EU payments all change. Your step by step guide to getting the most out of SEPA

Transcription

1 EU payments all change Your step by step guide to getting the most out of SEPA

2 Introduction The systems used to make over 140 million euro payments daily have changed very little over the last 30 years. This stability has enabled payment processes to be polished and perfected and errors inherent in any system to be handled efficiently. However, as the fundamental changes brought about by the Single Euro Payments Area (SEPA) come into effect, this period of stability has reached its end. This guide gives you an overview of SEPA and the impact it is likely to have on your business. It provides a number of steps for you to take now in order to minimise disruption to your euro payments and to ensure that you re prepared for, and able to capitalise on, the opportunities afforded by the Single Euro Payments Area. What is SEPA and how will it impact my business? SEPA is the European initiative spearheaded by the European Commission to drive down the payment barriers and differences between EU member states. SEPA allows economic actors to make and receive payments in euro, within Europe, whether between or within national boundaries under the same basic conditions, rights and obligations, regardless of their location. (European Payments Council Plenary 2006) IBAN (International Bank Account Number) and BIC (Bank Identifier Code) are harmonised means of storing bank account information independent of the country of origin and have been mandated for all cross-border euro payments since Going forward however, IBAN and BIC will be necessary for domestic transactions too. This means that bank account information stored for your customers will need to be converted to IBAN and BIC format. How can your payments function be SEPA compliant and continue without disruption or additional effort? The long term cost and efficiency benefits of SEPA may be appealing. However, the challenge to your business is how it can harness these benefits whilst maintaining current levels of efficiency and avoiding costly bank charges. 2 - EU payments all change - Your step by step guide to getting the most out of SEPA

3 SEPA Step-by-Step This section outlines a number of steps to help you plan for the impact of SEPA on your business including legal, financial services, data and systems implications. By following the steps outlined below, you will be better placed to ensure that the impact of the changes to the European Payments landscape have a positive effect on your organisation. Step 1 To fully assess your company s operations against SEPA you will need to have a good understanding of the basics of SEPA, the payment instruments (SEPA Credit Transfer, SEPA Direct Debit, SEPA Cards Framework) and the implications of the Payment Services Directive (PSD). There are many places to get this understanding and some useful sites are listed below: European Payments Council European Commission European Central Bank Experian Payments If SEPA does not offer you the improvements you need, participate in the user forums and industry groups (e.g. EACT) which can ensure that your voice is heard. Step 2 Investigate in which countries your organisation plans to operate. Consider into and within which countries you will want to make payments to create the scope of your SEPA planning. For each domestic euro clearing system, note when it will migrate to IBAN and BIC and determine what is required to comply. By understanding local migration plans you can determine how and when SEPA will impact your payments processes and can address this in your plan. Step 3 The PSD makes changes to the agreement between you and your payment service providers which may have implications on your business processes and implications for your customers and suppliers. There may for example be changes to the period in which a direct debit refund may be requested or changes required to existing customer/supplier documentation. Contact your bank to find out what these changes are and how they could impact your business. Step 4 Meet with your bank or banks to understand how they can help ensure you are able to continue making and receiving euro payments at the lowest risk and cost. Investigate whether increased charges for invalid payment instructions or instructions in the wrong format are likely to be imposed. Understanding what is on offer will help you determine any changes to your business processes and potential costs of submitting incorrect payments data to your bank. EU payments all change - Your step by step guide to getting the most out of SEPA - 3

4 Step 5 Businesses will incur additional costs to maintain two sets of data; legacy and SEPA. To minimise these costs you will need to complete migration to SEPA in a short timeframe. Analyse the number of bank account details you handle for payments and collections and determine how accurate your existing records are. This will allow you to assess how many records you will need to convert to IBAN and BIC format and will allow you to quantify the work required to address any errors in your existing data. Be aware that some banks help their customers by fixing problem transactions; this means that your actual data error rate is likely to be higher than the percentage of rejected transactions you experience. Your bank may be less likely to do this for you in the future so you should find out from them now what your actual error rate is and for how long they will continue to fix the errors for you. Step 6 Investigate whether your current payments systems can capture and handle the IBAN and BIC formats required for Eurozone payments. This will help quantify the amount of system change required to be SEPA-compliant. You will also need to decide whether you modify your existing systems to capture and validate IBAN and BIC in the future or whether you continue to capture payments data in its domestic format and convert this data into IBAN and BIC retrospectively. Either way, Experian Payments can help you with this. Next Steps: The investigation and analysis in the previous steps will give you a good idea of what needs to be done to prepare you for SEPA. The business case for change is based on cost savings from increased efficiency, reduced risk and the need to continue with euro payments. You will need to create a plan for change which should include: Define a systems strategy for data which will identify which systems should support IBAN and BIC capture, for example websites and customer service applications. Identify systems which do not need to be SEPAcompliant and can be bypassed. Plan to implement consistent validation across your systems or you will increase processing problems. Choose either to store legacy information alongside IBAN data or use IBAN as the sole reference and convert it to the appropriate format on-demand. Plan to address errors within your existing payments data and identify where you need to convert legacy formats e.g. Bankleitzahl and Kontonummer in Germany to IBAN and BIC. It is important to identify and correct errors in bank account details before converting as converting bad data simply perpetuates it in the new format. Choose to convert legacy data as a one-off scan and clean operation or use a facility to dynamically convert it to the required IBAN and BIC format as needed. Experian Payments offers both of these services. SEPA offers a number of advantages, but to gain real benefit organisations will need to invest in their systems, processes and relationships. 4 - EU payments all change - Your step by step guide to getting the most out of SEPA

5 How Experian Payments can help Convert your payments data By validating and electronically converting your existing payments database from the domestic BBAN (Basic Bank Account Number) format to the required BIC and IBAN standard, we can save your business time and money by ensuring that your payments data is free from errors and is SEPA compliant. The Experian Data Conversion Service uses the latest and most comprehensive bank reference data, account validation rules and conversion logic to: check your existing payments and collections databases for accuracy against the latest published and unpublished validation rules cleanse your database and remove any formatting errors convert all your valid records into new IBAN and BIC standards At the end of the process you will receive a complete updated database, a detailed conversion report and recommendations for ongoing improvements. Alternatively, Experian Payments can help you to convert your existing data dynamically within your business systems to IBAN and enrich it with BIC information to ensure that your organisation is using the most up-to-date and reliable data. Maintain your payments data Converting from your domestic bank account details to IBAN and BIC is just one aspect of the problem however. To ensure the efficiency of your payments database over time, it is important that new payments data is captured accurately and in the correct format on an ongoing basis. Bank Wizard from Experian Payments ensures that payment details are valid and in the correct IBAN and BIC format at the point of capture to ensure the Straight-Through-Processing of SEPA payments saving your organisation time and money by minimising the business inefficiencies experienced as a result of rejected payments. To find out more about how to get your payments data ready for SEPA, please contact Experian Payments on +44 (0) or info@experianpayments.com Alternatively, please visit our web site: EU payments all change - Your step by step guide to getting the most out of SEPA - 5

6 Experian Payments Swift Park Old Leicester Road Rugby Warwickshire CV21 1DZ United Kingdom T +44 (0) T (Sales) +44 (0) F +44 (0) Experian Payments All rights reserved 2009 This document does not form any contractual commitment. Whilst every effort is made to ensure accuracy, Experian Payments accepts no responsibility for errors or omissions. V1.1 November 2009