Contents. Preface 2. III RBS SEPA Accelerator 58 Fast forward to SEPA 58 Managed file formats 60

Transcription

1 RBS SEPA Handbook

2 Contents Preface 2 I Your SEPA Roadmap 3 SEPA establishing single market 3 SEPA contributing to your business 8 SEPA making it work 10 SEPA the foundation for your future 18 II SEPA the complete picture 20 Geographic scope and timelines 20 Bank connectivity and XML 23 Making payments in Europe with SEPA Credit Transfer 27 Collecting in Europe using SEPA Direct Debit 37 Cash management reporting in Europe 55 III RBS SEPA Accelerator 58 Fast forward to SEPA 58 Managed file formats 60 June, 2013

3 Preface SEPA, the Single Euro Payments Area, was introduced in 2008 to streamline the processing of euro payments by replacing multiple, diverse national payment systems with one standard infrastructure. Since its inception as a self-regulatory initiative, the overall adoption rate has been low, with some countries eagerly embracing it but others showing more reluctance. Regulation (EC) No 260/2012 was therefore introduced on 31 March 2012 by the European Parliament to encourage transition, mandating various stakeholders in euro member states to migrate credit transfers and direct debits to SEPA standards by 1 February RBS recognises that the migration to SEPA is comprehensive and complex, and that it will have a significant impact not only on your IT architecture but also on your day-to-day business processes. We are therefore committed to being your trusted advisor throughout the SEPA journey, helping you to successfully overcome the challenges of migration, achieve a seamless transition and maximise the benefits SEPA offers. With less than a year to go before the February 2014 SEPA migration end-date, we believe that it s essential to equip our clients with clear and accurate information. We have developed this handbook, which covers the key focus areas of your SEPA project as well as providing detailed information on SEPA instruments, bank connectivity and reporting improvements. In addition, to accelerate your country migration projects, we have recently published the RBS SEPA Country Expertise document, which offers detailed information on migration plans in the core euro countries, in particular covering direct debit instruments transition and including country-specific mandate migration rules. RBS is deeply committed to ensuring that you can move confidently ahead during the most critical phase of your SEPA project, where detailed knowledge is essential to successful migration. Steve Everett Global Head of Cash Management International Banking Vanessa Manning EMEA Head of Payments and Cash Management Solutions Tino Kam SEPA Product Executive 2 Preface

4 I Your SEPA Roadmap With only a few months left to the migration end date, 1 February 2014, SEPA will benefit and impact businesses in different ways. Corporate or public authority, centralised or decentralised, RBS can assist you in achieving compliance and future strategic objectives. SEPA establishing single market Background and context The Single Euro Payments Area (SEPA) creates a common market for payment processing right across the European Union, making it as easy, quick and secure for businesses and consumers to move money across national borders as they can domestically. It is one of the initiatives arising from the 2001 Lisbon Agenda, designed to level the playing field for crossborder business, driving innovation and helping the EU to become the world s leading knowledge-based economy. It will replace a complex range of national systems with a standardised, consistent service across all EU member states, thereby breaking down national barriers, increasing operational efficiency and reducing the cost of moving capital around Europe. Intensive consultation with national authorities and the financial services industry has helped shape this new, integrated financial landscape, and the European Commission is now promoting competition and transparency among SEPA payment service providers (PSPs) such as RBS. Since its inception in 2008, national authorities, banks and corporates have responded in various ways to SEPA, with some countries eagerly embracing it, and others showing more reluctance. Regulation (EC) No 260/2012 was therefore introduced by the European 3 Your SEPA Roadmap

5 Parliament to encourage transition, mandating various stakeholders in euro member states to migrate credit transfers and direct debits to SEPA standards by 1 February The Regulation stipulates the SEPA technical and business requirements for euro credit transfers and direct debit transactions. It also introduces a set of common standards and sets a migration deadline, known as the end-date, by which all non-urgent domestic and cross-border credit transfers and direct debit transactions in euro must comply with the stipulated requirements. After the end-date, legacy non-urgent euro domestic products in the SEPA zone will cease to exist. The basics Single end-date for both SCT and SDD By 1 February 2014, all Eurozone countries must replace their national euro credit transfer and direct debit schemes with SEPA Credit Transfer (SCT) and SEPA Direct Debit (SDD). For member states who do not use the euro as their national currency, the deadline is 31 October Businesses operating in both euro and non-euro countries can phase their implementation in line with these dates. Alternatively, they can opt to transition from legacy payment instruments to SEPA standards in one go all before 1 February We recommend the latter option, which is more cost and resource efficient. IBAN and BIC requirements The current SEPA Regulation mandates the use of both IBAN (International Bank Account Number) and BIC (Bank Identifier Code) by payers and recipients. Providing the BIC for national transactions will no longer be mandatory after the end-date, and for cross-border transactions after 1 February However, certain countries (Ireland, Greece, Cyprus, Malta and Portugal) have decided to align mandatory use of BIC for national transactions with the cross-border transactions, so that both will become optional after 1 February While it is possible to extrapolate BIC from an IBAN, in some cases the IBAN does not contain enough information to determine the bank branch, which is why RBS recommends that clients continue to collect and provide both BIC and IBAN details for all SEPA transactions. Corporates who cannot provide BIC and IBAN within the payment instructions may need to obtain account information enrichment solutions from vendors or, under certain conditions, banks. For instance, the RBS SEPA Accelerator meets this challenge by converting legacy account numbers into IBAN format. One single standard The ISO XML message format is to be adopted by corporates in the eurozone for all credit transfer and direct debit batch files by 1 February However, member 4 Your SEPA Roadmap

6 states can extend this timeline by two years; and Greece, Spain, Italy, Cyprus, Portugal and Slovakia have already confirmed they will be doing so. Estonia has opted for a one- year extension. Businesses that cannot meet this timeline will need conversion / enrichment solutions such as the RBS SEPA Accelerator. This solution accepts other global and local formats, as well as XML, for SEPA transactions, enriches them with relevant information and converts them to the right format. Lacking XML format compliancy (built in-house or provided by a third party), you may find yourself unable to make payments with an inevitable impact on your business. RBS has been closely involved in all aspects of the development of SEPA and is a leading member of Common Global Implementation (CGI), which aims to standardise and streamline corporate-to-bank connectivity. Having recognised the richness and flexibility of XML, we recommend clients to consider adopting it beyond SEPA, as a global messaging format for non- SEPA payment flows. Validity of legacy mandates Legacy direct debit mandates remain valid under the SDD Core scheme. However, additional data elements are needed to make them fully SEPA compliant. Business- to-business legacy mandates cannot automatically migrate to SEPA, unless countryspecific migration rules have been defined. We are advising businesses to start collecting missing mandatory information (such as mandate reference, creditor ID) on legacy mandates and to update their client database accordingly. This will enable funds to be collected from debtors, eliminating the risk of cash flow disruption and reparation costs. Our mandate management tool, as part of the RBS SEPA Accelerator, enables legacy direct debit mandates to be converted to SEPA and handles the full SDD mandate management lifecycle. Interoperability From 1 February 2014, all payment service providers (PSPs) offering domestic euro automated clearing house instruments must be fully reachable and interoperable with SCT and SDD Core schemes across member states. For PSPs in non-euro countries, this requirement comes into force from 31 October We have ensured RBS is already fully reachable and interoperable in all 18 (both Euro and non-euro) SEPA countries where RBS operates. 5 Your SEPA Roadmap

7 While banks technical systems may meet this requirement, this does not mean that all businesses payment flows can be facilitated via SEPA in the immediate future. In some countries, local requirements are embedded in domestic payment schemes covering certain payment flows. The translation of some specific local requirements into SEPA schemes has yet to be defined at national levels and RBS will provide guidance for our clients when countries announce their plans. Account location Under the new regulation, corporates can choose one of their European locations as the single base for SCTs and SDDs. This centralisation gives businesses an opportunity to review and optimise current financial structures, streamline payment operation processes and reduce costs. Removal of settlement-based reporting Often referred to as Central Bank Reporting, settlement-based reporting for all euro payments within the EEA region is due to be abolished under SEPA. Countries requiring settlement-based balance of payments reporting from banks relating to transactions of their customers will need to phase out these requirements by 1 February Some countries, however, will be looking for an alternative form of reporting to assure good-quality statistics and RBS is closely following developments in this area. Multilateral Interchange Fees The Regulation sees the phasing out of multilateral interchange fees (MIFs). MIFs on national payments are set to be phased out by 1 February 2017, crossborder payment MIFs having been prohibited from 1 November Only MIFs related to exception processing (R-transactions) are allowed and these must cover processing costs. Niche products Euro member states can have a two-year extension for products with a market share of less than 10%, also called niche products. Greece, Spain, Italy, Cyprus, France and Austria will be taking this step. Another specific product type, the card payment resulting in a direct debit, also falls within the niche category and has been granted an extended timeline until 1 February 2016 in order to become SEPA compliant. Germany and Austria have adopted this derogation. 6 Your SEPA Roadmap

8 An overview of currently known niche products: Country Austria Cyprus France Germany Greece Italy Niche products ATIB - credit transfer (where image of the customer 's paper instruction form is forwarded along with the payment order) ELV-Elektronisches Lastschriftverfahren Business continuity arrangements for electronic credit transfers Télérèglement Interbank TIP / Titre interbancaire de Paiement ELV-Elektronisches Lastschriftverfahren No official information available RID for financial transactions Fixed amount RID Spain Direct Debit Discounting ( Norma 58 ) Commercial Discounting ( Norma 32 ) Source: European Central Bank and in-country SEPA authorities 7 Your SEPA Roadmap

9 SEPA contributing to your business SEPA is much more than regulatory compliance, and offers larger organisations significant business benefits. Specifically, it can help the CFO or corporate treasurer reduce the costs of running the business, while improving cash flow and risk management. For instance, fewer accounts across different European countries can drive down administration costs; while complying with new regulations can reduce exposure to fraud. The Treasury Department is usually responsible for a wide range of business controls, as well as coordinating the multiple partnerships covering banking, technology and the company s value chain. Importantly, SEPA has the potential to enhance all these areas, while implementing shared service centres or a payment factory can also help corporates reach ambitious cash management targets, thereby achieving strategic objectives. Although current market focus is on achieving the minimum SEPA compliancy by the migration end date, RBS suggests there are many longer-term benefits that can be considered in your migration project. Some of these are listed below, divided into the four important areas of cost savings, better risk management, optimised cash flow management, and operational efficiency. Benefits of SEPA Implementation of a payment / collection factory, leveraging standardised rules, processes and formats across countries and on-behalf-of fields as part of payment / collection information Immediate Mediumterm Long-term Cost savings Simplified system configuration and maintenance. Local electronic banking formats will not need to be supported once migrated to one XML format suitable for payments / collections in all 32 countries Leveraging ISO XML format for non-sepa and/or non-euro payments, eliminating costs associated with the maintenance of other formats Domestic-level pricing for cross-border payments and direct debits across SEPA countries Payment methods review and rationalisation ending inefficient paper-based instruments 8 Your SEPA Roadmap

10 Benefits of SEPA Immediate Mediumterm Long-term Improved IT control and risk management through the standardisation and simplification of payment processes, formats and bank interfaces Risk management Improved operational risk framework through predictable, standardised processes, the reduction of manual exception handling and increased reconciliation STP through the use of new data elements, such as end-to-end reference By making fast, accurate decisions about customers creditworthiness, while complying with best practice and legislation, you can manage your exposure to fraud and risk Better and tighter control and transparency over crossborder payments within Europe supported by guaranteed next-day settlement Cash flow optimisation Improved visibility over and access to cash flows, specifically through the reduction / centralisation of euro bank accounts Simplified and optimised cash pooling structures, for example via centralisation of payment and / or collection accounts Optimised banking relationship structure through the reduction of local / regional bank accounts within Europe Operational efficiency Higher straight-through-processing (STP) rates of your cross-border SEPA payments / collections enabled by new data elements available in SEPA instruments Predictable and more automated exception management process based on standard reject / return codes, resulting in reduced rejection costs incurred from your bank Increased automation of the reconciliation process through availability of end-to-end references and extended payment detail data embedded in the whole payment chain Source: RBS RBS has a great deal of expertise in these areas, and offers a portfolio of market-leading technical solutions. This combination of skills and products will help you maximise the benefits from SEPA, both in the short and long term. 9 Your SEPA Roadmap

11 SEPA making it work Where to start The migration to SEPA is comprehensive and complex and will have a significant impact, not only on your IT architecture but also on your day-to-day business processes. Here, we consider where to start, and how to ensure your migration project delivers on time, across your entire organisation. Having worked on a vast number of SEPA implementation projects with blue chip clients, RBS has defined the three critical success factors in meeting the migration end-date: 1. Right project governance: Clear and quick project decision- making process Key internal stakeholder buy-in at all levels, including the management board Multi-disciplinary project team 2. Budget and resources: Sufficient budget allocation to cover end-to-end migration Continuity of SEPA resources for the entire project Specific (XML) expertise and knowledge availability 3. Working with partners: Working closely with your bank throughout your SEPA migration project and using your bank s intelligence, SEPA expertise and relevant country-specific advice Managing third party system vendors to deliver on time Ensuring business continuity through outsourcing to third parties for contingency or late delivery SEPA Awareness Before starting a project, it is important to build awareness about SEPA across your organisation. Key stakeholders and business areas in various European geographies will need to be involved from the start, so it s essential to engage them fully in the discussions. 10 Your SEPA Roadmap

12 RBS has a wealth of experience in building awareness and understanding of SEPA within organisations and continuously stages educational events that include roadshows, roundtables, and webinars on SEPA hot topics. Company-wide impact With the main stakeholders on board, you need to start planning the migration and assessing the company-wide impact, because SEPA affects every business, whether it has a decentralised or centralised structure, domestic or international operations. But of course, the level of impact will depend on the size and complexity of your company, your IT architecture, the geographies in which you operate and your specific payment flows. Firstly, you need a clear picture of your current euro collection flows, account structures, bank relationships and technology. Drawing a company-specific radar chart across six key areas helps visualising the level of impact on your organisation. Geographical scope (i.e. number of SEPA countries in which business is paying / receiving funds) Number of banking relationships Complexity of operations & finance organisation (e.g. decentralised, many hand-over points etc.) Range of client / vendor segments (e.g. consumer vs corporate) Complexity of IT infrastructure landscape (e.g. ERP, CRM, EB, contract admin, etc.) Range of products (e.g. credit transfers, direct debits) Example: Organisation 1 High impact on the business due to a wide range of products used including direct debits, multiple geographies and different segments of clients and vendors for which different activties will be required. Example: Organisation 2 Medium impact on the business with primary focus on country specific migration rules and internal processes and organisation. 11 Your SEPA Roadmap

13 Here, we look at these six areas in more detail: Range of client / vendor segments Who are your clients: consumers and/ or businesses? How many are on your books? As SEPA requires all your counterparties account numbers to be in IBAN format, you need to decide how best to enrich legacy (BBAN) account numbers to fulfil this requirement. For example, will you contact all of your counterparties directly and obtain IBAN information from them? Or will you use automated tools to provide the data? RBS recommends different approaches to fit different client expectations, with a mass solution for consumers and an individual approach for your business clients. And if consumers represent the bulk of your cash flows, it makes sense to migrate this segment first. Range of products What payment instruments are you using now, and what is their composition? As all non-urgent legacy payment instruments will be replaced by the European credit transfer and direct debit, you need to have a complete overview of your legacy instruments and then decide how to migrate them to SEPA. Note that urgent payments or cheques are officially outside the SEPA scope, although some countries have decided to apply SEPA principles for these payment types, in order to maintain consistency and simplicity. Our recommendation is to start with direct debits, as their impact on your organisation will be greater than with credit transfers. This is because your current mandate administration will need to change to comply with SEPA and local migration rules in the countries where you use legacy direct debits. You might take the opportunity to end some of the rarely-used or inefficient payment instruments, such as cheques and other labour- intensive instruments. Geographical scope Which countries are you conducting business in? Although the benefits of SEPA increase through pan-european uniformity, implementation requires a country-bycountry approach, because EU countries are making different migration choices. For example, some have applied for a two-year delay for niche products and other SEPA requirements. Our recommendation is to start with quick-win countries where SEPA acceptance and adoption are already high (see our RBS SEPA Country Expertise on SEPA adoption rates) Legacy mandate migration rules are clear (see our RBS SEPA Country Expertise on SEPA adoption rates) You have high volume of flows 12 Your SEPA Roadmap

14 Complexity of IT infrastructure What does your IT architecture look like and what is the lifecycle of your current systems? As SEPA has a substantial impact on the data managed within your client and financial systems, it is crucial to map your system architecture in order to measure the impact of migration. With third party providers especially, SEPA migration-related activities will need to be coordinated and aligned. You also need to understand the capability of your ERP system(s), and how to ensure they are SEPA compliant. This includes checking whether your ERP system can generate ISO XML payment initiation files. We recommend including all IT systems in your impact analysis, including those outsourced to third parties, and use this checkpoint as an opportunity to decommission old, end-of-cycle systems. This will cut maintenance costs and save time and money being spent on making them compliant. Complexity of operations & finance organisation / processes What do your business processes look like? SEPA is not just a technical migration: it has a direct bearing on your day-today business processes. Most of your order-to-cash, contracting and purchasing processes will be impacted to some extent, as SEPA imposes a new set of rules of engagement, especially with your consumer client base. For instance, you will need to revisit your payment terms, contractual provisions, and timelines of client debit notifications. Our recommendations here include gaining a clear view of R-messages and building them into your (ERP) workflow. Also, we suggest mapping your core processes and then flagging all the changes resulting from SEPA implementation. Number of banking relationships Most large companies have relationships with several banks, so you need to check the various relationships you have and understand what services you expect from each of them. Will you choose your SEPA bank partners based on the capabilities of their SEPA product sets and their experience in SEPA implementations? Does your SEPA bank offer AOS (additional optional services) and optional schemes such as COR1 ( next day service for direct debits) or a business-to-business programme? As SEPA supports a bank-agnostic approach in bank connectivity terms, your SEPA migration provides an opportunity to review and rationalise your account structures and simplify the communication channels you have with your banking partners. 13 Your SEPA Roadmap

15 Migration choices There are two approaches to SEPA migration. The first is tactical, and its objective is to achieve the minimum compliance within the set timeframe. The second is more strategic, and sets out to maximise the potential savings, efficiency boosts and improved risk management that SEPA implementation can deliver in the longer term. The two tables below look at the activities included in both and show departmental responsibilities. The tactical approach ensures SEPA compliance by the migration end-date. SEPA Tactical quadrant towards compliancy Low Opportunity High Review receivable process BIC & IBAN mass conversion Change timing direct debit runs New Direct Debit mandate form Update payment method Extra client / vendor master data Direct Debit revocation measures ERP upgrade for SCT Review payment process Change timing payment runs ebanking setup for SEPA Update booking rules SDD Mandate Migration ERP upgrade for SDD File format in ISO XML Client communication Receivables risk analysis Adjust cash forecasting process Low Responsibilities Technology Accounts Receivable Complexity Accounts Payable Treasury & Cash Manager High 14 Your SEPA Roadmap

16 The tactical approach means that businesses can continue to operate with existing account and process structures, but they will still need to complete several essential steps. They must obtain/ enrich BIC and IBAN information. ERP systems will need to be set up with new payment types and fields for SCT/SDD and mandate management processing must be administered in-house or outsourced to a third party. Companies will need to consider connectivity and communications between their various banking partners, and the file formats used. The strategic approach uses SEPA implementation as a driver to transform and rationalise the business, as shown below. SEPA Strategic quadrant towards centralisation Low Opportunity High Cash flow visibility improvements Centralisation of AP Cash forecasting improvements Review bank relationships Optimise cash pooling Bank account rationalisation ISO 2022 XML for non SEPA flows Bank rationalisation Centralisation of AR Review digital signature policy SWIFT connectivity Service Bureau implementation 3SKey Security In-house Banking Payment Factory Low Complexity High Responsibilities Technology Accounts Receivable Accounts Payable Treasury & Cash Manager 15 Your SEPA Roadmap

17 The strategic approach offers several opportunities to centralise, rationalise and consolidate operations, including Accounts Payable/ Accounts Receivable for example, and to evaluate existing banking relationships. The implementation of a payment / collection factory could be set as a long-term goal for the project, after minimum SEPA compliance has been achieved. However, as with the tactical approach, businesses will still need to complete several steps, including obtaining BIC/IBAN information, implementing ISO XML, setting up new payment types and fields within existing ERP systems, administering (or outsourcing) mandate management processing and reviewing bank connectivity. Whichever approach you decide best suits your business needs and fits your project timelines, RBS is committed to work with you to deliver a smooth SEPA implementation. Enterprise-wide commitment 1. Treasury - ERP systems impact - cash flow and forecasting optimisation - risk management review 2. Finance, SSC - invoices enrichment with IBAN - AR / AP / reconciliation review and centralisation - R-messages handling 3. IT, Operations - data model enrichment - ERP upgrade - bank connectivity and XML format - mandate management support 4. Legal and Tax - update terms and conditions - new SDD mandate template - SEPA bank agreement set-up 5. Client and Vendor Management - client SEPA communication program - IBAN collection from business partners - Internal SEPA training 6. Human Recourses - IBAN collection from employees - HR systems upgrade - SEPA salary payment initiation 16 Your SEPA Roadmap

18 Having understood the impact of SEPA implementation across your organisation, and decided whether to take the tactical or strategic path, you need to design a project plan that clarifies the roles and responsibilities of every internal stakeholder. The deep knowledge and experience we have built up, while leading SEPA migration projects for multi-national corporate clients, suggests that the most successful project plans align the migration activities to the various disciplines of internal stakeholders. Our diagram highlights the six areas you need to focus on. RBS has been a major participant in all stages of SEPA development, and the bank has a senior role in the European Payments Council. We have worked with many multinational clients on SEPA implementations and we have developed a range of solutions to ensure a smooth migration to SEPA. Our sound product expertise, along with our client-centric focus, makes us the ideal partner in this important transition. 17 Your SEPA Roadmap

19 SEPA the foundation for your future SEPA does not end in 2014 or even in It will serve as a robust foundation for change and will help drive a new era of innovation across Europe. One example is the move towards pan- European e-services, an initiative that is gathering pace and already proving cost-effective for smart organisations. As a leading member of the European Banking Association clearing working group on e-services, RBS is an important player in the implementation of pan-european e-services and is already helping many clients to future-proof their businesses. With SEPA implemented, along with new systems and XML standards, businesses can tackle the massive enterprise-wide inefficiencies that relate to paper and manual processing. Once you have moved beyond the minimum SEPA compliance, you can improve and streamline account management, account payables, account receivables and reconciliation processes, and maximise the potential of the new breed of e-solutions, such as electronic bank account management (ebam), einvoicing, estatements, emandates and eidentity. With bank-agnostic connectivity via SWIFT, you can also achieve wider benefits through the setting up of a payment factory. An overview of key e-solutions ebam - Electronic bank account management increases levels of self-service and eliminates the paper trails traditionally found within banking administration arrangements. ebam standardises and automates account opening, account maintenance, account closing and signatory management by using global, bank-agnostic ISO XML messages. It enables nonfinancial messages to be transferred through secure communications channels, such as SWIFT and EBICS, linking the back office systems of banks and corporates to enable straight-throughprocessing (STP) of BAM activities. ebam is a completely electronic process that uses digital signatures to authorise client requests. einvoicing Electronic invoicing boosts on-time payments, shorter approval cycle times, early payment discount capture and the maintenance or improvement of days payable outstanding (DPO) and days sales outstanding (DSO). It ensures the secure exchange of documents between you and your clients and specifically enables invoices and trade-related documents, such as purchase orders, to be issued, received, approved, reconciled and digitally archived. E-invoicing is a secure, managed service which removes paper from the invoice process and provides instant and compliant delivery. RBS s e-invoicing service will integrate seamlessly into your back office environment, helping you cut costs while improving efficiency and reducing errors. 18 Your SEPA Roadmap

20 estatement is a digital file of a bank account s final period end statement, transmitted to the account owner electronically. From one central system, your internal stakeholders from audit, compliance and accounting departments will be able to access, view or print the statement for audit and compliance reporting. The automation and centralisation of bank account statements process enables faster turn-around times, giving your employees more time to focus on valueadded activities. You can also control user access to specific documents or information, and the retention period for documents. eidentifier is a single mechanism that can identify, initiate and authorise banking instructions for example, SWIFT s bank-agnostic 3SKey initiative. This should be seen as part of a wider move to harmonise infrastructure for e-commerce within Europe, and the core focus is enabling individuals, corporates, public sector and banks to identify themselves securely. emandate projects for SDD are well underway and will offer great benefits in terms of eliminating paper- based mandates, including all related processing costs, such as issuing, storage and archiving. As a keen participant in a number of European emandate initiatives, RBS is helping to embed corporate clients requirements in the end-state solution. Fit for the future These workflow solutions will give the corporate treasurer or CFO greater visibility across the financial supply chain which is critically important in today s multi-channel, always-connected business world. They offer transparency across the entire transaction flow, providing a complete end-to-end audit trail. Automated account management, mandate management, transactions and reconciliation processes will also enhance internal controls and regulatory compliance. Many large enterprises are now looking for ways to harness the power of technology to make all their commercial activities fit for the future. They also want to ensure portability and connectivity between banking partners, while adopting the latest industry standards. RBS has the right balance of expertise, proven implementation skills and thought leadership to help you find the right solutions for your business, and we will work with you to achieve your longer-term ambitions. 19 Your SEPA Roadmap

21 II SEPA the complete picture SEPA and ISO XML provides the impetus to review current technology, bank connectivity and cash management procedures, and assess centralisation and optimisation opportunities. Our experience can help you to use SEPA as an opportunity to prepare your treasury for the future. Geographic scope and timelines SEPA was introduced in 2008 to streamline the processing of euro payments. It aims to do this by replacing multiple, diverse national payment systems with one standard infrastructure. SEPA covers the 27 EU countries as well as Iceland, Liechtenstein, Monaco, Norway and Switzerland. RBS SEPA footprint RBS SEPA footprint Other SEPA Countries Thirty-two countries in Europe participate in SEPA, including those outside the euro area who have adopted SEPA standards and practices for their euro payments/collections. Some have also chosen to use SEPA standards for their domestic currency payment schemes. Source: RBS 20 SEPA the complete picture

22 EU Euro Currencies Austria* Belgium* Cyprus Estonia Finland EU non-euro countries Bulgaria Czech Republic* Denmark* France* Germany* Greece* Ireland* Italy* Hungary Latvia Lithuania Luxembourg* Malta Netherlands* Portugal Slovenia Poland* Romania* Sweden* European Economic Area (EEA), non-eu countries/ Non-EEA countries Iceland Liechtenstein Norway Monaco Switzerland* Slovakia* Spain* United Kingdom* RBS operates in 18 of the countries listed above* and has partner bank agreements to cover other key countries within the SEPA area. This has enabled us to develop a comprehensive and fully harmonised SEPA proposition for RBS clients across Europe. Key dates relating to SEPA migration Already effective Reachability for SEPA credit transfers and SEPA direct debits in euro member states Prohibition of per-transaction MIFs on cross-border direct debits 1 February 2013 Member states publish country migration plans Member states confirm their position on the use of available temporary waivers Member states lay down rules on the penalties applicable to violation of the SEPA Regulation 21 SEPA the complete picture

23 1 February 2014 Migration end-date for SEPA credit transfers and SEPA direct debits in euro member states End-date for issuing legacy direct debit mandates Interoperability in euro member states Removal of the obligation for users to provide the BIC for national SEPA payments and collections 1 February 2016 Removal of the obligation for users to provide the BIC for cross-border SEPA payments and collections Expiry of transitional arrangements for niche products Expiry of member state option to allow banks to provide consumers IBAN conversion services Expiry of member state option to allow continued use of legacy file formats for SEPA payments and collections 31 October 2016 Migration end-date for SEPA credit transfers and SEPA direct debits in non-euro member states (or, if earlier, one year after joining the euro) Reachability for SEPA credit transfers and SEPA direct debits in noneuro member states (or, if earlier, one year after joining the euro) Interoperability in non-euro member states (or, if earlier, one year after joining the euro) 1 February 2017 Prohibition of per-transaction MIFs on national direct debits 22 SEPA the complete picture

24 Bank connectivity and XML SEPA and bank connectivity SEPA creates a single, transparent payments market throughout Europe, and will replace complex and fragmented payments system landscape. One of its key objectives is to harmonise and rationalise current domestic file formats and converge them into a single format ISO XML. This will enable businesses to communicate electronically with their banks, through a single set of newly-designed financial messages, across 32 SEPA countries. If your business operates across different European countries, SEPA and ISO XML provide the catalyst for you to review your existing technology, bank connectivity and cash management procedures, and to consider where centralisation can bring benefits to the business. As the ISO XML standard underpinned by SEPA is being adopted globally for transaction processing and account administration, reporting, electronic invoicing, FX and letter of credit confirmations, there is a strong case for companies to review their entire bank connectivity model and to accelerate a move towards payment factories. Having a global, bank-agnostic format with inter-bank connectivity will support moves towards a fully integrated, streamlined organisation; and, of course, the technical infrastructure behind banking connectivity is crucial for successful centralisation. SEPA is already fully integrated into the RBS payments infrastructure, and we provide several options for businesses to interact with us and send ISO XML files. These are: Access Online Access Direct SWIFT Corporate Access EBICS MultiCash ISABEL As we set out in Chapter I, by 1 February 2014 the ISO XML message format must be used by businesses operating in the euro zone for all credit transfer and direct debit batch files. There is an option for member states to extend the deadline by two years, and Estonia, Greece, Spain, Italy, Cyprus, Portugal and Slovakia have chosen this route. 23 SEPA the complete picture

25 Businesses that cannot meet this timeline will need to obtain conversion/enrichment services such as the solution mentioned previously, RBS SEPA Accelerator. The new standard It s worth looking at the background to this new standard the ISO It is based on a universal format : XML (extendible Markup Language), referring to the marking up of specific business elements and fields. The number confirms that this is the nd international standard the ISO has defined and published. The ISO technical committee used a business model as the foundation for the new standard, defining five financial business domains Payments, Securities, Trade Services, Cards and FX. Within Payments, the model then identified and described 11 relevant financial business activities, for example the initiation of a payment. The standard then aligns financial XML messages to business functions such as PAymentINitiation PAIN and CAshManagemenT CAMT (covering account reporting, among other things). You can see the five business domains in the diagram on the next page, and the functions within Payments as an example. It illustrates how the Payment Initiation function covers four business process definitions, and these are each then linked to a set of financial XML messages. 24 SEPA the complete picture

26 Five business domains Payments Services Trade Services Cards FX Functions The business domains payments Payment Initiation Account Management Payment Clearing & Settlement Cash Management FX The business function of payment initiation Four Business Processes Customer to bank payment initiation Creditor payment activation Customer to bank payment cancellation/modicification Mandates Business process of Customer to bank payment initiation Customer Credit Transfer Initiation Customer Payment Status Report Customer Payment Reversal Domains Processes Customer Direct Debit Initiation Messages Customer-to-bank Payment Initiation ( pain ) Message Definition Report (MDR) Customer Credit Transfer Initiation Customer Payment Status Report Customer Payment Reversal Customer Direct Debit Initiation Pain x XML Message Pain x XML Message Pain x XML Message Pain x XML Message This diagram also visualises how ISO XML messages are defined (in detail) by Message Definition Reports. These are integral to the standard, but are relatively independent. Enhancing ISO XML messages does not require the underlying business model to be re-engineered, making the process more straightforward and less expensive. More information on ISO XML standards can be found on Going Global The Common Global Implementation (CGI) initiative is a worldwide forum for banks, large corporations, associations, vendors and markets. Its objective is to simplify ISO XML 25 SEPA the complete picture

27 implementation for corporates, thereby promoting wider acceptance of the standard as the single communication method used between businesses and banks. CGI is driven by corporate demand for bank-agnostic implementations, and is intended specifically for global businesses that operate across multiple countries, using many banks and many different instruments. The objective is to standardise and streamline corporate-to-bank connectivity, and optimise the benefits of XML beyond SEPA. RBS is a keen member of this initiative and is encouraging corporates and institutional clients to consider using XML as a global message format for payment factories. Naturally, large businesses are eager to hear about collaborative initiatives such as this, as well as low-cost, low-maintenance solutions to support activities beyond the EU landscape. Our vast experience in XML and technology, along with our long-term commitment to develop bankagnostic, less complex and transparent solutions in cooperation with ERP providers, will enable you to maximise the potential of XML for all your transactions and workflow solutions. 26 SEPA the complete picture

28 Making payments in Europe with SEPA Credit Transfer Characteristics and benefits The SEPA Credit Transfer (SCT) is the simplest of the SEPA schemes. It supports the transfer of funds from one payment account (the originator account) to another payment account (the beneficiary account). The basic usage criteria and characteristics of SCT are: Same rules and conditions apply to both domestic and cross-border transfers Originator and beneficiary account must be within the SEPA zone and identified by IBAN The amount transferred is always in euro with a maximum of 1 billion euro ; The full amount is always transferred to the beneficiary bank (with no deductions by originator bank or intermediary bank) The beneficiary account is credited no later than the next banking business day Processing is always according to the shared (SHA) charges principle Originator-supplied remittance information is forwarded to the beneficiary bank in full and without alteration The SCT scheme will effectively replace all legacy (non-urgent) domestic and cross-border transfer schemes within the SEPA zone. The main, immediate benefits for corporates and financial institutions using SCT are: Full reachability of all beneficiary accounts within the SEPA zone with one single scheme A short maximum execution time with the benefit of predictability The same business rules and standards across all countries in the SEPA zone: Standard file format (ISO XML) for bulk payment submission End-to-end from initiation to transaction reporting transport of main payment attributes, as well as customer remittance data (either structured or unstructured) Standardised exception handling, such as for rejects and returns These benefits will enable further consolidation and efficiency-improving initiatives, such as: Account and/or bank relationship consolidation 27 SEPA the complete picture

29 Centralisation of payment processing in a payment hub or payment factory Centralisation of exception handling (accounts payable/accounts receivable) Value chain in the context of credit transfer Supply Chain Ordering Delivering Invoicing Buyer/ Originator Supplier/ Benefiiary Reconcilliation Beneficiary credited Originator debited Invoice review & payment initiation Financial Supply Chain Source: RBS Requirements and rules Introduction The SCT scheme applies equally to all users, whether they are banks, businesses or consumers. It regulates interactions and organises in stages which are both logical and transparent. The SCT scheme is maintained by the European Payment Council (EPC) and is described in the SCT Rulebooks, which along with Implementation Guidelines form the starting point and knowledge base for all users. The current and future SCT Rulebooks and Implementation Guidelines can be found on the EPC website 28 SEPA the complete picture

30 SCT regular flow The execution of an SCT payment involves four main players a) the originator, b) the originator bank, c) the beneficiary bank and d) the beneficiary. The regular or happy flow (shown below) describes the successful execution of an SCT. SCT regular flow in a Four Corner Model 1 Initiate SCT Originator 2 Debit account Clearing and Settlement Beneficiary 4 Credit account 3 Interbank message 3 Interbank message Originator bank Beneficiary bank Source: RBS 1. The originator initiates and signs the SCT order via his originator bank channel. The originator bank validates the SCT order and checks the account balance and status. If the originator wants to initiate multiple SCTs at once (bulk payments) the use of the ISO XML PAIN.001 format is mandatory. If you cannot meet the ISO XML by 1 February 2014 as required by EU 260 regulation, your RBS representative will be able to tell you about the RBS SEPA Accelerator. 2 If the validations are successful, the originator account is debited. 29 SEPA the complete picture

31 3 The Originator bank sends the SCT to the selected clearing and settlement mechanism (CSM). The CSM validates the SCT and, when successful, forwards the SCT to the beneficiary bank. 4 The beneficiary bank validates the SCT and the beneficiary account status and, when successful, credits the beneficiary account. Under the scheme, and the EU Payment Service Directive, the beneficiary bank must credit the beneficiary account the same day it receives those funds. Overview of SCT exceptions The exception flows shown below - describe irregular executions of an SCT. SCT exceptions Request for recall Originator Clearing and Settlement Beneficiary Approve or deny recall Request for recall Request for recall Originator bank Reject / Return Return Beneficiary bank Source: RBS Reject/return When an exception occurs after debiting the originator account, the funds are to be credited back to the originator account as soon as possible. The SCT scheme describes the rules for such exception handling and refers to the related transactions as R-transactions. Unsuccessful execution before settlement results in a reject transaction. If it is after settlement, the result is a return transaction. A return transaction must be sent by the beneficiary bank within three banking business days after settlement. 30 SEPA the complete picture

32 Reject and return transactions contain a reason code identifying why the exception occurred, such as incorrect account number or account closed. The possible reasons for R-transactions are described in the SCT Rulebook and are translated into a standardised (ISO) reason code in the SCT Implementation Guidelines. The reason for the R-transaction will usually be reported to the originator, along with the reference number of the original SCT, enabling easy reconciliation. Recall Another exception flow is the recall. The recall procedure can be initiated only by the originator bank, which undertakes it at the request of its customer. The originator bank may initiate a recall for the following reasons only: Duplicate sending Technical problems resulting in erroneous SCT(s) Fraudulent originated credit transfer A recall request can take place up to ten banking business days after execution of the SCT. If the SCT has not yet been settled, the recall request will trigger a reject transaction. If the SCT has been settled already, it is up to the beneficiary bank whether it will return the funds. As a general rule, the beneficiary bank will not return the funds without permission of the beneficiary. The beneficiary bank must answer a recall request within ten banking business days of receiving the request. If the recall is granted, then a return transaction is sent by the beneficiary bank to the originator bank, who will then credit the originator account. For reconciliation details, please refer to the Cash management reporting in Europe chapter of this document. Keeping up to date The EPC releases a new version of the Rulebook annually in November, with new or updated rules normally taking effect in November of the following year. Exceptionally, the Rulebook published in November 2012 will take effect only as of 1 February If necessary the EPC can issue an interim release between the annual editions. This schedule links changes in the Rulebook with the coming into effect of EU Regulation 260/2012 ( The SEPA Regulation ) that mandates the SEPA schemes. The Rulebook release management schedule, along with the latest versions of the SCT Rulebook, can be found on the EPC site 31 SEPA the complete picture

33 If you would like to suggest a change to a SEPA scheme, you can send your comments directly to the EPC following the process described on the EPC website. Additional optional services (AOS) The SEPA Regulation and Rulebook allow for the development of additional optional services, as long as they do not compromise interoperability of the schemes nor create barriers to competition. There are different types of AOS: AOS developed at domestic community banking level, according to specific country practices. For example, the support of specific character sets, account switch-over services AOS developed unilaterally by a bank. Banks may develop extra services to add value to their commercial proposition, and an example here is RBS shielding sensitive salary payment information in electronic banking Country AOS can be found in the RBS SEPA Country Expertise document. Strategic choices Transferring cross-border within the SEPA zone Introducing an SCT with consistent conditions throughout the eurozone may encourage some large enterprises to consider choosing a single account, from any of the 32 SEPA countries, as the base for transferring and receiving funds. When considering this option, it s worth noting that: A cross-border transfer may result in non-automated processing, due to possible sanctions, filtering or other bank procedures typical for cross-border payments traffic Domestic regulations may require certain types of payments to be made from or to an account in that country. Below is an overview of these payment types covering Euro countries where RBS operates. Local account required for: Salary payments Tax payments Austria No No No Belgium Yes Yes Yes Social security payments 32 SEPA the complete picture

34 France No No No Germany No No No Greece To be determined Yes Yes Ireland No No No Italy Yes To be determined Yes Luxembourg Yes Yes Yes Netherlands No No No Slovakia No To be determined To be determined Spain No Yes Yes Note: There may be tax and/or legal implications when using an account held abroad for making salary, tax or social security payments. You should therefore seek specialist advice from your tax advisor. Transferring/receiving on behalf of The SCT scheme allows third parties to transfer or receive funds on behalf of (OBO) another party (for example, a subsidiary located in a different country). This is because the scheme includes fields to identify both the direct initiating and receiving parties, as well as the ultimate originator and beneficiary. If OBO information is provided by the initiating party, the originating bank is obliged to pass on this information in full to the beneficiary bank. Although this information should also be made available by the beneficiary bank to the beneficiary on account statements, some banks may provide this additional information only on XML statements. It is therefore advisable to include OBO details as part of the remittance information, to increase the likelihood of the ultimate originator being reported to the beneficiary on the account statement. This will help prevent reconciliation problems when there is an unknown originator. OBO transfers allow multiple entities within a group to operate from one account that is controlled by for instance a central Treasury (assuming the fiscal and legal structure of the corporate permits this). The OBO concept can improve operational efficiency, cost and risk management control and liquidity visibility; and it supports centralisation initiatives, such as shared service centres, payment/collection factories and implementation of in-house bank structures. 33 SEPA the complete picture

35 However, the actual implementation of OBO structures can be complex, due to the differing tax and legislative requirements in multiple jurisdictions, as covered earlier. If you are considering an OBO operating model including salary, tax or social security payments, RBS recommends that you seek the views of your tax advisor. Tactical moves Terms & Conditions The SCT scheme sets out a number of rules and obligations for participants which RBS, like other banks, describes within its Terms & Conditions. Specific field information IBAN and BIC The mandatory provision of IBAN and BIC within an SCT to identify the beneficiary and the beneficiary bank is a temporary measure. EU Regulation 260/2012 determines that, after a transition period from 1 February 2014 for national transactions and 1 February 2016 for crossborder transactions BIC will no longer be required within the SCT payment instruction. The IBAN will constitute sufficient identification. Transition periods, however, vary in different countries, so please refer to the RBS SEPA Country Expertise document for an overview. RBS intends to support IBAN-only SCTs for both domestic and cross-border transactions ahead of the regulation timeline. End-to-end reference The end-to-end reference is the originator s unique reference for each SEPA transaction. The reference is transmitted throughout the whole process, up to and including reporting to the beneficiary. It is also transmitted and reported back in case of R-transactions. Although it is an optional field, populating the end-to-end reference is highly recommended, as it facilitates easy reconciliation. Remittance information The SCT scheme facilitates originator remittance information of up to 140 characters. The remittance information must be forwarded in full, and without alteration, to the beneficiary bank, which must provide this information to the beneficiary again without alteration. 34 SEPA the complete picture

36 The credit transfer dataset provides for a remittance data field that can be used in either of two ways: to carry unstructured remittance data (free text), or to carry structured remittance data This remittance data field will enable automated reconciliation between receivables and payments by the beneficiary. The EPC recommends that beneficiaries adopt the ISO Standard (ISO 11649) for a structured creditor reference to the remittance information as the preferred remittance data convention for identifying payments referring to a single invoice. For certain local instruments, however, the structured creditor reference will be a local reference standard. If the originator of an SCT decides to use unstructured remittance information, they will need to include a meaningful description of the transaction, as well as identifying the underlying contract and invoice number. Category purpose/purpose The category purpose of the credit transfer is information on the high-level nature of the credit transfer transaction. It can do different things. For instance, it may enable the originator bank to offer a specific processing agreed with the originator, or allow the beneficiary bank to apply a specific processing. An example would be the shielding of SCT salary payments, based on the category purpose SALA. Next to the category purpose code, an additional purpose code field can be used by the originator to inform the beneficiary of the purpose of the transaction. The beneficiary bank must provide this information to the beneficiary, unless otherwise agreed by the beneficiary. RBS SCT proposition RBS has developed a comprehensive SCT proposition for businesses, leveraging its presence in 18 SEPA countries and the partner bank agreements it has with multiple banks in other European countries. Our proposition includes: Harmonised SCT across 18 countries SCT from and to non-euro accounts requiring currency conversion Competitive cut-off times 35 SEPA the complete picture

37 Up to one year warehousing capability for future date transfers SCT-related reporting, via MT940 and/or ISO XML messages All ISO XML reasons codes are fully supported and reported on account statement Clear invoice per billing period, with an overview of the SEPA transactions processed in that period and the pricing Additionally, RBS s development plans include: SCT initiation using IBAN only; RBS will enrich with the BIC Shielding of SCT salary payment information notice to beneficiary on behalf of the originator, advising that an SCT crediting the beneficiary account has been sent Consolidated posting of incoming SCTs (credits) on account statement combined with annex reporting (breakdown of the consolidated posting) 36 SEPA the complete picture

38 Collecting in Europe using SEPA Direct Debit Characteristics and benefits The SDD schemes are based on the following concept: I request money from someone else, with their prior approval, and credit to myself. The SDD schemes allow a biller to collect funds from a payer s account, provided that a signed mandate has been granted by the payer (called debtor ) to the biller (called creditor ). The main benefits of using direct debit payment method, versus credit transfer collections, include: Optimised cash flow/cash flow forecasting - predictable day sales outstanding is achieved with the scheduled credit to the creditor s collecting account Automated reconciliation of funds collected in multiple countries and efficient exception handling through structured reporting of exception items Improves vendor relationship through prompt and accurate billing, payment and settlement and less need for enquiry Value chain in the context of direct debit Supply Chain Ordering Delivering Invoicing Collecting Creditor SEPA Direct Debit Mandate Debtor Reconcilliation Creditor credited Debtor debited Invoice review & approval Financial Supply Chain Source: RBS 37 SEPA the complete picture

39 SDD brings additional business benefits: Euro electronic collections can be made from 32 countries, out of a single account Introducing SDD throughout the eurozone may encourage some corporates to expand beyond local markets Creditors can collect funds from debtors located across 32 countries, regardless of the location of the debtor or creditor account It accelerates the setting up of a collection factory, using standardised collection methods and harmonised refund processes managed from a shared service centre or in-house bank model The three main prerequisites for using SDD with your counterparties are: The debtor and the creditor must each hold an account with a payment service provider (PSP) located in the SEPA zone While the transfer of funds between the debtor s bank and the creditor s bank always takes place in euros, the accounts of the creditor and/or the debtor may be in any currency There must be a valid mandate authorised by the debtor in favour of the creditor Requirements and rules As mentioned earlier, the EPC releases a new version of the Rulebook annually in November, with new or updated rules normally taking effect in November of the following year. Exceptionally, the Rulebook published in November 2012 will take effect only as of 1 February If necessary the EPC can issue an interim release between the annual editions. This schedule links changes in the Rulebook with the coming into effect of EU Regulation 260/2012 ( The SEPA Regulation ) that mandates the SEPA schemes. The Rulebook release management schedule, along with the latest versions of the SDD Rulebook, can be found on the EPC site. 38 SEPA the complete picture

40 An SDD regular flow 2 Pre-notification 1 Mandate 5 Debit account Debtor 6 Interbank message Clearing and Settlement 6 Interbank message 7 Credit account Creditor 3 Collection incl. Mandate data Debtor bank Source: RBS 4 Interbank message 4 Interbank message Creditor bank The parties involved in the SDD schemes are: a) the debtor (payer), b) the creditor (biller), c) the creditor bank, d) the debtor bank, and e) the clearing and settlement house. A normal SDD collection flow is shown in the figure above. 1. Creditor provides the debtor with a paper-based mandate (to be replaced by e-mandates in the future) that must be returned to the creditor, duly signed before the creditor can start collecting funds. 2. Creditor must pre-notify the debtor of the upcoming collection at least 14 days before the due date (the date on which the debtor is to be debited), unless another timeline has been agreed between the creditor and the debtor. 3. Creditor initiates SDD collection via the creditor bank in ISO XML PAIN.008 format. Each collection must contain mandate- related information (MRI) retrieved from the actual mandate. 4. Creditor bank forwards collection to the selected clearing and settlement mechanism (CSM) according to timelines set by the scheme. On the same day, CSM forwards the collection to the debtor bank. 39 SEPA the complete picture

41 5. Debtor bank informs debtor of the upcoming collection. Debtor bank debits the debtor account on the due date according to the SDD instruction received. 6. Debtor bank forwards the due amount to the creditor bank via the CSM. 7. Creditor bank credits the amount on due date to the creditor. Overview of SDD exceptions In situations where one of the parties may not be able to process the collection in a normal way, the affected party will start one of the available exception processes, using R-messages that communicate a collection failure. These situations may impact any of the parties involved, before and after the settlement. Our diagram shows an overview of all exceptions, as identified under SDD. SDD pre-settlement flow Debtor Creditor Refusal Clearing and Settlement Reject Revocation Reject Reject Debtor bank Request for cancellation Request for cancellation Creditor bank Source: RBS The table on the next page sets out exception situations and the R-messages to be used before SDD settlement (pre-settlement). 40 SEPA the complete picture

42 Overview of pre-settlement R-messages and their usage rules Initiated by Sent to Type of exception (R-message) Creditor Creditor bank/csm Creditor bank/csm/ debtor bank Debtor Creditor bank CSM/ debtor bank Creditor/ creditor bank/csm Debtor bank Revocation Request for cancellation Reject Refusal Allowed timeline (D=settlement date) Not regulated by the scheme, agreed between creditor and creditor bank Not regulated by the scheme, agreed between creditor bank and CSM Up to D prior to settlement cut-off time Up to D prior to settlement cut-off time Reason for usage Creditor requests recall/cancellation of the entire or part of SDD collection. Creditor bank/csm requests t recall/ cancellation of the entire or part of SDD collection. Creditor bank, CSM or debtor bank are unable to process the collection for a technical reason (such as invalid format, wrong IBAN check digit) Debtor bank is unable to accept the collection for other reasons (such as account closed, customer deceased, account does not accept direct debit, or for reasons relating to Article 78 of the PSD, or because the debtor wishes to refuse the debit) Debtor requests not to pay (to refuse) the collection. Debtor also has the right to instruct the debtor bank to prohibit any direct debits from his bank account. Pre-settlement refusal will result in a reject by the debtor bank to the creditor, via CSM and creditor bank. The diagram and table below illustrate exception situations and R-messages to be used after SDD settlement (post-settlement). 41 SEPA the complete picture

43 SDD post-settlement flow Debtor Creditor Reversal Return / Refund Clearing and Settlement Return / Refund Reversal Return / Refund Return / Refund Debtor bank Reversal Reversal Creditor bank Source: RBS Overview of post-settlement R-messages and their usage rules Initiated by Initiated to Type of R-message Creditor Debtor bank Creditor bank Creditor Bank via CSM Allowed timeline (D=settlement date) Reason for usage Reversal From D to D+5 Creditor requests to reverse a collection and to pay the collected direct debit back to the debtor Return Core scheme: Collections diverted from normal From D to D+5 execution after interbank settlement (TARGET days) B2B scheme: From D to D+2 (TARGET days) 42 SEPA the complete picture

44 Overview of post-settlement R-messages and their usage rules Debtor Debtor bank Refund Core scheme: From D to D+8 weeks (calendar days) B2B scheme: not allowed To be reimbursed for the collection on a no-questions-asked basis. Postsettlement refusal by the debtor will be handled as a refund Debtor Debtor bank Refund of unauthorised transactions From D to D+13 months (calendar days) To be reimbursed for an unauthorised collection, for instance when there is no valid mandate As reasons for rejections and returns can vary widely from technical (such as invalid format or wrong IBAN check digit) to business (such as refusal by the debtor) the standardisation of the reason codes, as defined by the ISO, is an important feature of the SDD schemes. When reported back to the creditor, this standardised information enables an improved and furtherautomated reconciliation process, and helps creditors to respond automatically when faced with a particular reason code, without further manual intervention and investigation. For more details, please refer to the Cash management reporting in Europe chapter of this handbook. It s important to note that some countries will not support specific reason codes, because of data protection / banking secret / consumer protection rules. More information on code acceptance across Europe can be found in the RBS SEPA Country Expertise document. Core and Business-to-Business (B2B) schemes There are two SDD schemes for the collection of national or cross-border payments within SEPA countries: The Core scheme, which is available to both businesses and consumers. For the Core scheme, all banks which operate within the EU SEPA countries and are reachable for legacy direct debits, must be reachable for SDD The B2B scheme is available only to collect from businesses. For consumer protection rights to apply, the debtor must not be a private individual. Within this scheme, there is no reachability requirement, making it optional, and banks can decide to be reachable as debtor bank or as both debtor and creditor bank. Banks that support the B2B SDD have registered at the European Banking Association (EBA) Clearing House, and you can find an overview of participants on the EPC site 43 SEPA the complete picture

45 The country-specific definition of the micro-enterprise in relation to using B2B scheme is shown in the table below. Country-specific definition of the micro-enterprise Treated as companies Austria, Belgium, Bulgaria, Denmark, Estonia, Finland, France, Germany, Greece, Ireland, Latvia, Lithuania, Luxembourg, Netherlands, Poland, Romania, Slovenia and Spain Treated as consumers Cyprus, Czech Republic, Great Britain, Hungary, Italy, Malta, Portugal, Slovakia and Sweden Common features of the Core and B2B schemes are: Mandates are the responsibility of the creditor Each legal entity has a unique identifier Mandates need to carry a unique mandate reference number Same sequence types (first, recurrent, last and one-off) Pre-notification obligation of 14 days (unless otherwise agreed with the debtor) Based on the same XML messages, which carry all necessary fields Mandate expires 36 months after last SDD submission Maximum refund period of 13 months for debtor for unauthorised transactions The main differences between the two schemes are summarised in the table below: Comparison between SDD Core and SDD B2B schemes Subject SDD Core scheme SDD B2B scheme Access to the scheme Both consumers and businesses Only businesses Mandates Debtor signs and sends mandate to creditor Debtor signs and sends mandate to creditor and to the debtor bank 44 SEPA the complete picture

46 Comparison between SDD Core and SDD B2B schemes Subject SDD Core scheme SDD B2B scheme Mandate registration by the debtor bank Mandate checks by the debtor bank Mandate migration Not required Not required Existing legacy mandates remain valid for SEPA collections Debtor bank is obliged to keep track of authorisation of debtor for each mandate, including additional instructions, if offered through additional optional services (AOS) Obliged to check for every transaction, whether instruction matches B2B mandate registered and authorised by the debtor, including any additional instructions by the debtor, before debiting the debtor s account. This is because there is no right to refund In most countries, legacy business mandates cannot migrate to SDD B2B scheme. New SDD B2B mandates must be signed by debtors Collection timelines For one-off or first collections: D-5 For recurring or final collections: D-2 D-1 for all collections Returns Up to D+5 Up to D+2 Refunds Automatic refund within 8 weeks No refund for authorised transactions The advantages of the B2B scheme to creditors are: Shorter collection cycle than under the Core scheme Certainty of the collection, as there is no right of refund Creditors using the B2B scheme need to consider: Limited coverage, due to the optional nature of the B2B scheme Limited coverage, due to consumer labelling of micro-enterprises in some countries 45 SEPA the complete picture

47 In most countries, new mandates are required and domestic legacy business mandates cannot be migrated Debtors using the B2B scheme need to consider: Mandatory registration of the mandate at the debtor bank Absence of the right to refund Debtor s obligation to inform debtor bank about the cancellation of a mandate SDD collection types Similar to most European legacy direct debit schemes, SDD schemes recognise two specific types of SDD collections: one-off and recurrent. A typical one-off collection is where a company needs to make timely and straightforward collection once only. These are normally used for non-recurrent selling of products, such as books or appliances, and for one-off services. Recurrent collections are used mostly by companies who need to collect regularly, and have a long-term contract with the debtor for delivery of products/services. This type of collection is generally used by utility companies for electricity, telephone and water, and by clubs and organisations for monthly subscriptions. For recurrent collections, a sequence type needs to be part of each collection, to identify whether the collection is first, recurring or final: First - this is the first collection in a recurring series Recurring - this is a subsequent direct debit under the mandate in a recurring series, for a limited or unlimited period of time Final - this is the final collection in a recurring series The type of the collection (one-off or recurrent) is a mandatory element of the mandate and therefore provides full transparency to the debtor, when signing the mandate. Interpretation and AOS Although SDD schemes are strictly governed and comply with a widely accepted Industry standard, they could be interpreted differently by different countries or by individual banks. There are variations in technical validations and in the resulting actions by debtor or creditor banks. To avoid inconsistency, EPC regularly publishes clarification papers for scheme participants. As RBS participates in both the Core and B2B schemes, we review these papers carefully to assess any required changes and inform our clients accordingly. 46 SEPA the complete picture

48 The SEPA Regulations and Rulebook allow AOS to be developed as long as they do not compromise interoperability of the schemes nor create barriers to competition. There are different types of AOS: AOS developed at domestic community banking level, according to specific country practices. For example, the support of specific character sets, account switch- over services AOS developed unilaterally by a bank. Banks may develop extra services to add value to their commercial proposition. Country AOS can be found in the RBS SEPA Country Expertise document. Mandate management A mandate is an authorisation given by the debtor to the creditor to allow the creditor to debit the debtor s account in favour of the creditor. In many European countries, domestic direct debit schemes see the mandate being handled by the debtor bank. Each country has its own mandate requirements and often needs different data sets to process them. SEPA changes all this by adopting a creditor mandate flow and one mandate harmonised data set. Creditors will have full responsibility for migrating their legacy mandates into SEPA and, more importantly, will be the sole party dealing with the debtor relationship. Amending existing mandates, issuing new ones, and then storing them all will become the exclusive responsibility of the creditor. There are different forms of mandates that currently co-exist under domestic direct debit schemes in Europe, including paper, electronic and voice. Under SEPA, however, the mandate may only exist as a paper document which is physically signed by the debtor, or as an electronic document which is created and e-signed securely. Requirements and process for SDD mandates Under SDD, the creditor is responsible for registering and keeping records of all issued mandates. In the case of a dispute by the debtor, the creditor must be able to provide a copy of the valid mandate, on the basis of which collection took place. The main characteristics of the SEPA mandate can be outlined as follows: Paper-based (Although SEPA compliant e-mandates have not yet been implemented, some countries may accept electronic forms of mandates.) Rich data set and mandatory elements to ensure validity and standardisation 47 SEPA the complete picture

49 Optional data elements to endure completeness of information (such as contract number or on-behalf-of element) Freedom of format, shape, colours, and so on Different mandate for each scheme Separate mandates for different types of collections (recurrent or one-off) Language of the debtor used to ensure understanding and transparency A new SEPA (paper-based) mandate, whether B2B or Core, is issued by the creditor and sent to the debtor for signing. The debtor signs and then returns the mandate to the creditor. B2B mandates also have to be sent to the debtor bank for registration and further validation of SDD collections. Upon receipt of a signed mandate, the creditor has to de-materialise the SEPA mandate (store as an electronic record), without altering the content of the mandate. The MRI will be used by the creditor in the electronic SDD instruction to the creditor bank. The original mandate document, which provides legal background for each collection, must be stored by the creditor for as long as the mandate is valid and at least for 14 months after the last collection. During this period, a copy of the mandate may be requested by the debtor in case of any dispute. 48 SEPA the complete picture

50 An SDD mandate Mandate Storage Mandate Management System Corporate Post Box Sent to Customer Mandate Customer Sign Signature Source: RBS Once all mandate information is available electronically and is complete in terms of SEPA requirements, it is ready for business-as-usual mode, where the MRI element of the SDD collection file needs to be filled with valid mandate information. When changes in the mandates are made, and agreed by creditor and debtor, the creditor will, as required by the schemes, also de-materialise these changes and send them to the creditor bank, as part of the next collection on this mandate. When the creditor and debtor have cancelled a B2B mandate, the debtor should inform the debtor bank, so the debtor bank can update its stored instructions and reject any collections on a cancelled mandate. The EPC has issued a guidance document containing practical information on how selected mandate information may be used in various situations. Useful information and examples can be found through the following links: Details about the SEPA mandate 49 SEPA the complete picture

51 Example SEPA mandate form Examples of translations for SEPA mandate forms Mandate migration, as part of preparations for the February 2014 SEPA deadline, represents a significant challenge for businesses, despite implementing SEPA upgrades to their ERP systems. RBS offers, as part of its RBS SEPA Accelerator, a full mandate migration and management service that converts legacy mandates and manages their full lifecycle. Mandate Management is a comprehensive tool with fully integrated archiving, scanning and printing services, as well as collection initiations. You can find out more from your RBS representative. Legacy mandate migration to SDD Core Although existing legacy mandates do not meet all the SEPA requirements, they can be re-used to collect funds, via the SDD Core scheme. This will facilitate a smooth client migration. However, on top of the requirements described in the previous chapter, creditors need to take several other actions to be able to use legacy mandates for SDD collections. These include: Identification of the location and the medium of legacy mandates Assessment of legal validity of the mandate, in particular debtor s valid record of consent Collection and registration of additional data elements required for SDD collections, such as the debtor s IBAN or mandate ID Application of country-specific rules for mandate migration, as covered in the RBS SEPA Country Expertise document Legacy mandate migration to SDD B2B In most countries, if a creditor intends to use the B2B scheme, legacy mandates cannot be migrated. New, SEPA-compliant mandates must be issued to all B2B debtors. There are some exceptions, which are covered in the RBS SEPA Country Expertise document. Strategic choices Collecting cross-border within the SEPA zone The introduction of the SDD as the first pan-eurozone collection instrument may encourage some businesses to expand beyond local markets and start collecting direct debits cross- 50 SEPA the complete picture

52 border from a single account in any of 32 SEPA countries. As we mentioned in reference to SCT, while making a decision on your preferred operating model, it is worth considering: A cross-border collection may result in a non-automated processing due to possible sanctions, filtering or other bank procedures typical for cross-border payments traffic There is a higher chance of unauthorised refunds caused by juridical invalidity of the mandate, specifically when collecting from a country which accepts electronic signature as a valid authentication, while the debtor bank s country does not Counterparty risk analysis of a debtor, located in a different country than the creditor, may be not as straightforward as that of a debtor located in the same country The mandate and all communication between the creditor and the debtor must be in the language of the debtor Moving towards centralisation The SDD schemes allow creditors to collect on behalf of (OBO), whereby a collecting party collects funds on behalf of another party (such as a subsidiary located in a different country). This is enabled in SDD schemes by a) inclusion of creditor reference party fields (as optional fields) on the SDD mandate form; and b) provision of standard creditor reference party fields in the SDD collection file. If OBO information is provided by the creditor, the creditor bank is obliged to pass on this information in full to the debtor bank. Although OBO information should also be made available by the debtor bank to the debtor on account statements, some banks may provide this additional information only on XML statements. It is therefore advisable to include OBO details as part of the remittance information, to increase the likelihood of the creditor reference party name being reported to the debtor on the account statement. This will help prevent refunds resulting from an unknown creditor. It is also important to note that: The mandate must be issued in the name of the creditor, whose account is used to credit SDD collections. Creditor reference party ( the party on whose behalf the collection is made) information needs to be included in the optional fields of the mandate The creditor will receive the collected amounts, and any further distribution of funds to the creditor reference party needs to happen outside of the SDD scheme 51 SEPA the complete picture

53 Tactical moves Identifying creditors To collect funds under SDD schemes, a collecting party needs to obtain a creditor identifier (CID). This identifies a legal entity, or an association that is not a legal entity, or a person assuming the role of the creditor. This identification must be stable in time, to enable the debtor to return to the creditor for any (unauthorised) refunds, complaints or checks on the existence of the mandate. The CID must be unique in the scheme, meaning that each CID refers only to one creditor. A single creditor, however, is free to use more than one CID, or to use only one CID for the initiation of collections in all SEPA countries. In addition, a creditor can use the creditor business code extension, consisting of three characters, to identify different business activities. Most countries have their own specific procedures for providing a CID to creditors. No new SEPA procedure has been created, and the SDD scheme allows the use of existing national identifiers to build a SEPA CID, by adding a country code and a check digit. The following is a general structure for the CID: Position 1-2 filled with the ISO country code Position 3-4 filled with the check digit according to ISO 7064 Mod Position 5-7 filled with the creditor business code, or if code not used then filled with ZZZ Position 8 onwards filled with the country-specific part of the identifier. Country-specific CID formats and the procedures for CID provision are listed in the RBS SEPA Country Expertise document. Terms & Conditions The SDD schemes define a number of obligations for the creditor, putting responsibility on the creditor bank to regulate them either by means of a specific SDD agreement, or by including them in the bank s general Terms & Conditions. These agreements or T&Cs must meet the SDD scheme requirements. RBS, like other banks, has developed a SEPA Direct Debit Origination Agreement, which a creditor must sign before initiating the first SDD collection. Pre-notification Pre-notification can be done in various ways. It could be a single notification summarising all future collections; it could be within commercial documents, such as a contract or invoice; or it could be a separate note. However the creditor chooses to implement pre-notification, it must 52 SEPA the complete picture

54 clearly state each due amount with the corresponding due date. The pre-notification, as well as all disputes arising from it, are between the creditor and the debtor; the banks do not become involved. End-to-end reference The end- to-end identification is the creditor s reference for a direct debit collection. It is a unique number that identifies, for a given creditor identifier, each collection transaction presented to the creditor bank. This reference is transmitted to the debtor throughout the whole process. It will be reported by the debtor bank to the debtor and returned in any exception handling process by all the parties involved. Although it is optional, we recommend end- to-end referencing, as it can facilitate reconciliation. Defining the internal structure of this reference is an important part of a SEPA project, as it should help the creditor to identify each collection. Unique mandate reference With SDD, each mandate must be identified by a unique mandate reference whose structure can be chosen by the creditor. However, combined with the creditor identification the reference must be unique for each mandate. It is not like a debtor ID or a contract ID, where multiple mandates may exist under the same debtor or contract. If the unique mandate reference was not available when the mandate was signed, it must be provided by the creditor to the debtor before the first SEPA collection is initiated. Remittance information This information is defined by the creditor and must be communicated by the debtor bank to the debtor when debiting the debtor s account. We recommend that it contains a reference to the pre-notification and could also contain the identifier of the underlying contract and/or a short description of the collection s purpose, which will be meaningful to the debtor. RBS SDD proposition RBS has developed a comprehensive SDD proposition for businesses, leveraging its presence in 18 SEPA countries and the partner bank agreements it has with multiple banks in other European countries. The characteristics of our SDD proposition include: Harmonised SDD offering across 18 countries, with a single SDD contract for both Core and B2B schemes SDD Core scheme for creditors with an account in any of 18 RBS branches 53 SEPA the complete picture

55 SDD B2B scheme for creditors with an account in any of 18 RBS branches SDD B2B schemes for debtors with an account in any of 18 RBS branches Competitive file submission cut-off times for both schemes Full mandate migration and management service that converts legacy mandates and manages their full lifecycle, as part of the RBS SEPA Accelerator Customisable operational limits (in terms of, for example, maximum batch amount) for creditor s operational risk management SDD-related reporting via MT940 and/or ISO XML messages All ISO XML reasons codes are fully supported and reported on account statement Up to one year warehousing capability for future collections Reversal facility for creditors, as per scheme specifications Additionally, RBS s development plans include: SDD COR1 scheme (allowing for D-1 file submission) for creditors with an account in any of 18 RBS branches SDD initiation using IBAN only; RBS will enrich with the BIC Consolidated posting of R-transactions on account statement combined with annex reporting (breakdown of the consolidated posting) 54 SEPA the complete picture

56 Cash management reporting in Europe Improved reconciliation One of the objectives of SEPA is to improve end-to-end processing of payments, without interruption or manual intervention known as straight-through-processing (STP). This goes beyond moving funds from payer to payee without interruption; it also includes improved (automated) reconciliation of transactions. There are two factors that will help realise this ambition: 1. The definition of one common data set, the SEPA data format, to be used for all SEPA transactions. 2. The obligation under SEPA rules and regulation that for every SEPA transaction a certain minimum set of information must be passed on unchanged through the entire chain of processing, up to and including the account statement. This information will comprise among other details the IBAN of the opposite account, the name of the account holder, an end-to-end reference identifying the transaction and 140 characters of unstructured or structured remittance information. RBS provides this information in several reporting formats, such as MT940 and XML. The XML format is relatively new and is part of the ISO20022 standard. The XML format matches the existing SWIFT account statement messages and adds richer payment details with the opportunity to separate consolidated account entries. SWIFT Message Message name ISO20022 Message Message name MT942 Intraday account statement camt.052 Bank to customer account report MT940 End-of-day account statement camt.053 Bank to customer statement - - camt.054 Bank to customer debit / credit notification Table: Corresponding SWIFT and ISO20022 Account statement messages The camt.054 format has no corresponding SWIFT message, although local formats that provide similar reporting possibilities currently exist, such as the VERWINFO format in the Netherlands and the CFONB240 format in France. Structured Reporting Of the several account reporting formats that RBS supports, the SWIFT MT940 (end-of-day) and MT942 (intraday) account statements are by far the most widely used. Although ISO20022 XML 55 SEPA the complete picture

57 reporting formats will be adopted as the native SEPA format in future, the pervasive use of the SWIFT MT940 and MT942 is expected to continue for some time. Using RBS structured MT940/MT942 reporting of SEPA transactions brings you the benefits of improved reconciliation, without having to move to XML reporting immediately. In this way, you can plan your move to XML reporting to suit your business, as well as the lifecycle and readiness of your IT systems. The structured MT940 and MT942 statements follow market standards by using code words (between slashes) in field 86, indicating the data items they precede. Some examples are shown below: Example : 86:/IBAN/here is an IBAN/BIC/here is a BIC/NAME/here is a name/remi/ here is the remittance info/eref/here is the original reference number/purp/here is the purpose Translating this to for instance an incoming credit as a result of a SEPA Credit Transfer: :86:/IBAN/NL85ABNA /BIC/ABNANL2A/NAME/MR CREDITOR/REMI/ Invoice /EREF/ /PURP/OTHR Exceptions such as rejects, refunds and returns are also reported including an ISO reason code. Example for a Return of the same SEPA Credit Transfer: : 86:/IBAN/NL85ABNA /BIC/ABNANL2A/NAME/MR.CREDITOR/RTRN/AC06/ REMI/Invoice /EREF/ /PURP/OTHR Code word RTRN is followed by AC06, the ISO reason code indicating that the account of the beneficiary was blocked. Another example for the debit of a collector account after the debtor requested a refund of an SDD: 56 SEPA the complete picture

58 :86:/EREF/ /PREF/SDD-BATCH-ID /MARF/ MNDIDXXPROVING-RBSNV /IBAN/DE /REMI/UTILITIES BILL NO /RTRN/MD06 Code word MARF precedes the unique mandate reference of the corresponding direct debit and reason code MD06 indicates that the debtor requested a refund. For a full description of SEPA structured reporting, please consult the document SEPA Reporting Details for SWIFT MT940 and MT942 on Ahead of the game Today, RBS already supports camt.052 (intraday statement) and camt.053 (end-of-day statement) reporting through its global Access Direct channel, and we intend to extend these capabilities to Access Online. With RBS, you can have multiple transactions posted as one consolidated posting on your account statement. We support various consolidated posting set-ups to match your needs, such as gross or net posting, consolidation per local product and consolidation of R-transactions. In certain cases, you may need the individual transactions comprising the consolidated posting to be specified, as an annex to the account statement: for instance, when you need to see all refunded and rejected direct debits for your credit control department. Here, we offer annex reporting as an additional service. RBS s development plans include annex reporting in camt.054 and csv (comma separated values) formats. 57 SEPA the complete picture

59 III RBS SEPA Accelerator Fast forward to SEPA While the business case for SEPA is compelling, many large enterprises admit they will struggle to make all the necessary changes to their systems and processes in order to meet the looming deadline of February RBS SEPA Accelerator supports you along the entire SEPA journey An end-to-end solution that minimises the impact of adapting existing IT infrastructures and workflows to the new SEPA payment standards. Corporate Type 1 - SEPA Project well under way Require a contingency plan or some business units not ready In-house project Well established SEPA project IT and SEPA resource and budget available BIC/IBANs - Available and validated Preference for Capex Resource to monitor - SEPA rule books Technology religion Average Investment - EUR 250K+ Project Lead Time - 6 to 12 months Corporate Type 2 - SEPA Project not yet started A reliable solution required to meet the deadline 1 February 2014SEPA project Outsourced Service Late start of SEPA project IT and SEPA resource and budget available BIC/IBANs provided Contingency plan Minimise impact on resources and capital Fast track option Average Investment - EUR K Project Lead Time - Maximum 8 weeks RBS SEPA Accelerator Source: RBS 58 RBS SEPA Accelerator

60 As we have mentioned elsewhere in this brochure, credit transfers and direct debits offered by euro countries must be SEPA compliant by then, and yet recent research among large enterprises revealed the majority of treasurers were not prepared for this important transition. Our deep understanding of the significant challenges facing corporates, as well as our close involvement with the development of SEPA over the past few years, encouraged us to design a solution that will help businesses to bridge the migration gap. This innovative and marketleading offering will help you meet the SEPA deadlines with minimal changes to your current systems, so you can maximise the potential of the new pan-european financial landscape as quickly as possible. The solution, aptly named the RBS SEPA Accelerator, speeds up the transition process and ensures your company won t be left behind. A comprehensive solution for full SEPA migration Transaction Management SEPA-compliant global electronic banking channels Full compliance with SEPA rulebooks Multi-channel notifications to debtors Multi-language support Multi-creditor, multi-country SEPA Mandate Management Migration of existing mandates Full mandate lifecycle Paper mandate flows Digital and physical archiving Online mandate management Translation and Enrichment Translation of domestic into SEPA transactions Enrichment to BIC and IBAN Enrichment with mandate data Flexible remittances generation Transactions management Translation & Refunding and R-transactions Enrichment Flexible pricing Reporting and billing Legacy to SEPA XML file format conversion SEPA compliant transactions management Interfaces E-Mandate routing and management RBS SEPA Accelerator XML testing, validation, simulation XML Validation Mandate creation and management BBAN to BIC/IBAN conversion SEPA Manadate Management Conversion BIC/IBAN Pre-notification services Direct debit creation Paper mandate management Master Data Update Mass enrichment to BIC and IBAN Mass enrichment with mandate data XML Validator Online client self service for testing, validation and simulation of SEPA ISO XML CGI format Source: RBS 59 RBS SEPA Accelerator

61 Saving time and costs There are three specific migration obstacles that the RBS SEPA Accelerator helps you to overcome: the need to adopt the new XML standard; the requirement to change existing BBAN details to BIC and IBAN; and the need to apply new mandate management processes. (All three areas were covered extensively in Chapter 2.) In each case, the RBS SEPA Accelerator provides a quick, simple and cost-effective answer, saving you time and resources while reducing the risks to your day-to-day business. RBS SEPA Accelerator converts legacy formats to XML, for example, so you won t have to update your current systems. It also validates and electronically converts existing domestic bank account numbers to the SEPA-required format, IBAN; and by flagging incorrect data it will help you reduce errors and minimise rejection costs. Managed file formats RBS SEPA Accelerator can accept existing transactional formats and convert them into the SEPA XML PAIN format. Domestic file formats: Belgium, France, Germany and The Netherlands. International file formats: SAP, EDIFACT and Oracle. Our Accelerator also converts legacy mandates into SDD-compliant mandates while managing their full lifecycle, as required by the SEPA rules. Both SDD Core and B2B mandates, also discussed in Chapter 2, are supported. The RBS SEPA Accelerator is a truly comprehensive, end-to-end solution built on RBS s many years as a provider of international cash management products and services; and it offers you a speedy, streamlined route to compliance. Importantly, for existing clients, the RBS SEPA Accelerator integrates seamlessly with current RBS electronic banking channels; and we provide high-quality advice and support throughout the transition process for any company deciding to take the journey to SEPA with us. In this Handbook, we have outlined the many strategic business advantages you can gain through the move to SEPA, and our experts can discuss these in detail with you. In many cases, our SEPA proposition will be an important stepping stone towards further e-commerce innovations, described at the end of Chapter I, which could provide the financial foundations for your future. 60 RBS SEPA Accelerator

62 Take control A fully-integrated European payment landscape the largest payments initiative ever undertaken within Europe has been on the cards for some time now, and SEPA Credit Transfer and SEPA Direct Debit have been in place for several years. However, it is only now with a deadline on the horizon that many businesses are giving SEPA their full attention. Our advice is to take stock of where you are, and run a SEPA scan with the help of our experts. Your RBS relationship manager, and the RBS SEPA Accelerator if needed will make sure you are firmly in the driving seat during such an important time in the history of European finance. 61 RBS SEPA Accelerator

63 Contact your local RBS representative for more information or visit No representation, warranty, or assurance of any kind, express or implied, is made as to the accuracy or completeness of the information contained in this document and no member of the RBS Group accepts any obligation to any recipient to update or correct any information contained herein. The information in this document is published for information purposes only and does not constitute an analysis of all potentially material issues. Views expressed herein are not intended to be and should not be viewed as advice or as a recommendation. You should take independent advice in respect of issues that are of concern to you. This document does not constitute an offer to buy or sell any investment, and nor does it constitute an offer to provide any products or services that is capable of acceptance to form a contract. The products and services described in this document may be provided by any member of the RBS Group, subject to signing appropriate contractual documentation. No member of RBS shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including lost profits arising in any way from the information contained in this communication. The Royal Bank of Scotland plc. Registered in Scotland No Registered Office: 36 St Andrew Square, Edinburgh EH2 2YB. The Royal Bank of Scotland plc is Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. The Royal Bank of Scotland N.V is authorised by De Nederlandsche Bank (DNB) and is regulated by the Autoriteit Financiele Markten (AFM) for the conduct of business in the Netherlands. The Royal Bank of Scotland plc is in certain jurisdictions an authorised agent of The Royal Bank of Scotland N.V. and The Royal Bank of Scotland N.V. is in certain jurisdictions an authorised agent of The Royal Bank of Scotland plc. Copyright 2013 RBS. All rights reserved. This communication is for the use of intended recipients only and the contents may not be reproduced, redistributed, or copied in whole or in part for any purpose without RBS s prior express consent rbs.com/mib