SEPA Update. 13 November 2007 Harry Leinonen

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Irene Morton
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1 FACT Autumn meeting SEPA Update 13 November 2007 Harry Leinonen The views expressed are those of the author and do not necessarily reflect the views of the Bank of Finland. 1

2 SEPA is a process towards common rules and conventions for payments - faster delivery - lower costs - more automation - good security Payments from Helsinki to Rome as easily and efficiently as from Helsinki to Turku 2

automation - good security Payments from Helsinki to

3 Harmonisation of heterogeneous habits umber BE DK DE GR ES FR IE IT LU NL AT PT FI SE UK Credit transfers Direct debits Card payments Cheques Source: ECB, Blue Book, December

4 Number of electronic payments per capita, Harmonisation of different development levels FI 200 AT NL UK DK 150 DE BE 100 SE PT 50 ES IE IT GR Automation level, %, Sources: European Central Bank and Bank of Finland. 4

SE PT 50 ES IE IT GR 0 0 10 20 30 40 50 60 70 80 90 100 Automation

5 Development of the EU payment regulation SEPA is a long political process for changing the EU payment habits EU Treaty 1987 The common market 1992 Credit Transfer Directive 1997 Euro account currency 1999 Banks SEPA White Paper 2001 Payment Service Directive 2007 Citizens SEPA 2008 esepa 201? 1990 EMU 1st phase 1995 Finnish EU membership 1998 Settlement Finality Directive 2001 Payment regulation (2560/2001) 2002 Euro cash EPC established 2006 EU Comm. Incentive and Competition reports Payment systems and habits change slowly 2010 Full fledge SEPA 5

6 Source: EPC web-page 6

7 The incentive problems Banks dilemma Increased competition with - transparent pricing - rapid delivery - common standards and - open infrastructures Customers dilemma Changes are costly and require therefore immediate benefits minisepa SEPA or esepa? Authorities dilemma Regulation risks - too heavy regulation - slowing down developments - promoting ineffcient solutions - the slow process of regulation minisepa is without benefits, only modern esepa ensures suffcient customer interest 7

8 Basic deliveries SEPA Credit Transfer rule book + ISO standard from 28 Jan 2008 onwards SEPA Direct debit Creditor based mandate flow, waiting for Directive implementation SEPA Cards Framework Visa and Mastercard as before + co-branding SEPA Governance model Continuous development model 8

waiting for Directive implementation SEPA Cards Framework Visa and

9 Credit transfers: open issues Will IBAN be enough, or is BIC also required Domestic account number (BBAN) to IBAN conversion support Support for structured reference/reconciling code Implementation guides for customer XML-messages Standards for statement of accounts, file transfer framework, customer identification and security Standardisation of optional data fields (eg original payment day, original payer/payee, payment reason) Basic model official starting date 28 Jan

Standards for statement of accounts, file transfer framework, customer identification and security Standardisation of

10 Direct debit: open issues Final definitions of alternative models Starting date Reachability e-mandate description and decisions Will probably wait until the implementation of the Payment Service Directive 10

e-mandate description and decisions Will probably

11 Card payments: open issues The future of national debit cards The coming of an European debit card scheme Common card, terminal and message standards for card transactions Interchange fee rules (decisions of EU Competition) Surcharging rules (decisions of EU Competition) Everybody waits for EU Competition decisions (probably some already by end of 2007) 11

Interchange fee rules (decisions of EU Competition) Surcharging rules (decisions of EU

12 Implementation plans Finnish General link-page Current national implementation plans vary a lot, minimum info requirements will improve situation 12

eu Current national implementation plans

13 Future developments: esepa e-invoicing EU Commission support EBA (Euro Banking Association) project e-payments (real-time internet payments EPC working group m-payments EPC working group Customer e-identification increased attention Growing interest for esepa, however, general implementation is far away, but optional possibilities could be introduced earlier 13

EPC working group Customer e-identification increased attention Growing interest for

14 Authorities activities Payment service directive implementation Regulation 2560 assessment, balance-of-payment reporting harmonisation e-invoicing project Next steps objectives revisited Card competition decisions Authority push is a slow road, but seems to be the most efficient 14

e-invoicing project Next steps objectives revisited Card competition

15 SEPA-links: Bank of Finland Bulletin No 2/2006, Towards the Single Euro Payments Area ECB 5th progress report on SEPA ECB SEPA link-page to national implementation plans Finnish national SEPA implementation plan EU commission communication and consulation on SEPA Payment System Directive European Payments Coucil (EPC) GT-news (Global Treasury) verkkolehti 15

eu Finnish national SEPA implementation plan http://www.fkl.fi EU commission communication and consulation on SEPA http://europa.eu.int/comm/internal_market/payments/docs/sepa/sepa-2006_02_13.

16 esepa is future Thank you, Q&A 16

Marcus Evans 6th Annual Liquidity Management Conference 2007 The Impact of SEPA on Cash Management Products and Services

Marcus Evans 6th Annual Liquidity Management Conference 2007 The Impact of SEPA on Cash Management Products and Services The views expressed in this presentation are those of the author and do not necessarily