STANDARDISATION OF PAYMENT SYSTEMS WITHIN SEPA

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STANDARDISATION OF PAYMENT SYSTEMS WITHIN SEPA
SAF Conference CORPORATE FINANCIAL MANAGEMENT
October 4 , 2007 Bratislava Hotel Radisson

• Gianfranco Tabasso
• Chairman EACT Payment Commission

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SUMMARY
Industry and cross-industry standards , E2E STP
SEPA and EPC Rulebooks Legal framework
( PSD ) SEPA implementation and governance
( EPC ) EEI initiative of the EU Commission
on E-invoicing Advantages of SEPA for
corporates SEPA open issues The EACT
and CAST
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INDUSTRY AND CROSS-INDUSTRY STANDARDS Industry
SWIFT messages for the banking industry Odette
for automotive Papinet for paper Rosettanet for
high-tech ISO20022 /SEPA inter-bank in Euro
countries Cross industry UN CEFACT (
Edifactnow XML ) ISO ( ISO 20022 UNIFI )
Objective of standard .simplify life of
corporates ( and individuals ) automate
processes inside and outside ( E2E STP ) reduce
wkg.capital investment and operating costs
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SEPA , EPC RULEBOOKS , PSD Single Euro
Payment Area creates Pan-European payment
instruments ( Credit Transfer Direct Debit
Card framework ) but EPC rulebooks only
mandate an inter-bank standard not
corporate-to-bank ( C2B)and bank-to-corporate (
B2C ) Payment Service Directive..creates a
harmonised legal framework for EU countries
applies also to non-euro countries ( non-euro
payments)and non-SEPA payments The EC and ECB
vision of SEPA is much broader than mandate
accepted by the EPC . E2E STP ..includes
standardisation of B2C and C2B ..e-invoicing,
security, e- and m-payments
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STANDARDISATION AND COMPETITION Contradiction
within the banking community - Push for ISO
20022 XML standard in C2B and B2C. then EPC
does not mandate ISO 20022 in SEPA because.
.C2B and B2C are competitive domain
Traditional bank concept of competition must
be updated. cannot exclude the use of
standard formats Bank fear
standardisation/commoditisation .losing
identity many more dimensions to service than
standard formats .many ways banks can create a
distinctive image even when using the
standard for basic payments
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EPC ISO/SEPA STANDARD Credit Transfer Credit
Transfer Scheme Rulebook v2.3
Approved Credit Transfer Scheme
Implementation Guide v2.3 Approved Direct
Debit Direct Debit Scheme Rulebook v2.3 (CMF)
Approved Direct Debit Scheme
Implementation Guidelines v2.3 Approved
Direct Debit Scheme Rulebook v3.0 (B2C-DMF)¹
Not approved Direct Debit Scheme Rulebook(B2B
-CMF) ¹ National Consultation E-Mandate
Proof-of-Concept ¹
Approved
Work
in progress ¹ not published on EPC website
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TIMETABLE SEPA / PSD January 28, 2008
credit transfer (receiving banks) December
2008 ? ¹ (sending banks
) November 2009 exp.
transposition of PSD in national law December
2009 ?¹ AOS for Direct Debit Dicember 2009
exp. start of Direct Debit CMF Dicember
2009 exp. start of e-mandate 2012 -?
reaching critical mass 2012 -
? closing domestic non-sepa
payments ¹ Reachability of all SEPAadherent
EU banks via PEACH or SEPA-compliant ACH
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• SEPA IMPLEMENTATION AND GOVERNANCE
• SEPA National Migration Committees
• led by banking associations/central banks , with
  all stakeholders ( not in all countries )-
  plan implementation ( IBAN BIC , intra-bank,
  etc.)- decide start and end dates for new /old
  instruments
• - define AOS
• - plan communication campaign
• EPC approval of community AOS
• EPC/ECB verification/coordination of national
  plans
• SEPA GOVERNANCE
• - EPC Plenary ,SPS Working Groups, Secretariat
• Scheme Management Committee
• Appeals Committee
• Stakeholders Forums ( at EU and National Levels)

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EEI¹ INITIATIVE OF THE EC ON E-INVOICING SEPA
not well received by the majority of
medium-small domestic banks. Global and
EU regional banks see SEPA as an opportunity to
- increase market share - adopt new technology
platform ( XML , TCP-IP) - recoup future loss
of revenues from basic payments with new
value added services around the FSC ²
e-invoicing e-invoice financing
outsourcing of collections /payments/reconciliatio
n Corporates want elimination of barriers and
more standardisation to dematerialise the
Financial Supply Chain ¹ European Electronic
Invoice framework ² Financial Supply Chain
parallels the physical supply chain
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EEI INITIATIVE OF THE EC ON E-INVOICING The EC
and ECB realised they had no convincing business
case for banks to adopt SEPA payments -
built a case on benefits of e-invoicing - tried
to convince the EPC to enlarge scope of mandate
- finally, the EC decided to take the initiative
December 2006 invited a group of experts
to participate
in task force on E-invoicing
June 2007 task force
delivered EEI report October 2007 EC
to create Expert Group to lead EEI
initiative ( stakeholders
representatives ) 2008-2009 Study
on e-invoicing in EU , Pilots
e-invoicing e-procurement of PA
and EC
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ADVANTAGES OF SEPA FOR CORPORATES. Advantages
of SEPA vision are obvious, especially for
multinationals - more bank competitionlower
fees - same instruments all over Europeless
bank accounts simplification of cash
management reduced cost of payments - more
standardisation more automation .E2E STP -
e-invoicing and optimization of Financial Supply
Chain - new multi-message XML standard for the
whole Supply Chain ( order- to- cash
integration) Advantages of SEPA realisation,
as is, are less obvious. - SEPA instruments
less efficient than domestic need to close
gaps vith AOS - promised E2E STP and automatic
reconciliation will not be achieved by
SEPA inter-bank standard alone
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THE EACT CAST¹ INITIATIVE EACT represents 19
National Treasurers² Associations - over
7.500 members in 5000 corporates CAST focuses
on standards for the FSC - enormous benefits
in FSC automation ( E2E STP ) - standards
are key to unlocking potential - more
participation of end-users in decisions over
standards - evaluate standards against
business requirements - increase CFO and
treasurers awareness of strategic
importance of FSC dematerialisation - lobby
the EU institutions for better legislation/changes
- promote market solutions ..e.g.
alliances of EBPP - provide neutral ,non
technical information to members - research on
best practices e-invoice,e-reconciliation ¹
Corporate Action for STandards ² Corporate
treasurers , CFOs, financial professionals
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CAST Corporate Action for STandards
..How to optimise working capital reduce
operating costs, improve quality of
service and security.

• Gianfranco Tabasso (European Associations of
  Corporate Treasurers)
• CAST Coordinator

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• CAST OBJECTIVES AND DELIVERABLES
• Three projects
• 1 ) 20-question Survey of corporates with NTAs
  , if possible, or sponsor
• 2 ) Set up CAST website
• 3) Set up Group of 30 corporates for
  consultation in EEI framework
• E-Invoicing
• Monitor / support / evaluate e-invoicing
  alliances Questionnaire for operators Guide
  to choose e-invoicing solution for corporates
• Participate to EC Experts Group of EEI
  initiative
• Research paper on Revisiting the Invoice as an
  electronic document
• Evaluate cross-industry e-invoice standard (
  with end-users..) - Monitor/participate/evaluate
  upcoming e-invoicing pilots
• E-Signature
• - Monitor/ support/ evaluate Digital Identity
  system with double signature
• Status Quo of e-signature in Europe and best
  corporate practice
• E-Reconciliation
• Improve rate of automatic reconciliation .Gap
  analysis of Remittance Advice standards vs.
  requirements new or improved standard message ?
  

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CAST LIST OF SPONSORS
SOCGEN SHELL
TBG 5 (UN-CEFACT)¹ BNP
PARIBAS PHILIPS
SWIFT ABNAMRO
IKEA TWIST ING
SOFID ( ENI )
IFX CITIGROUP
FINMECCANICA UNICREDIT
FERRERO EU Commission²
ISABEL FIAT Group
EU Central Bank VOCA
TELECOMITALIA
IDENTRUST ENEL
PBS ( ACH Danemark)
IMPRIMERIE NATIONAL BGC ( ACH
Sweden ) LE ROY MERLIN ABI (
Italian Banking Ass.) EADS ASTRIAX
SIA-SSB ELIOR
SECETI CROWN CORK
E- BILLING
LUFTHANSA
CAPGEMINI
ATEB ( Belgian Tres.
Ass.) ¹ MoU ² Endorsement

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VALUE CHAINS
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The working capital circle
Working capital is the capital invested in
operating processes to buy make and sell and
generate a profit which is measured in relation
to the total capital employed
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5
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• SAVINGS FROM E-INVOICING IN THE EU
• Cost of processing a paper invoice (B2B)
• Issuer
  5 to 15 euros
  the saving of
  automatic reconciliation
  of Receivables
• Receiver
  25 to 60 euros
• Estimated net savings from
  60-90 of total cost
• Dematerialization Process Reeng.
• Savings calculation for e-invoice
• Cost of invoice low end of estimates 255
  30 euro- Saving from e-invoice
  80
• 50 of bills and invoices (B2B) 13.5
  billion
• Potential Saving
  243 billion euro
• Source estimate by EACT based on real
  user-cases of savings and Beweco market figures

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SAVINGS FROM E-INVOICING IN THE EU Case Study
ITALY Two years ago, CNEL ( a Think Tank
advising Government ,Parliament and P.A.) ,
opened an Experts Table on Dematerialisation
of Administrative and Financial processes and
Development of the network economy.
- auditions of international experts -
in-depth analysis of best practices -
definition of market business model Results .
Est. savings from e-invoicing B2B for the Italian
economy 60 Billion Euro ( 4,5 of GNP ) Next
2-year work-session of CNEL on Dematerialisation
- specific proposals of economic policy
to Government and P.A. - initiatives to
implement market business model -
support of CAST initiative - launch of
pilot projects in Italy ( CBI 2 , EBPP ,
District ASP)
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• AUTOMATIC RECONCILIATION OF A/R ..
• New payment messages will facilitate
  reconciliation of A/R - URI
• - Standard Remittance Advice Savings
  are substantial .
• Telecom Italia had 253 people working full time
  reconciling 400.000 credit transfers/year worth
  3.3 billion on 72 bank accounts - In the US
  , a recent study estimated the time spent in
  reconciling A/P and A/R equivalent to 500,000
  full time workers This is the bulk of the
  bookkeeping work in America ( over 100
  billion/year )

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Grocery costs and benefits
Order cycle costs
/ equivalent order
80
68,9
50,9
12,1
70
BENEFITS
60
18,0
50
56,8
40
68,9
30
50,9
20
10
12,1
0
Traditional
Intermediate
Integrated
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Grocery costs and benefits
/ equivalent order
80
50,9
12,1
68,9
70
BENEFITS
60
18,0
30,1
50
56,8
40
20,8
30
20
38,8
30,1
2,0
10
10,1
0
Traditional
Intermediate
Integrated
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Grocery costs and benefits
/ equivalent order
80
50,9
12,1
68,9
70
BENEFITS
60
18,0
21,3
50
56,8
13,8
40
30
47,6
37,1
20
10
4,7
7,4
0
Traditional
Intermediate
Integrated
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Best practice .
Total E-Doc Tran 000
15.007 19.650 21.682 29.626 41.815
48.639 53.134 50.134
Total e-doc trans. 000

Source SOFID ( SSC of ENI Group )
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Background

• B2B electronic invoicing is in a very early stage
  in most European countries
• There is a lot of information in the Internet
  about electronic invoicing, but is it helping
  companies to take to solutions in use?
• There is no one place to find Service Providers
  to whom one could outsource the electronic
  invoicing process
• There are a lot of small and shady players in
  the market as electronic invoicing is becoming
  bigger and bigger causing companies to be very
  careful in investments
• Roaming between operators has been discussed a
  lot and the unclear situation is not helping
  companies to make the investment in electronic
  invoicing

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What will eInvoicing Community do?

• It will gather the Service Providers for a common
  message to the market
• It will help companies find the right information
  to make the decision about how to proceed with
  electronic invoicing
• It will lower the uncertainty in investing to
  electronic invoicing through its credible members
  already providing the service
• It will keep a record of electronic invoice
  senders and recipients and help them connect with
  each other and thus generation more transaction
  and profitable business for the service
  providers. This is accessible through the web to
  all users
• It will gather up-to-date news and researches
  from consultant companies about electronic
  invoicing, present them through the website and
  have a discussion site for open communication

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Increased electronic invoicing transactions
Research
eInvoice Finder
Companies investing and using electronic invoice
Marketing
RFQ
Information
News
Discussions
Research
Electronic invoicing service providers
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For informations contact
Gianfranco Tabasso
VP AITI , EACT Payment Commission
CAST coordinator gianfranco.tabasso_at_fmsgr
oup.it www.EACT-Group.com