EPC Report on the results of the IBAN+BIC Survey Joint EPC and EUC Task Force on IBAN+BIC 2

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1 Doc EPC (Version 1.1) 5 May 2011 EUC/EPC Joint Task Force on IBAN+BIC Circulation to: Publicly available Restricted: No Report on the Results of the IBAN+BIC Survey (Approved by the Customer Stakeholders Forum 25 March 2011) Background Following an EPC workshop with stakeholders on 25 June 2009, where the need was raised to create a technical group on IBAN+BIC issues, including the Banking Industry and other stakeholders. The Customer Stakeholders Forum agreed to form a Joint Task force on IBAN and BIC issues which began its work in January 2010, with members from the EPC/SSG and representatives from the Customer Stakeholders Forum. The objective of the Task Force was to analyse the usage experiences of end-users in inputting the BIC and IBAN as part of the SEPA Credit Transfer payment initiation process. In order to achieve this goal, the Task Force prepared a questionnaire with the purpose of determining: 1) Problem(s) confronting the end user associated with using both the IBAN and the BIC. 2) Magnitude of any problem(s) in the context of the market segments affected. 3) Problem(s) associated with specific end-users (consumers, SMEs, retailers, corporates, etc.). 4) Solutions end-users may consider appropriate. Two on-line questionnaires (attached) were made available to the public from 3 May to 5 July The analysis and conclusions resulting from the answers received from both businesses/corporates and individuals are the basis for this report. In reviewing the report the reader should also be aware of the complexity that existing, and emerging, regulatory regime sets out both for the payments industry and the users: Regulation 2560 requires IBAN+BIC in SEPA cross-border payments. As a result banks and clearing systems have made the necessary changes to process IBAN and BIC. Bank customers have also been required to pass on to their counterparties their IBAN and BIC to ensure timely and correct payment. Regulation 924/2009 further confirms the use of IBAN and BIC in cross-border SEPA payments and specifically that the payer in transactions initiated by the payer shall, on request communicate to the payment service provider, the payee s IBAN and the BIC of the payee s payment service provider. The PSD specifies a reference to one identifier without specifying the IBAN and or BIC. This raises the issue of a regulatory environment that is unclear. To date, only three countries (Italy, Luxembourg and Slovenia) have made mandatory the use of IBAN (Italy) or IBAN + BIC (Luxembourg, Slovenia) for domestic payments. European User Committee (EUC) EPC AISBL Avenue de Tervueren Brussels Tel.: Fax: Enterprise N secretariat@europeanpaymentscouncil.eu

2 The proposal for the upcoming End-Date regulation (EC Regulation amending EC Regulation 924/2009, mandates the use of IBAN in the customer to bank space and IBAN and BIC in the inter-bank space. Methodology followed in presenting results of survey The consumer questionnaire was answered by 348 individuals and the business one by 445 organizations representing a cross section of large and small businesses as well as public sector organisations across 18 countries. Overall responses to the survey have tended to come from the smaller countries; e.g. in the business survey, Switzerland and Belgium with 202 and 93 respondents and accounted for 66% of replies while Germany, UK and Spain had 9 respondents altogether (see annex; slide 4). The distribution of individual respondents is even more geographically unbalanced than the business one, with Switzerland and Belgium accounting for 83% of responses (slide 41). Although the survey was distributed and promoted via many different banking and corporate bodies, the resulting sample is: 1. Not statistically valid in quantitative terms (this was to be expected). 2. Not geographically balanced, if we consider the real weight of countries in the EU credit transfer market (slide 5). 3. Not fully in line with distribution of type and size of payment users in the EU actual (slide 6). 4. Not reflecting the actual mix of domestic cross-border payments in EU (slide 12). As a result, the sample does not allow to fully explain the pattern of responses, and the detailed make-up of the response pattern. Nevertheless, the results allow enough qualitative analysis to indicate some general trends and possible solutions to the issues evidenced by respondents. (see comments in slide 64 and followings) Two questionnaires were developed, one for individuals and a second one for businesses and then placed on the Internet for on-line responses. The Swiss community used the same questionnaires in a telephone survey. We particularly concentrated the focus of our analysis on the business segment which is the heavy user of payment services and encounters more complexities in their management (system-generated payments, mass payments, reconciliation and accounting needs). Given the limitations of the sample, we should be careful not to directly project results (i.e. overall sample averages) to the whole SEPA area, but to keep sample results in the perspective of the market reality which we know, e.g. country s share of total EU payments: In evaluating results we should always keep in mind that respondents replies are not always consistent with well known market realities, such as (see for example, the 7 th Progress Report and the ECB Blue Book: 1. SEPA Credit Transfers (SCTs), mostly cross-border, today represent less than 10% of total payments. 2. Cross-border SCTs represent about 5% of total payments. 3. Public Administrations originate about 15 % of EU payments and make largely domestic payments. EPC Report on the results of the IBAN+BIC Survey Joint EPC and EUC Task Force on IBAN+BIC 2

3 To date, in only three countries (Italy, Luxembourg and Slovenia) has the use of IBAN (Italy) or IBAN + BIC (Luxembourg, Slovenia) been made mandatory for domestic payments. The results of the survey are presented as follows: 1) Show results of the whole sample (averages). 2) Add additional slides that segregate results of those countries that are overrepresented and, where available, indicate the actual distribution of the universe (EU SCT Payments). 3) Where considered useful, show a what if simulation extrapolating survey results based on the universe s mix. These simulations are clearly marked as such. 4) Submit reasonable assumptions derived from the qualitative analysis of those questions/answers that transcend country-differences and concern how corporates do things. 5) Submit, and clearly mark as such, interpretations and possible explanations supplied by the Task Force as a whole or, in some cases, by its corporate or banking members. 6) Present to the Customer Stakeholder Forum the shared conclusions and recommendations for action. Results of survey The samples evidenced a high percentage of credit transfer for cross-border payments. Seventy four percent of individual respondents make cross-border payments (slide 43). Due to the different way the question was posed in the Swiss survey, we cannot extrapolate the cross border percentage of payments for the whole individual s sample. As far as EU respondents are concerned, 18% of their payments are cross-border (slide 44). Corporate cross-border payments amount to 20% of total (slide 12), but this share rises to 35% if we exclude Switzerland and the three countries where IBAN is already mandatory for domestic payments. (slide 14). Business and individual respondents say they are familiar with both the IBAN and the BIC. This is not surprising because respondents are among those who already make euro payments with IBAN and BIC. Eighty six percent of individuals affirm that they can initiate their credit transfer using only the IBAN (55% in domestic and 31% in cross-border payments), while 12% cannot make payments with IBAN only (slide 55). Percentages are quite different for the business segment which uses IBAN+BIC in 55% of its payments and no IBAN or BIC in 21% of the cases (slide 10) Considering that nearly 80% of business payments are domestic, slide 13 indicates that 45% of domestic payments do not use BIC (24% of only IBAN + 21% of BBAN). The percentage grows to 53% if we exclude Switzerland, which has a higher usage of BIC in domestic payments. Normally, most corporate payments are bulk payments created by their ERP and sent to banks via file transfer, while individuals make single payments mainly using on-line banking. Where single payments are made via on-line banking, the BIC and IBAN can be stored as part of a payment template to facilitate regular payments thus helping to reduce errors. This practice is evidenced by individual comments. EPC Report on the results of the IBAN+BIC Survey Joint EPC and EUC Task Force on IBAN+BIC 3

4 Respondents know the IBAN and BIC of their own accounts and, in most cases, those of their counterparties with which they interact regularly. Obviously, IBAN and BIC must be originally received from counterparties; banking services being useful only for formal validation. Eighty two percent of corporates and 72% of individuals communicate their IBAN and BIC to their counterparties in order to facilitate the payment process. According to respondents, 77% of corporates maintain IBAN and BIC reference data of their counterparties most of which they pay regularly (slide 25). Individuals are remarkably good at storing this data (slide 53), and according to their comments, they use both on-line banking and other means. Respondents who use IBAN and BIC are familiar with their structures, even though, in the comments, some mention difficulties in the availability and use of the BIC and some uncertainty about its structure. According to the comments, it would appear that respondents accept the inevitability of IBAN and its structure, which varies by country, but some have reservations about the need to add a BIC, especially for domestic payments (see comments on slide 64 and followings). Where problems have been encountered, these tend to be related to the payment initiation process, which is to be expected. The business survey shows that 41% of respondents (slide 29) and 48% of EU respondents had some kind of problems with IBAN and BIC (slide 30). Of the latter, 85% had problems with less than 10% of their payments and on average 3.24% of their payments either fail and/or require additional processing with differences among countries, the highest percentages of errors being in France and Italy, which have the largest number of corporate respondents (slide 31). The causes of these errors are missing or wrong IBAN and/or BIC (slide 32). Due to the different way the question was posed in the Swiss survey, we cannot extrapolate for the whole sample, individuals and businesses, an exact percentage of failed or reprocessed payments because of IBAN and/or BIC problems. At any rate, 39% of individual respondents indicated they had problems with some of their payments (slide 58) while individual EU respondents that faced problems evidenced an average error rate of 13.8% of their payments (slide 59). Most individuals use on-line banking services, many of which allow a check of the formal correctness of IBAN. The limitations of the sample do not allow quantifying with certainty the extent of these issues. To do so, would require further questions and further analysis. What is clear from the survey is that relatively straightforward steps could be taken by users, particularly corporates, to help reduce errors and increase data reliability through improved reference data management and IBAN validation routines (see comments on slide 64 and followings). Further analysis on Business sample As far as the business survey is concerned, responses from Switzerland and Belgium make up 66% of the total, but the Task Force agreed to include them in the overall results with the addition of separate slides when trends in these countries differ from the broader geographical community of respondents. EPC Report on the results of the IBAN+BIC Survey Joint EPC and EUC Task Force on IBAN+BIC 4

5 The survey shows that knowledge of IBAN is widespread in Europe and respondents use IBAN, and to a less extent BIC, in their payments even though it is not yet mandatory in their countries. Therefore, the sample is useful to identify the issues faced by national communities when they implement IBAN and BIC also for domestic payments. 1 Payment initiation trends As previously mentioned, corporate respondents in the sample make a considerable number of payments on-line where more usage of ERP (Enterprise Resource Planning) applications had been predicted (slide 16). The surveys results regarding this aspect are largely influenced by the Swiss respondents (slide 17). Swiss and EU show opposite trends in the use of single payments and EU results are more in line with expectations based on experience. A possible explanation of the massive use of single payments is that, IBAN and BIC not being mandatory in many countries and no end date for SCT, many corporates, particularly SMEs, have not yet implemented their systems for IBAN and BIC and treat these as exception payments. These payments are still low in number, are processed individually and/or cannot be batched together with other mass payments which use BBAN coordinates. Without an end date for SCT set at the time of the survey, corporates, particularly SMEs, did not seem to be willing to implement automated procedures for handling what may be considered parallel processes. 2 Respondents and payment volumes There is a broad range of respondents from a cross section of countries. In the business survey (slide 6) there is a mix of large users (46%), public authorities (24%) and SMEs (31%). Respondents come from a variety of industry sectors and, even though public authorities and large corporates are over represented, responses are numerous enough in each group to be considered a fair representation of the European market. In terms of payment volumes, 74% of corporate users are making less that 1000 payments per month (slide 9), with 80% individuals making less that 10 (slide 42). The majority of payments is made to counterparties that are part of an on-going relationship and therefore the payments are regular and stable (slide 15). 3 Usage of the IBAN and BIC As previously mentioned, respondents, whether individuals or businesses are familiar with the IBAN and BIC and know where to obtain support when they encounter problems. Slides 11 to 14 show the usage of IBAN and BIC and the split domestic - cross-border payments. According to business respondents, nearly 80% of payments use either the IBAN or the IBAN and BIC as does the vast majority of individual respondents. This figure is influenced by the mix of national versus cross-border payments in the sample (respectively 80% and 20%) which is much higher than the EU average where cross-border payments are estimated at 5%. Deducting the 20% share of cross-border payment, the use of IBAN on domestic payments amounts to 59% (slide 13), with a high contribution of Italy and Switzerland where IBAN is already mandatory. Excluding these two countries, usage of IBAN in domestic payments falls to 38% (slide 14). EPC Report on the results of the IBAN+BIC Survey Joint EPC and EUC Task Force on IBAN+BIC 5

6 Business respondents indicate that the BIC is used on cross-border payments and 35% of national payments. When the results from Switzerland are removed from the sample, only 21% of national euro payments carry the BIC (slide 13); if we also exclude Belgium, the usage of BIC in domestic payments drops to 16% (slide 14). Respondents understand that banks are the prime source of information on IBAN and BIC and banks represent the first line of support if they have problems associated with their IBAN and BIC (slides 21, 22). The survey shows that the majority of corporates do not take any steps to validate the correctness of the IBAN and BIC prior to initiating a payment (slide 34). The view being expressed by the corporates in the Task Force is that corporates generally validate this data when originally acquired from counterparties before storing them in their central IT systems (master tables of reference data) and do not necessarily validate them (internally or externally) each time they make payments. 4 Experience with the IBAN and the BIC Corporates have experienced what might be considered to be typical problems related to the usage of the IBAN and BIC, such as invalid structures or no data at all. While the vast majority of respondents say they have no problems with the structure of the IBAN or the structure of the BIC when initiating euro payments (slide 28), some 41% of corporates that use IBAN and BIC say they have experienced some problems related to the IBAN and BIC during payment initiation which has resulted in failures or additional processing (slide 29). Distribution of errors can be calculated for all countries except Switzerland, where the question was posed differently. More payments fail or require additional processing because of problems associated with the BIC (slide 32), which may be significant since BIC is used less than the IBAN. Large corporates show a higher percentage of failures (slide 33), possibly due to higher number of payments and more limited use of on-line banking services which would help to ensure correct and up to date reference data such as the BIC and the IBAN. However, 22% of businesses do not maintain counterparty reference data (slide 25) and the use of services to validate the IBAN is still limited (slide 36). Conversion services are not widely used and, where they are, the experience is positive in the majority of cases (slide 37, 38). It may be the case that relatively simply corrective steps like using IBAN and BIC reference tables and validation services offered to the market by banks and other providers could improve the situation. A number of corporates though, while accepting the inevitability of IBAN substituting BBAN, oppose maintaining and posting also the BIC on payments, particularly domestic (see comments on slide 64 and followings). The Corporate representatives argue that the BIC being an internal routing code for banks, should be provided by banks who are, or should be, in a position to match an IBAN to a correct BIC. As a subordinate solution, corporates should have access to reliable and up-to- EPC Report on the results of the IBAN+BIC Survey Joint EPC and EUC Task Force on IBAN+BIC 6

7 date BIC data. The real problems for corporates concerning IBAN, as evidenced by comments of respondents and confirmed by Task Force corporate members are: 1) Mass update of counterparties IBAN in place of existing BBAN. 2) Update of these references when counterparties change the account or banks coordinates vary because of bank mergers and other organizational changes. To some extent the first problem has been solved by some countries and single corporates in a number of ways which should be publicized and could be followed by other communities. Clearly there is a cost to business users and to banks for acquiring, storing and maintaining IBAN and BICs reference data, but this cost could be offset against savings made through reduced errors and reprocessing costs. The risk and liability and the cost for banks to underpin such a model should also be evaluated. In this respect, it must be noticed that 95% of corporates have no budget to address these issues (slide 35). This may possibly be due to the fact that the PSD does not mandate IBAN and BIC and at the time of the survey, that no end date had been set for SEPA payments, where IBAN and BIC are required. Conclusions and recommendations Continue to educate users through a range of communication channels on the importance of using the IBAN and BIC to reinforce the positive trends on adoption and usage in the market. Promote the importance of validating bank reference data to avoid errors and delays. Publicise freely available sources of IBAN validation and consider EPC publishing an IBAN checker on its website to promote self-help. Put on the SEPA agenda the issue of mass migration to IBAN and issue of updates, especially in view of the proposed end-date regulation. Promote the use of openly available BIC reference data sources related to ISO 9362 standards and the ISO Registration Authority (SWIFT) but, at the same time, investigate the issue of not requiring end users to post the BIC on payments, including implication for banks costs, risks and liabilities. Regulation 924/2009 on cross-border payments is due for review before 31 October 2012 but the issue of BIC or no-bic for end-users should be discussed and resolved long before that since they must be prepared soon enough for SEPA end date. Stress the business value of maintaining reliable up-to-date payment reference data and encourage Payment Service Providers as far as possible to facilitate good practice in this regard through their popular online banking channels. Ask corporate associations to investigate what steps they could undertake to promote best practice concerning the usage of IBAN and BIC. Bearing in mind that the vast majority of corporates have no budget assigned to help address matters related to IBAN and BIC internally. Through joint discussions in reviewing survey results, although not directly attributable to the results themselves, the following issues of particular relevance to the corporate representatives in the Task Force have been identified, and are consider worthy of further investigation by the CSF to clarify the issue(s), identify the business impact and to identify if collaborative action is appropriate: o to what extent changing existing (BBAN) corporate reference on payments to make it SEPA compliant (IBAN) presents a significant barrier for corporates EPC Report on the results of the IBAN+BIC Survey Joint EPC and EUC Task Force on IBAN+BIC 7

8 as part of their migration to SEPA payments for cross-border and national transactions. o to what extent the legislative requirement to provide the BIC on cross-border euro payments may negatively impact national SEPA migration where the majority of euro payments are between counterparties in the same country. o whether there is any benefit to end users in clarifying at a payment industry level the usage of the ISO BIC standard to identify participants within the SEPA payment schemes. o the issues and agree the business impact associated with the corporates obtaining and maintaining IBAN and BIC reference data. Noting in particular the roles, responsibilities, cost, risk, and ownership issues related to this data and as a first step, recommend sharing prior approved document Statement of Principles and Functional Requirements for an IBAN / BIC Database (EPC148/06) EPC Report on the results of the IBAN+BIC Survey Joint EPC and EUC Task Force on IBAN+BIC 8

9 ANNEX to the EPC/EUC IBAN+BIC Report Annex to the Draft Report on IBAN+BIC Joint EPC/EUC Task Force on IBAN+BIC March 2011

10 ANNEX to the EPC/EUC IBAN+BIC Report Joint EPC/EUC Task Force on IBAN+BIC BUSINESS SURVEY

11 Q 1: Countries Individuals 22% 61% 3

12 Q 1: Countries Business 21% 45% 12% 8% 4

13 Total EU credit transfers payments 2009: ECB Switzerland United Kingdom Belgium Croatia Denmark Estonia Finland Spain 17% France 15% Slovenia Portugal Poland 30% Malta Germany Luxembourg Lituania Italy Hungary 5

14 Q 2: Organization Distribution Business 6

15 Q 3: What is your type of business or market sector? Business 7

16 Q 4: In which countries are the accounts from which you make your euro credit transfers located? Business Austria Belgium Bulgaria Croatia Cyprus Czech Republic Denmark Estonia Finland France Germany Gibraltar Greece Hungary Ireland Italy Latvia Lithuania Luxembourg Malta Morocco Netherlands Norway Poland Portugal Romania San Marino Slovak Republic Slovenia Spain Sweden Switzerland Tunisia United Kingdom Asia (China, Korea) USA Latin America (Argentina) 8

17 Q 5: How many euro credit transfers within the SEPA area do you make per month? Business 9

18 Q 6: How are you using IBAN/BIC for these euro credit transfers? Business 100% 90% 21% 80% 70% 24% 60% 50% 40% Don't use IBAN and BIC Use IBAN only Use IBAN and BIC 30% 55% 20% 10% 0% 10

19 Q 6: How are you using IBAN/BIC of these euro credit transfers? Simulation, answers weighted by countries share of EU CT volumes * Business 100% 90% 80% 45% 70% 60% 50% 40% 15% Don't use IBAN and BIC Use IBAN only Use IBAN and BIC 30% 20% 40% 10% 0% * Results of countries in sample weighted by their share of EU CT Volumes 2009 ECB statistics 11

20 Q 7: Where are these euro credit transfers made? Business 12

21 Q 7: Where are these euro credit transfers made? Q 6: How are you using IBAN/BIC of these euro credit transfers? Business Analysis of EU and Switzerland results EU CH TOTAL ANSWERS IBAN + BIC IBAN NO IBAN NO BIC 47% 64% 55% 21% 27% 24% 32% 9% 21% CROSS BORDER DOMESTIC 27% 13% 20% 74% 87% 80% BIC DOMESTIC IBAN DOMESTIC NO BIC 21% 51% 35% 42% 78% 59% 53% 36% 45% Quite different results between EU and CH BIC DOMESTIC = IBAN + BIC CROSS BORDER e.g. Total = 35 IBAN DOMESTIC = IBAN + BIC CROSS BORDER + IBAN e.g. UE = 59 13

22 Q 7: Where are these euro credit transfers made? Q 6: How are you using IBAN/BIC of these euro credit transfers? Further analysis 2 Business EU - BE CH TOTAL EU - IT, LU, SL CH TOTAL EU - IT CH TOTAL ANSWERS IBAN + BIC IBAN NO IBAN NO BIC 51% 64% 57% 45% 64% 54% 47% 64% 55% 24% 27% 25% 16% 27% 21% 17% 27% 21% 25% 9% 18% 39% 9% 25% 37% 9% 24% CROSS BORDER DOMESTIC 35% 13% 25% 35% 13% 25% 25% 13% 19% 65% 87% 75% 65% 87% 75% 75% 87% 81% BIC DOMESTIC IBAN DOMESTIC NO BIC 16% 51% 32% 10% 51% 28% 22% 51% 35% 40% 78% 57% 26% 78% 50% 38% 78% 56% 49% 36% 43% 55% 36% 46% 53% 36% 45% BIC DOMESTIC = IBAN + BIC CROSS BORDER IBAN DOMESTIC = IBAN + BIC CROSS BORDER + IBAN 14

23 Q 8: Euro credit transfers that are made with counterparties on an ongoing, well established business relationship Business 15

24 Q 9: How do you create your euro credit transfers? Business Could depend from ERP not yet ready 16

25 Q 9: How do you create your euro credit transfers? Further analysis Business UE CH TOTAL ANSWERS ON LINE BANKING (SINGLE) 23% 75% 47% FILE TRANSFER BANK SW (BULK) 28% 12% 21% FILE TRANSFER BUSINESS SW (BULK) 49% 12% 32% Quite different results between EU and CH 17

26 Q 9: How do you create your euro credit transfers? Share of bulk payments among organization Business 60,00 56,8% 50,00 47,9 40,00 30,00 34,3% Large Corporate Public Authority 20,00 SME 10,00-18

27 Q 10: Are you familiar with IBAN and BIC? Business 19

28 Q 11: Are you aware of IBAN and BIC of your bank account (s)? Business 20

29 Q 12: Where do you obtain the IBAN and BIC of the bank account (s) you hold? Business More answers possible in Swiss questionnaire 21

30 Q 13: To whom do you refer, if you encounter issues related to the IBAN and BIC for your bank account (s)? Business 22

31 Q 14/15: What type of counterparty account information are you required to provide? Business 43% not required to provide BIC 23

32 Q 16: When your organization do not know the IBAN and BIC of the counterparty you are trying to pay, whom would you usually contact to obtain them? Business 24

33 Q 17: For counterparties your organization pay regularly, do you maintain a record of their IBAN and BIC? Business 25

34 Q 18/19: Causes of difficulties you may have encountered when using the IBAN and BIC to make euro credit transfers and estimate their frequency? Business BIC % are lower because BIC is less used 26

35 Q 20: Do you communicate the IBAN and BIC of your account(s) for the accounts you hold to your counterparties? Business 27

36 Q 21/22: Have you experienced problems when initiating euro credit transfers associated with the structure of the IBAN - BIC? Business Problems with structure of IBAN Problems with structure of BIC 100% 100% 90% 90% 80% 80% 70% 60% 50% 40% YES NO no answer 70% 60% 50% 40% YES NO no answer 30% 30% 20% 20% 10% 10% 0% 0% 28

37 Q 23: What percentage of your euro credit transfers fail or result in additional processing due to IBAN and BIC related issues? Business 41% of respondents had problems* * IBAN BIC USED BY 79% OF RESPONDENTS, SEE SLIDE 10 29

38 Q 23: What percentage of your euro credit transfers fail or result in additional processing due to IBAN and BIC related issues? UE Respondents only Business 100% 90% 80% 70% 60% 25% 1% 6% No answer More than 50% 48% of EU respondents had problems* 50% 40% 41% Between 10 an 49% Less than 10% 0% 30% 20% 10% 27% 0% * IBAN BIC USED BY 68% OF EU RESPONDENTS, SEE SLIDE 13 30

39 Q 23: What percentage of your euro credit transfers fail or result in additional processing due to IBAN and BIC related issues? Country error distribution, without Switzerland* Business COUNTRY Large Corporate Public Authority Small Medium Sized Enterprise Total % errors for Country BE 2,17 1,65 2,44 1,80 CR 0,50 0,33 0,45 DE 0,00 1,00 0,67 ES 1,00 1,00 ET 0,00 0,00 FI 1,00 1,00 5,00 3,00 FR 7,18 0,00 2,09 5,52 GB 4,17 0,00 3,13 HU 1,00 1,00 IT 6,04 5,00 4,00 5,63 LU 2,20 2,20 MT 0,50 0,50 N.A. 1,00 5,00 3,00 PL 2,20 10,00 3,50 PT 0,37 0,37 SI 2,54 1,00 2,23 Total 4,54 1,60 2,67 3,24 * IBAN BIC USED BY 68% OF UE RESPONDENTS, SEE SLIDE 13 31

40 Q 23: What percentage of your euro credit transfers fail or result in additional processing due to IBAN and BIC related issues? Business Average causes, without Switzerland 4,0% 3,9% 3,5% 3,0% 2,5% 2,4% 2,5% No IBAN 2,0% Invalid IBAN NO BIC 1,5% 1,0% 0,5% 1,2% Invalid BIC Distribution of errors among respondents with problems 0,0% 32

41 Q 23: What percentage of your euro credit transfers fail or result in additional processing due to IBAN and BIC related issues? Business Average error rate in different organization, without Switzerland 5 4,5% 4,5 4 3,5 3 2,5 2,7% Large Corporate Public Authority 2 1,5 1,6% SME 1 0,5 0 33

42 Q 24: What steps does your organization take to validate the IBAN and BIC for the counterparty you are attempting to pay before initiating a euro credit transfer?? Business Question could be misleading. Corporates could check IBAN BIC when storing them in ERP 34

43 Q 25: Do you have a budget for addressing IBAN and BIC credit transfer related issues? Business 35

44 Q 26: Have you employed any conversion service to convert either the national account to an IBAN or generate the BIC associated with an IBAN? Business 36

45 Q 27: If you have experience using a conversion service have you encountered significant issues related to the conversion of national account number to an IBAN? Business NOTE: EXPERIENCE REFERS TO THOSE WHO USED SERVICES ONLY 37

46 Q 28: If you have experience using a conversion service have you encountered significant issues related to the generation of the BIC from the IBAN? Business NOTE: EXPERIENCE REFERS TO THOSE WHO USED SERVICES ONLY 38

47 Q 29: Any reasons for not using the IBAN and BIC when this information is available? Business 39

48 Joint EPC/EUC Task Force on IBAN+BIC INDIVIDUALS SURVEY

49 Q 1: Countries Individuals 41

50 Q 2: How many euro credit transfers do you make per month? Individuals 42

51 Q 3: What percentage of these euro credit transfers are made within your country? Individuals 74% of individuals made some cross border CTs 43

52 Q 3: What percentage of these euro credit transfers are made within your country? Individuals Cross-border payments, without Switzerland 100% 90% 18% 80% 70% 60% 50% 40% 30% 20% 10% 0% 82% Crossborder Within your country 44

53 Q 4: To whom you make your euro credit transfers? Individuals 45

54 Q 5/6: How do you make your euro credit transfers? Individuals 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1% 9% 90% Others Made through a third party merchant website (web shop) Made through a bank (via online banking or ATM) 46

55 Q 7: Are you familiar with IBAN and BIC? Individuals 47

56 Q 8: Are you aware of IBAN and BIC of your bank account(s)? Individuals 48

57 Q 9: From where you would obtain the IBAN and BIC for your bank account(s)? Individuals More answers possible 49

58 Q 10: To whom do you refer, if you encounter issues related to the IBAN and BIC for your bank account(s)? Individuals 50

59 Q 11/12: What information on the party you are attempting to pay are you required to provide? Individuals More answers possible 51

60 Q 13: When you do not know the IBAN and BIC of the party you are trying to pay whom would you usually contact to obtain them? Individuals 52

61 Q 14: For parties you pay regularly, do you maintain a record of their IBAN and BIC? Individuals no answer 2 no maintainance 39 Others 6 PC / Databxe Notes Online-Banking 147 IBAN and BIC More answers possible 53

62 Q 15/16: Causes of difficulties you may have encountered when using the IBAN and BIC to make euro credit transfers and estimate their frequency? Individuals 54

63 Q 17: Are you able to initiate euro credit transfers using only the IBAN? Individuals In a number of cases banks may supply the BIC 55

64 Q 18: Do you communicate the IBAN and BIC of your account(s) to other parties to enable them to pay you? Individuals 56

65 Q 19/20: Have you experienced problems linked to the structure of the IBAN and BIC when making euro payments? Individuals Problems with structure of IBAN Problems with structure of BIC 100% 100% 90% 90% 80% 80% 70% 60% NO 70% 60% NO 50% 40% YES 50% 40% YES 30% 30% 20% 20% 10% 10% 0% 0% 57

66 Q 21: What percentage of your euro credit transfers fail or result in additional processing due to IBAN and BIC related issues? Individuals 39% of respondents had problems 58

67 Q 21: What percentage of your euro credit transfers fail or result in additional processing due to IBAN and BIC related issues? Country error distribution, without Switzerland* Individuals COUNTRY Less than 10 Between 10 and 100 More than 100 Not available Everage % errors for Country BE 27,80 10,50 0,75 17,94 CR 1,00 0,00 1,00 DE 10,00 10,00 FR 10,00 0,00 10,00 IT 2,00 0,00 2,00 LU 5,00 5,00 5,00 PL 50,00 3,00 26,50 SP 5,00 10,00 7,50 UK 15,00 15,00 Average 18,92 9,00 1,50 10,00 13,88 * AMONG RESPONDENTS WHO USE IBAN OR BIC AND THAT HAD PROBLEMS 59

68 Q 22: Using of free Internet conversion tool to convert either the national account number to an IBAN or generate the BIC associated with an IBAN? Individuals 60

69 Q 23: Any observations related to the conversion of a national account number to an IBAN? Individuals 61

70 Q 24: Any observations related to the generation of the BIC from the IBAN? Individuals 62

71 Joint EPC/EUC Task Force on IBAN+BIC BUSINESS SURVEY RESPONDENTS COMMENTS

72 Comments in IBAN BIC survey- Business 30 Questions asked : 14 of them allowed comments 246 Respondents = high percentage of replies 63% on average Selected comments to five significant Questions are presented here 21) Have you experienced problems when initiating euro credit transfers associated with the structure of the IBAN? 22) Have you experienced problems when initiating euro credit transfers associated with the structure of the BIC? 24) What steps does your organization take to validate the IBAN and BIC for the counterparty you are attempting to pay before initiating a euro credit transfer? 26) Have you employed any conversion service to convert either the national account to an IBAN or generate the BIC associated with an IBAN? 30) Other comments. 246 respondents Final Report - 64

73 ANALYSIS OF COMMENTS major issues mentioned Analysis of comments. major issues mentioned 1/9 21) Have you experienced problems when initiating euro credit transfers associated with the structure of the IBAN? (Q 21 = 25 comments) IT Not properly problems, but necessity to gather the IBAN from counterparties. FR Control issue with the bank of the beneficiary, especially in the eastern countries : no control between beneficiary name and IBAN: if IBAN invalid, another company could be credited. Lots of problems to get the money back. HU Payments to MALTA, because the Maltese IBAN contains 31 digits - this is a problem in our ERP because the field only contains 30 digits. in addition, our ERP software sometimes rejects valid Maltese IBANs - especially those to the Malta central bank. BE the account numbers in the countries are too different, so you haven't any idea whether the accounts are correct. IT IT IT to know IBAN structure for each country. cannot validate a non-italian IBAN. lack of information in the home banking. BE boekhoudsoftware kon dit niet verwerken (same as previous comment). Final Report - 65

74 Analysis of comments. major issues mentioned 2/9 21) 21) Have you experienced problems when when initiating initiating euro credit euro transfers credit transfers associated associated with with the the structure structure of the of IBAN? the IBAN? (cont d) ( continued) SI IBAN and BIC don't match LU some IBANs communicated by our counterparts are different from those we could determine by using a converter from BBAN to IBAN (mainly due to bank ID / some banks do not change the IBAN when a bank account is moved to a different branch but the BIC changes. So there is then a mismatch between the bank ID in the IBAN and the BIC used. different in IBAN vs BBAN, e.g. in Sweden). CR if we make a blank place between numbers in the structure of the IBAN, there is a problem. ES only we have BBAN in databases. 66

75 Analysis of comments. major issues mentioned 3/9 22) 21) Have you experienced problems when when initiating initiating euro credit euro transfers credit transfers associated associated with with the the structure structure of the of IBAN? the BIC? ( Q 22 = 30 comments )( continued) ES not possible to manage it in some IT systems and no required by banks for domestic transfers. BE Accounting software is not fully prepared. IT the problem is due to the lack of information between the banks and the small customers, those small entities hardly know why we need the Bic or swift code. BE the counterparties don't know the BIC of their own bank. IT It's not clear how characters are in a BIC and how it's composed. FR Last figures or letters of the BIC code : XXX or??? FR Bic 8 or Bic 11. LU Some banks do not change the IBAN when a bank account is moved to a different branch but the BIC changes. So there is then a mismatch between the bank ID in the IBAN and the BIC used. 67

76 Analysis of comments. major issues mentioned 4/9 22) Have you experienced problems when initiating euro credit transfers associated with the structure of the BIC? (cont d) GB Counterparty supplied 9 digit BIC in error. BE There are still banks that give the Swift and not the Bic code. This problem occurs for example Germany and the United Kingdom. IT SI No way to validate quickly and inexpensively. No way to match a BIC to a known IBAN. IBAN and BIC don't match Final Report - 68

77 Analysis of comments. major issues mentioned 5/9 24) What steps does your organization take to validate the IBAN and BIC for the counterparty you are attempting to pay before initiating a euro credit transfer? (Q24 = 134 comments) ES IBAN our own ERP functionalities and BIC through third party to be paid. LU update on regular basis our ERP data base, questionnaire to new suppliers and swift info to check IBAN and BIC's are correct. IT IT We introduce the IBAN and BIC codes during the creation of master data supplier. we ask for an official communication from our suppliers concerning their IBAN-BIC. BE Sending supplier master file to our main bank to verify the accuracy. FR Ask the counterparty for an original statement from their bank with BIC & IBAN identifier. Check accuracy of BIC + IBAN. Ask the same info. from another. BE Receive written confirmation<br>original letterhead. PL Check with the counterparty IBAN and BIC details on invoice/contract before payment execution PT We use the information contained in the bill. CR We take data from the invoice and check with counterparty if necessary. FR Checking through EAI treasury tool and vs. Data source (SWFT BIC + IBAN directory) FR SAP converter Final Report - 69

78 Analysis of comments. major issues mentioned 6/9 24) What steps does your organization take to validate the IBAN and BIC for the counterparty you are attempting to pay before initiating a euro credit transfer?(cont d) BE automatic control in transfer protocol. IT remote banking. BE internet search BE the bank application has a fault detection module, so wrong iban or bic would not accepted in this case we have to contact the counterparty to get the right numbers CR no steps, if we use wrong IBAN or BIC counterparty bank return payment and then we contact counterparty for the correct IBAN and BIC. BE IBAN: checksum<br>bic: None. LU * IBAN mandatory when paying into a country that has adopted the IBAN standard * IBAN structure is validated according to country specific rules and check algorithm * BIC is checked * Coherence between BIC and Bank ID in IBAN is verified DE checking the check digits of the IBAN FR IBAN is validated in the accounting system and BIC is validated in the banks communication tool MT through an IBAN checker software provided by the Central Bank of Malta. IT Italy we grant for good the result of a specific interbank procedure for IBAN validation/retrieval Final Report - 70

79 Analysis of comments. major issues mentioned 7/9 26) Have you employed any conversion service to convert either the national account to an IBAN or generate the BIC associated with an IBAN? ( Q26 = 27 comments ) ES official one is not able to treat files. Only one by one. BE In the accounting software we convert the old data. BE in SAP ERP system. FR standard tool is available in the accounting system to convert the local bank details to an IBAN but nothing exists to generate the BIC from an IBAN. MT The Central Bank of Malta has asked commercial banks to provide the said conversion. Final Report - 71

80 Analysis of comments. major issues mentioned 8/9 30) Other comments ( Q 30 = 138 comments ) GB We use BIC and IBAN as much as possible for all of our EUR payments in order to avoid non-stp payments and bank intervention (creating higher bank charges) <br><br>we would like to do the same with our GBP payments, however our e-banking systems won't allow the entry of IBANs or BICS for GBP - the system only allows it for EUR! FR Why maintaining both IBAN and BIC at customer level as BIC could be derive from IBAN? I understand banks need BIC for routing purpose, but I think they can derive it fro IBAN, letting their customers freed from BIC maintenance. IT We strongly recommend to not use anymore the BIC in addition to the IBAN. Any BIC can be diverted from the IBAN. THE BIC PROVIDED IS CREATING NO ADDED VALUE TECHNICALLY WISE AS BUSINESS WISE BUT IS SOURCE OF ADDITIONAL COSTS, EFFORTS AND CREATE ADDITIONAL UNEFFICIENCY. FR need a SEPA end date - need to extend the 140 characters fields for payment details. BE Please unify the account numbers throughout the whole SEPA-area.The Belgian system is far head to the other countries. IT please keep BIC optional and mandatory only for cross-border payments. LU If the SEPA credit transfer instructions could forward the Central Bank Reporting information, we would convert all our bulk payments into SEPA credit transfers Final Report - 72

81 Analysis of comments. major issues mentioned 9/9 30) Other comments (Cont d) HU Our organization, the Food and Agriculture Organization of the United Nations, is against the idea of inventing portable IBANs. The use of portable IBANs would negate all of our internal checking that allow us to verify to which bank and bank branch a given IBAN belongs to, which in turn allows us to maintain a more than 99% STP and to avoid fraud when counterparties may try to give erroneous data for non-existant bank branches. The current system, IBAN + BIC, is perfect the way it is. ISO already includes ISO 3166 (IBAN) and ISO 9362 (BIC) as components of this wonderful payment standard. Anything to disrupt this would be devastating to the entire worldwide movement where there are more than 60 countries that have now adopted ISO 3166 IBAN as part of their country's payment standard. This movement should not be disrupted, as it will lower the cost of making payments worldwide as this European born standard is now becoming a worldwide standard. Final Report - 73