Introduction This document provides an overview of all the country specific information you need to successfully implement your migration to SEPA in Italy. Intending to provide a global picture of the impact of SEPA on your organization, it will help you understand all the elements you need to take into account in order to migrate your payment activities. The main market specificity of Italy lies in its current interbank system called AEA (Allineamento Elettronico Archivi, meaning Electronic Database Alignment). This system supports many interbank services related to all payment means. With the migration to SEPA, this system will be replaced by its successor SEDA (SEPA Electronic Database Alignment), which will continue playing the same role but for SEPA compliant products. REGULATORY UPDATE: ADDITIONAL TRANSITION PERIOD The European authorities agreed on allowing banks and other payment providers to process payments that differ from the SEPA format for an extra six months (amending EU Regulation N 260/2012). As a consequence, all parties (e.g. corporates, SMEs and Public Administrations) may continue to send payments and collections through non-xml formats until 1 st of August 2014. Each Member State has taken a position towards the application of this proposal. In Italy, legacy formats (such as BONI PC/PE, RID Ordinari/Veloci) are accepted until 1 st August 2014. 1
SEPA Credit Transfers (SCT) Overview of the domestic formats Today Italy is supporting two credit transfer formats, additionally to SCT : the BONI PC and the BONI PE. If you are initiating credit transfers from Italian channels, identify which format you use currently. For each format, use the table below to understand until when you can use them according to the regulation. This is key information to take into account in your migration plan. Therefore, if you are using a waived format or a format supporting a niche product, the migration deadline for your credit transfer system is 1 February 2016. Obviously, you can start migrating now. Description Validity BONI PC Domestic format for domestic credit transfers and cheques Waived until the 1 st February 2016 BONI PE Domestic format for international credit transfers Waived until the 1 st February 2016 Comparison of domestic and SEPA transfers properties It is important for you to understand the impact of switching from one scheme to another. In addition to using a new format, migrating to SEPA impacts your operational team and your beneficiaries. While choosing your migration approach, make sure you understand all the related impacts using the comparison table below. BONI PC BONI PE PAIN.001 (SCT) File Format Plain text Plain text XML Does the local format allow SCT payments? Yes: the accounts are mentioned in IBAN format so the format is compatible with SEPA Yes: the accounts can be mentioned in IBAN format so the format is compatible with SEPA Book date / Value date Debit: D Credit: Settlement date D: Execution date set in the credit transfer Implementing the PAIN.001 Debit: D Credit: Debit: D Credit: PAIN.001 is the XML standard used for communications between the debtor/initiator and their bank. In addition to considering the format provided by the EPC, two specific points must be taken into account: Choosing the correct version PAIN.001 currently exists in 3 versions. A company starting its migration today should implement the last version PAIN.001.001.03 as indicated in the Rulebook 6 (downloadable from the EPC website). 2
SEPA Direct Debits (SDD) Overview of the domestic Formats Italy is currently supporting several domestic direct debit products. Rid Ordinari and RID veloci are within the scope of SEPA and must be migrated to SDD. On the other side, RID for financial transactions and fixed amount RID will be considered as niche product, and will remain valid until 1 st February 2016. A few other means of payment are outside the SEPA scope: RiBa, MAV, RAV and Bollettino Bancario. Concerning RID direct debits, banks currently use a specific process supported by the AEA (Electronic Database Alignment) which ensures a validation of new mandates by the debtor. The service can be initiated either by the creditor or the debtor: - Creditors inform their bank of the new mandate, which informs the debtor s bank via AEA. From then, the debtor s bank considers the mandate active and accepts the following collections. - Debtors inform their bank of the new mandate via their banking channel or directly via their branch. In such case, the debtor s bank directly informs the creditor of the readiness of the mandate. The service provides the debtor with protection from of any fraudulent collection and drastically reduces the amount of rejections. It will remain active till the 1 st February 2014 for RID ordinari and RID veloci, while for financial transactions rid and fixed amount rid it will remain active till the 1 st February 2016. Meanwhile, the Italian banking association decided to set in place the successor of AEA dedicated to SEPA transactions: SEDA (SEPA Electronic Database Alignment). SEDA will be usable by both Italian and non-italian creditors, if provided by their Bank. SEDA reachability will be mandatory for the debtor bank not before the 3 rd quarter of 2013 (SEDA is not mandatory for the creditor s bank). Regarding SEPA, the RID format has been declared as waived for the section Customer-to-bank. It means that the domestic format can remain in use until 1st February 2016. But creditors will need to enrich the existing format with the SEPA mandatory information, such as Sequence Type, date of signature and IBAN of the debtors. RID mandates will no longer be in use as of February 2014. To convert a RID mandate into a SDD mandate, creditors must send an SDD collection associated to the RID mandate. In the transition period from September 2013 to February 2014, creditors will be allowed to send both RID and SDD mandates (an update to a RID mandate can also be provided to migrate to SDD mandates). Data required to migrate RID into SDD will be added to the RID format (see also paragraph New mandatory mandate information in SDD collections at page 6). 3
If you do use products that are not within the SEPA scope, you may want to look into how SDD could replace such products, especially if you plan to use SEPA as an opportunity to harmonize your means of payment. RID Ordinari RID Veloci RID for financial transactions fixed amount RID RiBa, MAV, RAV, Bollettino Bancario Description Domestic format for domestic direct debits Domestic format for B2B domestic direct debits Domestic format for financial transactions Domestic format for domestic direct with pre-determinate fixed amount Other means of payment Validity Waived until the 1 st February 2016 Waived until the 1 st February 2016 Niche product The product is maintained as today until the 1 st of February 2016 Niche product The product is maintained as today until the 1 st of February 2016 Not in scope of SEPA 4
Comparison of domestic and SEPA direct debits Regarding direct debits, it is particularly important to understand the consequences of switching from one scheme to another. In addition to using a new format, migrating to SEPA also impacts your operational team, and above all your customers. This is why, while designing your migration approach, you must make sure you understand all the related impacts using the comparison table below. RID SDD Core SDD B2B Format Plain Text XML XML Does the local format allow SDD collections? No, local format does not contain all necessary data to allow SDD. Cfr New mandatory mandate information in SDD collections Eligible RID Ordinario: All All Business only* debtor Settlement Cycle (D = payment due date) Mandate Archiving Refund right RID Veloce: Business only* D-8 Rid Ordinario D-2 Rid Veloce Mandate held by the AEA. Paper mandate could be held by the creditor or by the debtor s bank Conditional refund right for Consumers within 8 weeks after the date of debit for an authorized transaction***. For non-consumers, 4 types of refund right are possible: 8 weeks (only for RID Ordinario) 5 days (only for RID Ordinario) Settlement date no refund This type is always specified on the mandate. D-5 (First / D-1 (all) One-off) D-2 (Recurrent) Paper Mandate has to be held by the creditor Unconditional refund right within 8 weeks following the date of debit. 13 months for an unauthorized transaction No refund right for an authorized transaction. 13 months for an unauthorized transaction Pre- Authorization For all schemes: 13 months for an unauthorized transaction Control of mandate authorization by the debtor bank No control of mandate by the debtor bank Control of mandate authorization by the debtor bank Pre- Notification N.A. Must be sent 14 days before payment date** Must be sent 14 days before payment date** * In Italy, micro enterprises are seen as businesses and can therefore be declared debtors of B2B mandates. ** The pre-notification time can be reduced if agreed upon by both the debtor and the creditor. *** According to article 62 of the PSD. 5
New mandatory mandate information in SDD collections Generating SDD implies using certain mandatory data regarding the mandate, that were not necessary in the RID format. In addition to managing all the XML collection constraints, this means you will probably need to adapt your IT and/or operational processes in order to collect, store and send the following information: Transaction identifier: transaction identifier must be indicated for every transaction but can be automatically generated Debtor s account: the account of the debtor is not present in the RID format. Creditor s account in IBAN format: accounts of the creditor is already included in the RID format although it is not mandatory. Creditor Identifier: The creditor identifier must be indicated in every collection. Debtor s bank BIC: this information is mandatory until the 1 st February 2014 for domestic transactions and the 1 st February 2016 for cross-border transactions. If you encounter difficulties in enriching the BIC of your debtor s banks, BNP Paribas can provide a service for automatic enrichment. Unique mandate reference: can be generated as indicated by ABI: Company code SIA + type of RID mandate + the unique code of RID mandate Date of signing: The date of signing of the original mandate must be mentioned in every collection. Italian banks and Italian Customer-to-Bank consortium have already agreed to add all SDD relevant information in some empty fields already included into the RID format sent by creditors to their banks thus allowing Italian banks to easily convert RID into SDD. Implementation of the PAIN.008 (SDD Collection) Italian banks agreed to follow the EPC standard recommendations, without any specifics. Mandate Migration The Regulation N 260/2012, article 7 Validity of mandates and right to a refund, allows that existing mandates within a legacy direct debit scheme continue to be used within SEPA. Migrating a mandate means that you already have a domestic mandate authorizing you to debit the account of one of your customer and that you will continue using the same mandate, only with SEPA compliant collections. A mandate is considered as migrated when its first related collection in SEPA format has been successfully performed. One of the benefits of the migration is that you can continue to debit your customers with no need for them to re-sign a SEPA mandate. To migrate your mandates, you should consider the two main following points: Schemes allowed for mandate continuity RID can be migrated to SDD without signing a new mandate. Note that in Italy, micro enterprises are seen as fully-fledged businesses and can therefore be declared debtors of B2B mandates. 6
Migration rules The first SDD collection sent to convert a RID mandate can be valued with First Recurrent or Last. The creditor can choose to migrate a mandate to Core or B2B without asking the debtor to resign a new mandate but informing the debtor at least 30 days before the migration date: Consumers: migration to Core only Non-consumers: migration to Core or B2B, depending on the agreement between Creditor and Debtor. To migrate mandates, a creditor must generate the Unique Mandate Reference as indicated by ABI: Company code SIA + type of RID mandate + the unique code of RID mandate SIA Code used by the Creditor to collect RID. SEPA Creditor Identifier (CI) In order to use SEPA direct debit, the first administrative step you must take is getting a SEPA Creditor Identifier. This number will identify your company wherever you will be collecting within the SEPA zone. Note that you can request one SEPA CI for each of your business activities. How to get a Creditor Identifier? Contact your BNP Paribas point of contact to get a SEPA Creditor Identifier. The bank will ensure its correct calculation according to the Italian standard. CI format The Italian format is the following: IT97ZZZA1B2C3D4E5F6G7H8 The Italian CI has a length of 23 characters in total. The fiscal code (codice fiscale) and VAT number (Partita IVA) will be used as the national part of the Creditor Identifier. The fiscal code is 16 digits long, while VAT number and temporary fiscal code are both 11 digits long (in this case a 5 zero padding on the left is used). The Creditor Identifier for Italy will be: Characters 1-2 : IT, the ISO country code. Characters 3-4: standard SEPA check digit. Characters 5-7: the Creditor Business Code, selected by the creditor to fulfill his business needs (if not applicable: ZZZ). Characters 8-23: national fiscal code, assigned by the Italian Tax Agency. When the code is a VAT number or a temporary fiscal code (which are 11 characters long), the positions 8-13 are filled with 5 zeros and 14-23 with the actual code. Mandate information Types of mandate Italian companies have the choice between two types of mandates: paper and electronic. Mandate Forms The mandate for SDD will be integrated with info required for SEDA if subscriber is different from debtor (name of the subscriber and tax code). 7
How to build up the IBAN In Italy, the IBAN is composed of 27 characters with the following structure: The first two characters identify the country of the account and are therefore always: IT. The next three characters correspond to the standard IBAN check digit plus CIN. Then the structure is the following: 5 crt: ABI code 5 crt: CAB code 12 crt : account number Example: IT 21G 01005 21500 000000000123 8