Single Euro Payments Area SEPA

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Single Euro Payments AreaSEPA
Ann Börestam Payment Systems and Market
Infrastructure European Central Bank
DRF Conference, Basel, 25 April 2006
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Overview

• SEPA general objectives
• SEPA instruments
• SEPA infrastructures and standards
• Proposed directive on payment services

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General objectives

• Ultimate SEPA objective
• A euro area in which all payments are domestic
• Within the SEPA, customers will be able to make
  payments throughout the whole euro area as
  efficiently and safely as in the national context
  today
• If they so wish, using a single payment account
  and a single card

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General objectives

• The project aims to develop common instruments,
  standards, procedures and infrastructures in
  order to foster substantial economies of scale

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General objectives
The multidimensional aspect of the project and as
a consequence its complexity

• Specific issues concerning different payment
  instruments
• Credit transfers
• Direct debits
• Cards
• And some  common  horizontally
• Infrastructure (ACHs)
• Standardisation
• - Common regulatory aspects

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General objectives
The timing 01/01/06 01/01/07 01/01/08
01/01/09 01/01/10 31/12/10 Today
Deadline 1 Deadline
2 -Consolidation Preparation
Migration to be
completed
-Some local instruments
to be
phased out
The timing 01/01/06 01/01/07 01/01/08
01/01/09 01/01/10 31/12/10 Today
Deadline 1 Deadline
2 -Consolidation Preparation
Migration to be
completed
-Some local instruments
to be
phased out
The timing 01/01/06 01/01/07 01/01/08
01/01/09 01/01/10 31/12/10 Today
Deadline 1 Deadline 2



SEPA instruments available
SEPA instruments in general use
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SEPA instruments

The EPC has organised the SEPA project around
three core payment instruments Credit transfers
? Rulebook Direct Debits ? Rulebook Card
payment ? SEPA Cards Framework A lot of
work has been done, but there are still some
shortfalls of Rulebooks/Framework that needs to
be addressed by the EPC


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SEPA instruments

• Credit transfer
• EPC achievement
• A basic scheme, with a maximum 3 day execution
  time
• Improvements required
• investigating the possibility for D1 execution
  time
• same day transaction standard to be defined by
  EPC
• structured customer information e.g. remittance
  information and a code for automatic
  reconciliation

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SEPA instruments

• Direct debit
• EPC achievement
• A basic direct debit scheme with mandate flow
  from debtor to creditor
• Improvements required
• an alternative mandate flow from debtor to debtor
  bank
• business-to-business option
• ensure reachability of all debtor banks

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SEPA instruments

• Cards
• EPC achievement
• Adoption of SEPA cards framework (SCF)
• Improvements required
• interoperability of schemes (standards, common
  business practices)
• interchange fees (no longer differences based on
  geographical ground
• fraud prevention

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SEPA infrastructures and standards

• Standardisation
• at the very core of the SEPA project
• covers a wide range from POSs terminals to
  settlement infrastructure standards
• standards are the prerequisite for ending
  national fragmentation, integrating markets,
  promoting interoperability and consolidation of
  infrastructures

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SEPA infrastructures and standards

• Infrastructure
• consolidation needed but may take time
  (investment cycles)
• interoperability

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Conclusion
Certainly, major parts are well on track but
should be careful not to loose momentum
Factors that could hinder progress - Weakness
of banks commitment - Low use / low interest by
end-users (including public administrations) -
Design of solutions that are below current
national standards / Mini-SEPA - Non-coherent
assessment procedure / self-assessments ?
Communication strategy, assessment strategy,
addressing shortfalls, profitable solutions etc



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Proposed directive on payment services

• The aim of the Commission is to create a Single
  Payment Market by eliminating barriers between
  member states for the provision of payment
  services, and by creating conditions for
  competition, integration and rationalisation of
  national payment systems.

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Proposed directive on Payment services

• Scope of the proposed directive
• Both consumer and business payments (Titles III
  and IV of the directive do not apply on payments
  exceeding EUR 50 000)
• At least one payment service provider must be
  located within the Community
• All currencies

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Proposed directive on Payment services

• Payment institutions
• Payment service providers which are not a credit
  institution, an e-money institution or a post
  office giro institution
• Payment services, operational and ancillary
  services, accessing and operation of payment
  systems
• Should be licensed
• Authorisation requirements could be waived under
  certain circumstances (in that case no single
  license)

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Proposed directive on payment services

• Information requirements
• Contractual conditions including changes
• Obligations and liability
• Execution times
• Point in time of acceptance of a payment order
• Charges or fees
• Exchange rate
• Redress and complaint procedures
• Applicable law

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Proposed directive on payment services

• Rights and obligations
• Authorisation of payment transactions
• User liability max EUR 150 (except when acting
  fraudulently or being gross negligent)
• Acceptance of payment orders
• Execution times D1
• Strict liability for non-execution or defective
  execution

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Thank you very much for your attention