to settle tolls in 20 countries across Europe. With more than 47,000 points of acceptance in 38 countries and a turnover of more than three billion euros annually, UTA represents one of the leading service card companies operating in the sector.

UTA implemented, in a first step, the Direct Debit ( ) Business to Business (B2B) Scheme followed by the Credit Transfer ( ) and the Scheme. This article focuses on the UTA migration project.

The advantages of the Scheme

The and the Schemes offer businesses significant efficiency gains through the automation of payment processing and optimisation of the cash management process. enables businesses to consolidate accounts currently maintained in different European countries. Managing all payments through a single account allows centralised liquidity. In addition, the Schemes facilitate the expansion of businesses across national borders by introducing a standardised payment infrastructure. The Schemes therefore support and facilitate trade across the European Union ( ) internal market. Innovative end-to-end solutions, based on global standards developed by the International Organization for Standardization (ISO), also lead to decreased IT costs, streamlined back office functions and simplified reconciliation. The economy as a whole will also benefit if invoices are paid when they are due. The business community depends on reliable cash flow and the Schemes enable the biller to collect payments on the exact due date.

The Scheme enables business customers in the role of payers to make payments by direct debit. The Scheme, in particular, fully supports the intra-European supply chain management of companies on the financial side.

These are the differences between the Scheme and the Scheme:

  • Services and products based on the Scheme are only available to businesses; the payer must not be a private individual (consumer).
  • In the Scheme the payer (a business) is not entitled to obtain a refund of an authorised transaction.
  • The Scheme requires the payer's bank to ensure that the collection is authorised by checking the collection against mandate information. The payer's bank and the payer are required to agree on the verification to be performed for each direct debit.
  • Responding to the specific needs of the business community, the Scheme offers a significantly shorter timeline for presenting direct debits and a reduced return period.
The UTA project - questions and answers

Newsletter: UTA started the planning concerning Single Euro Payments Area ( ) migration in 2010. What motivated UTA to set up a implementation project early in the process, despite the fact that at the time there was no legal obligation to implement payment schemes and standards?

Thomas Wolpert: We recognised the significant benefits we could derive from the introduction of harmonised payment schemes and, in particular, the Scheme, early on. We therefore followed the process with great attention from the start. The direct debit payment instrument is essential to the UTA business model. Considering that we operate in and across 38 European countries, this meant that in the pre- era we had to observe the rules, processes and formats of as many national direct debit schemes. The situation was aggravated due to the substantial differences between these national direct debit schemes. It also meant that we had to maintain accounts in each of these countries. As we are processing mostly business to business direct debits, we engaged in planning implementation practically as soon as the European Payments Council ( ) launched the scheme in November 2009. We will also implement by the end of 2013.

Newsletter: Did UTA also implement ?

Thomas Wolpert: We implemented in a second step. To ensure efficient project management and identify the scope of the task, we started the process with a very comprehensive business impact analysis. This analysis demonstrated that migration to would be more complex than migration to . We therefore decided to focus first on implementing . In line with the findings of our initial impact analysis, we managed implementation together with our principal banking partners and software providers without any difficulties. We concluded the migration project in March 2013.

Newsletter: Did you set up a implementation team? If so, which departments of your company were involved in the project?

Thomas Wolpert: Yes, we set up a dedicated implementation team including members of our accounting, credit and risk management, cash management, sales, IT and marketing departments as well as members of the UTA customer service centre. I fully concur with the advice shared by other project managers who reported on their successfully concluded migration projects in the Newsletter; is not only an IT project. implementation affects an organisation at all levels. Successful project management therefore requires appointing a team including members from all departments impacted by payments to coordinate the process.

Newsletter: Did UTA view implementation as a stand-alone project or was it part of a review of processes and applications beyond payments?

Thomas Wolpert: Well-functioning payments are of major significance to any company. Considering the impact of the project on UTA payment processing and to ensure a smooth transition, we handled migration as a stand-alone project. Managing the transition generated several very valuable insights and findings, which allowed us to identify further opportunities to optimise processes that we had not anticipated prior to launching the migration process. As a result, the UTA project led to the launch of several additional 'sub projects' including a project aimed at enhancing data quality.

Newsletter: Did you decide to upgrade the existing IT architecture or to implement new IT applications and enterprise resource planning (ERP) systems?

Thomas Wolpert: The business impact analysis we carried out prior to designing the UTA project plan found that it would be preferable to adapt the existing IT architecture in line with the requirements rather than to implement new systems. This decision also reflects the fact that UTA - and, in particular, our customer service - operates based on very sophisticated and highly integrated existing software applications.

Newsletter: What are the timelines of the UTA implementation project?

Thomas Wolpert: Following the business impact analysis concerning the transition to carried out in early 2010, we ran first test transactions in December 2010. We scheduled additional test phases in 2011 and 2012. The repeated and extensive testing generated very valuable insights, which we logged in detail in our ' process house'. This project management tool allowed us to identify how to further standardise and optimise our processes at every stage of the implementation phase.

In October 2012, we started migrating customer payments to . This takes place in a phased approach, because we must obtain an mandate1 from each customer. To be able to process B2B direct debits, the customer also needs to inform its bank about the mandate number and ask the bank to activate the account for B2B transactions. We are planning to conclude the project; i.e. to have all direct debit payments from our business customers migrated to , at the end of September 2013.

Newsletter: How did UTA organise the process of obtaining mandate forms from customers?

Thomas Wolpert: We send mandates and related information packages to all our business customers. With this mail-out, customers also receive a cover letter and a one-page flyer providing information on . To make the process as easy as possible, the information package includes the completed mandate so that our customers only have to sign it and send it back to us. Designing the mandate form based on the mandate text including translations provided by the and using sample mandate forms made available by our banking partners was relatively easy. To bring all customers across Europe on board, we are sending out about 1,500 information packages every week at this point. Because of our pro-active outreach to customers, UTA already collects payments based on the harmonised Scheme in twelve European countries.

Newsletter: What are the aspects of implementation that required specific attention?

Thomas Wolpert: We dedicated greatest attention to all aspects related to mandate management. As mentioned above, obtaining the signed paper mandate from all customers is quite an extensive exercise. At UTA, we would appreciate it if a Europe-wide solution was in place to obtain mandates electronically.

We encountered some problems when we first designed our system to generate the unique reference required for each mandate. The system we first developed included a full stop in the middle of the reference. During first testing, we realised that the banking partners of our customers quite often, if inadvertently, did not include the full stop included with the mandate reference when processing the mandate related information. This resulted in high return rates at least for first collections during the early testing phase. To eliminate the problem, we re-designed our system to ensure that the reference includes only numerical values. Subsequent tests confirmed that using mandate references which include only numerical values reduced error rates significantly.

We also experienced some incidents of erroneously returned transactions due to the customer's bank not yet having updated mandate information by the time we sent a first collection. We have however in the meantime implemented processes to avoid this scenario.

In addition to aspects related to mandate management, we also focused on adapting the accounting system and other relevant processes with the timelines. According to the standard time cycle the payer's bank must receive the request for a first, one-off or subsequent direct debit collection at the latest one inter-bank business day prior to the due date. At UTA, we have now a lot of routine in managing collections compliant with these timelines. One should not underestimate the effort required to change systems and processes in this regard.

Newsletter: What were the main challenges in the implementation project?

Thomas Wolpert: The main challenges throughout the implementation phase were unrelated to the particulars of the Scheme, but resulted from the very distinct level of expertise among our customers. Since the start of the UTA project, we made communication with our customers on the migration to the harmonised payment schemes and technical standards a priority. Throughout the preparation phase it became clear that customers representing bigger companies with high transaction volumes were generally very aware of the process and commanded enhanced 'skills', so to speak. This greatly facilitated the communication.

In our experience, smaller companies however often lack the time and workforce to stay up-to-date on technical and regulatory developments relevant to the process. Explaining the transition to customers not handling major payment volumes themselves therefore generally required more time and attention. At UTA, we trained staff in all units to be able to assist customers with any -related questions.

Newsletter: Did UTA not consider the conversion of customer account data to the International Bank Account Number (IBAN) and the Business Identifier Code (BIC) a challenge?

Thomas Wolpert: No, we did not. This was a comparatively easy exercise that we managed very smoothly with the support of our principal banking partners and service providers.

Newsletter: Does UTA expect to generate additional efficiencies based on the implementation of the ISO 20022 message standards?

Thomas Wolpert: Yes, we expect to generate additional efficiencies with ISO 20022. This is the most complete of all message standards. The implementation guidelines based on the global ISO 20022 message standard developed by the with regard to the and Schemes ensure fast and efficient processing of payment transactions. In addition, ISO 20022 can also be used for other financial data communication such as, for example, e-invoicing and electronic bank account management (eBAM). At UTA, we are planning to discuss future solutions taking further advantage of the ISO 20022 message standards with our software and banking partners in future months.

Newsletter: Is it possible to quantify the investment by UTA to implement the payment schemes and standards?

Thomas Wolpert: Since we opted to initiate the migration process early, we were able to coordinate the entire project in-house. As mentioned above, we also decided to adapt the existing IT architecture and therefore did not have to purchase and implement new systems. The need for external support was therefore very limited. We will carry out a conclusive assessment on the overall investment into the project at the start of 2014. We assume that once the implementation project is completed, cost reductions resulting from simplified processes will offset the adjustment expense. We also expect to lower the IT costs incurred to manage our payments business.

Newsletter: In your view, what are the main benefits of implementation?

Thomas Wolpert: In addition to streamlining processes and reducing costs, implementation of and simplifies account reconciliation. We also see the potential to increase the scale of automated processing in the environment compared to the old world. New software tools becoming available will support this trend. The instruments also facilitate centralising cash management. The Scheme, in particular, provides more control over payment flows because the scheme allows splitting or grouping transactions. Collecting payments across all countries based on the harmonised Scheme also allows us to perform a standard credit risk analysis and implement related uniform processes. Previously, we had to design a specific approach in line with each national legacy direct debit scheme. Finally, migration to and makes it possible to reduce the number of bank accounts and banking relationships. As regards the latter however, UTA decisions take into account the value of established long-term relationships with our banking partners.

Newsletter: law effectively mandates migration to and by 1 February 2014 in the euro area2. The representatives of corporates, public administrations and government agencies, who reported on their successfully completed migration projects in this newsletter, unanimously recommended that organisations which still have to achieve compliance become active as soon as possible. Since October 2012, the has alerted market participants that this is no longer a recommendation but an imperative; i.e. there is no time to procrastinate further. Do you share this view?

Thomas Wolpert: Yes! I fully agree with the assessment of Luc Waterlot, the Financial Systems and Interfaces Manager at Electrabel GDF Suez Market & Sales, who reported on the Electrabel GDF Suez migration project in the January 2013 edition of the Newsletter; migration to and is feasible, manageable and beneficial. Preparation, however, is everything and time is of the essence. As detailed above, the scope of the changes is extensive.

We noticed, for example, that to date our suppliers have not contacted UTA to discuss the transition to as regards our payments to them. We therefore conclude that some companies have a lot of catching up to do. Late movers should focus, in a first step, on achieving basic compliance and then seek to realise further efficiencies to be generated with the implementation of the harmonised payment schemes and technical standards.

Newsletter: In an article on the UTA migration project you contributed to gtnews3, you stated that having to manage in parallel systems to collect payments based on all European national direct debit schemes and the harmonised Scheme during the transition phase is a major challenge. So, are you looking forward to 1 February 2014 when and will replace the multiple national euro credit transfer and direct schemes in the euro area?

Thomas Wolpert: Yes, we look forward to the day when and will replace the multitude of national euro credit transfer and direct debit schemes existing today. is an important step towards the further integration of the internal market. The harmonisation of the euro payments market will allow everybody to do more and better business across the European countries.

Newsletter: Mr Wolpert, thank you very much.

Thomas Wolpert is Senior Credit and Project Manager at UTA.


The invites all end-users and, in particular, small and medium-sized enterprises, now preparing migration to and to take advantage of the lessons learnt by payment service users who reported on their successfully completed migration projects in the Newsletter. For more information, refer to the links included at the end of this article.


Related links:

UTA Website

gtnews: Case Study: Germany's UTA Implements SEPA Direct Debits

EPC Podcast (April 2013): Learn to Love SEPA in 6 Minutes and Get Ready by 1.2.2014 in the Euro Area. Act Now!

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

EPC Blog (19 November 2012): Is Your Local Corner Shop Ready for SEPA? Belgian Best Practice Shows How to Engage Small and Medium-Sized Enterprises in the Migration Process

The EPC Migration Tool Kit: Get Ready for SEPA by 1.2.2014. Act Now!


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

SEPA Migration - Don't Count on a Plan B. European Central Bank publishes first SEPA Migration Report and warns against risks of late migration 

The Long Road to Harmonisation: Transitional Arrangements in European Union Member States Permissible Under Regulation 260/2012 (the SEPA Regulation). European Commission and European Central Bank provide information on national derogations


Related articles in previous issues:

EPC Newsletter: Case Studies Highlighting Successful SEPA Migration Projects of Bank Customers

1 The Schemes allow a creditor (biller) to collect funds from a debtor's (payer's) account, provided that a signed mandate has been granted by the debtor to the creditor. A mandate is signed by the debtor to authorise the creditor to collect a payment and to instruct the debtor's bank to pay those collections.

2 Regulation ( ) No 260/2012 establishing technical and business requirements for credit transfers and direct debits in euro (see 'related links' with this article).

3 Gtnews (17 December 2012). See 'related links' with this article above.

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