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What is a payment scheme?

The payment schemes developed by the EPC are used by thousands of payment service providers (PSPs) in Europe to facilitate some 37 billion transactions each year.

What is a payment scheme 1

They are the building blocks of most ’ euro credit transfer and direct debit solutions. They also enable their interoperability in .

A payment scheme is a set of rules which PSPs have agreed upon to execute transactions through a specific payment instrument (such as credit transfer, direct debit, card, etc). It is different from a payment system, which is a technical infrastructure that processes transactions in line with the rules defined in a payment scheme.

What is a payment scheme 02

Most euro credit transfers and direct debits rely on the  schemes

The EPC SEPA payment schemes are the rules underlying the euro credit transfer and direct debit solutions proposed by all (mostly banks) in SEPA. Simply put, when doing credit transfers and direct debits in euros (in a single country or across SEPA), a service created on the basis of the EPC’s payment schemes is used. These schemes contribute to the creation of a single payments market in Europe by making it possible for consumers to rely on just one payment account to make euro credit transfers and direct debits not only in their own country, but also in SEPA – an area larger than the European Union.

Four schemes available

The has created four distinct schemes:

  • The Credit Transfer () scheme.
  • The SEPA Instant Credit Transfer () scheme, which will start in November 2017.
  • The SEPA Direct Debit (SDD) Core () scheme.
  • And the SDD Business-to-Business () scheme.

As a result of the Regulation, the and schemes are mandatory for all offering euro credit transfer and direct debit services in the European Economic Area. The and the schemes are optional: PSPs are free to propose services based on these schemes.

The schemes rulebooks are publicly available on the EPC website. However, PSPs wishing to use them have to formally participate, adhere to the schemes and pay an annual scheme participation fee.

What is a payment scheme 03

Harmonised rules that leave room for flexibility

The schemes attach the general rules enabling harmonised credit transfers and direct debits. Yet they also allow to provide additional services of their choice to the actual payment products in order to meet specific customer needs.

The schemes are composed of various elements
Each EPC scheme is made up of:
  1. A rulebook. This contains the set of business rules, obligations, and technical standards for the execution of payment transactions. It can be regarded as an instruction manual that provides a common understanding on how to move funds from account A to account B within SEPA. For example, the rulebook defines in which currency (euro) a SEPA transaction must be made, and the various steps and maximum duration have to respect for such transactions.
  2. Implementation Guidelines (). These are the technical translations of the rulebook into ISO 20022 payment messages enabling SEPA transactions.
  1. The Scheme Management Internal Rules (SMIRs). This document – common to all schemes – explains the principles governing the administration and evolution of the scheme.

In addition, the publishes clarification papers on a case-by-case basis covering specific topics related to the schemes’ implementation.

All the EPC schemes respect the principles defined in the Payment Services Directive, and are overseen by the Eurosystem.