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Single Euro Payments AreaSEPA
Ann BörestamPayment Systems and Market Infrastructure
European Central BankDRF Conference, Basel, 25 April 2006
Overview
• SEPA general objectives • SEPA instruments• SEPA infrastructures and standards• Proposed directive on payment
services
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
• The project aims to develop common instruments, standards, procedures and infrastructures in order to foster substantial economies of scale
General objectives
Specific issues concerning different payment instruments- Credit transfers- Direct debits- Cards
And some « common » horizontally- Infrastructure (ACHs)- Standardisation- Common regulatory aspects
The multidimensional aspect of the project and as a consequence its complexity
General objectives
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
SEPA instruments
available
SEPA instruments
in general use
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
The EPC has organised the SEPA project around three core payment instruments:Credit transfers RulebookDirect Debits RulebookCard 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
SEPA instruments
Credit transferEPC achievement:
A basic scheme, with a maximum 3 day execution timeImprovements required:• investigating the possibility for D+1 execution time• same day transaction standard to be defined by EPC• structured customer information e.g. remittance information
and a code for automatic reconciliation
Direct debitEPC 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
SEPA instruments
CardsEPC 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
SEPA instruments
SEPA infrastructures and standards
Standardisation:at the very core of the SEPA project
covers a wide range: from POS’s terminals to settlement infrastructure standards
standards are the prerequisite for ending national fragmentation, integrating markets, promoting interoperability and consolidation of infrastructures
SEPA infrastructures and standards
Infrastructure
consolidation needed but may take time (investment cycles)
interoperability
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
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.
•
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
Proposed directive on Payment servicesPayment 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)
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
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 D+1• Strict liability for non-execution or defective
execution
Thank you very much for your
attention