0. Client logo positioning
12 April 2017
An Overview of SEPA
October 2010
Client logo positioning

1. Do you really know what SEPA is?
Top-10 in Google.com:
Single Euro Payments Area
Scottish Environment Protection Agency
Solar Electric Power Association
State Environmental Policy Act
Science Education Partnership Award
SouthEastern Psychological Association
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2. SEPA Background
SEPA Credit Transfer
SEPA Direct Debit
SEPA Benefits
SEPA Status and Outlook

3. The European Payments Landscape pre SEPA (1)
Domestic Credit-Transfer and Direct-Debit schemes vary considerably throughout Europe
Example Direct Debit:
Different mandates
Different submission dates
Different cut-off times
Different return timeframes (finality of payment) even post-PSD
Interbank rules vs. local law
Different file formats
No cross-border direct debits
Potentially forced to use different banks in different countries
Cumbersome account reconciliation efforts
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4. The European Payments Landscape pre SEPA (2)
Domestic Credit-Transfer and Direct-Debit schemes vary considerably throughout Europe
Example Direct Debit:
Belgium (DOM’80)
No due date
Registration of creditor by DB with CEC/UVC, which assigns a unique creditor ID
Debtor bank needs the mandate (mandate check)
DOM’80 file format
Spain (CSB19)
No registration of the creditor with central bank
Debtor bank does not need the mandate (no mandate check)
CSB19 file format
Italy (RID)
Due date
Registration of creditor with Central Bank (SIA)
Debtor bank needs the mandate (mandate check)
CBI RID file format
Portugal (EDR)
No due date
Creditor ID has to be registered with SIBS
Debtor bank does not need the mandate (no mandate check)
EDR file format
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5. Single Euro Payments Area (SEPA): A political Project
1999: Introduction of the Euro
2000: EC Financial Services Action Plan
Also known as “Lisbon Agenda”
Comprising 42 measures to create a Single Financial Services Market
2002: Launch of SEPA initiative by the banking sector
European Payments Council (EPC)
2008: First step achieved: launch of the SEPA credit transfer
2009: Second step achieved: launch of the SEPA direct debit
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6. Scope Instruments and schemes Market Infrastructure
Credit Transfers (since 28 January 2008)
Direct Debits (since 2 November 2009)
Debit-Card transactions
Phase out of national payment schemes (by 2012/13?)
Market Infrastructure
From various local systems to pan-European clearing houses (PE-ACH’s)
Legal Framework (European Commission)
European Payment Services Directive
Transposition into national law completed in most countries
EU Regulation 924/2009 (formerly 2560/2001)
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7. Geographic Scope EU – Euro Countries (16) EU – Non-Euro Countries (11)
Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, Netherlands, Portugal, Slovenia, Slovakia and Spain
EU – Non-Euro Countries (11)
Bulgaria, Czech Republic, Denmark, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Sweden, United Kingdom
The European Economic Area
Iceland, Liechtenstein, Norway
and additionally
Switzerland, Monaco, Mayotte and St.Pierre-et-Miquelon
…only € Transactions!
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8. SEPA Background
SEPA Credit Transfer
SEPA Direct Debit
SEPA Benefits
SEPA Status and Outlook

9. SEPA Credit Transfer Characteristics
Full amount credited to beneficiary – no deductions
Maximum clearing cycle from transaction initiation to credit on the beneficiary account of:
Currently max. 2 days
Max. 1 day from 2012
Central-bank reporting will continue
Threshold increased to EUR 50k from January 2010 (EU Reg. 924)
Germany remains at EUR12,500
Not covered by SEPA
Foreign-currency Payments (EU also)
Urgent Payments
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10. SEPA Credit Transfer New Data Elements
IBAN and BIC to replace account number and national bank code
Payment Detail field length: 140 characters
Optional fields for:
Originator reference (end-to-end reference)
Purpose Codes
The orderer bank must pass them on to the beneficiary bank
The beneficiary bank can optionally display them to the beneficiary
Category Purpose Codes
The orderer and/or the beneficiary bank can optionally offer special processing
E.g. bulk vs. individual booking
For on-behalf-of payments
Originator Reference Party
Beneficiary Reference Party
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11. SEPA Background
SEPA Credit Transfer
SEPA Direct Debit
SEPA Benefits
SEPA Status and Outlook

12. SEPA Direct Debit Characteristics
Direct debit scheme based on a signed mandate
Content is standardised
Language of debtor country
Creditor captures and maintains mandate data
Relevant mandate data are part of every SDD (creditor mandate flow)
Harmonized collection and exception timelines and rules (so-called R-transactions)
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13. SEPA Direct Debit New Data Elements (1)
IBAN & BIC instead of legacy account number & national bank code
Unique mandate number
To be issued by creditor
Country-specific creditor ID
Issuance to be defined per country
Example Germany: via central bank
Mandate date
Likely a fictitious date for existing mandates
Remittance Information (Payment Detail) field length: 140 characters
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14. SEPA Direct Debit New Data Elements (2)
Mark as B2B or Core SDD
Mark as first or one-off direct debit, or as recurrent direct debit
Optional creditor reference (end-to-end reference)
Optional transaction codes
Purpose Codes
The creditor bank must pass them on to the debtor bank
The debtor bank can optionally display them to the debtor
Category Purpose Codes
The creditor and/or the debtor bank can optionally offer special processing
E.g. bulk vs. individual booking
For on-behalf-of collections
Creditor Reference Party
Debtor Reference Party
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15. SEPA Direct Debit Core vs. B2B Scheme: Main Differences (1)
Usage
Core SDD: can be used with consumers and companies
B2B SDD: can be used with companies only
Status of micro-enterprises to be determined by country
A micro-enterprise is defined as an enterprise which has less than 10 employees and whose annual turnover or balance sheet is equal or less than 2 million Euro (2003/361/EC)
Return right by debtor
Core SDD: 8 weeks after debit
B2B SDD: no return right after debit
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16. SEPA Direct Debit Core vs. B2B Scheme: Main Differences (2)
Mandate check by debtor bank
Core SDD: optional
B2B SDD: mandatory
Usage considerations
Acceptance of B2B scheme by debtor/debtor bank
Implications on processes (especially if both schemes are used)
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17. SEPA Direct Debit Timelines
Core Direct Debit
B2B Direct Debit
D: Due date = debtor’s debit date = inter- bank settlement date D-14 CD: Customer pre-notification of amount & due date (unless other timeframe is agreed) D-5 BD:* Submission of first & one-off SDD D-2 BD:* Submission of subsequent SDD D+5 BD: Latest date for bank returns D+8 W: Maximum refund period for debtor for authorized transactions D+13 M: Maximum refund period for debtor for unauthorized transactions D+36 M: Mandate expires 36 months after last SDD submission
D: Due date = debtor’s debit date = inter-bank settlement date D-14 CD: Customer pre-notification of amount & due date (unless other timeframe is agreed) D-1 BD: Submission of first, one-off and subsequent SDD D+2 BD: Latest date for bank returns No refund right for debtor D+36 M: Mandate expires 36 months after last SDD submission
CD = Calendar Days
BD = Business Days
W = Weeks
M = Months
* = optional reduction to D-1 in discussion
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18. SEPA Direct Debit Mandate Sample Core Scheme
Mandate Number
Authorization of the debtor‘s bank in addition to the creditor
Creditor ID
IBAN & BIC
Additional examples in “EPC Guidelines for the Appearance of Mandates” from :
and at:
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19. SEPA Direct Debit Mandate Sample B2B Scheme
Mandate Number
Authorization of the debtor‘s bank in addition to the creditor
No refund right
Creditor ID
IBAN & BIC
Additional examples in “EPC Guidelines for the Appearance of Mandates” from :
and at:
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20. SEPA Background
SEPA Credit Transfer
SEPA Direct Debit
SEPA Benefits
SEPA Status and Outlook

21. Result: Increased Centralization
Strategic Benefits
Trends
Result: Increased Centralization
Rationalization
Reduction of banking partners/accounts
Seamless IT interfaces
Elimination of paper
SEPA
Collections
“on behalf of”
SEPA
Collection factories
via SDD
Standardization
SWIFT for corporates
XML formats
SEPA
SEPA
Shared Service Centers
Cost Reduction
SEPA
Payment factories/“on behalf of” payments
Centralization of liquidity regionally
(In-house banks)
Centralization
Centralized Treasury
SSC/Payment factories
Single ERP
Outsourcing
Centralization of liquidity by country
Local cash management by subs
Risk Control
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22. Account Consolidation
Clients need just one account in Europe for making payments and collections
Corporate
SEPA Countries
SEPA Transactions
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23. Limitation of Centralization with SEPA
Geographic /
Currencies
(only EUR)
Instruments
(e.g. checks, Ribas, letters of exchange, etc.)
SEPA
Potentially legal
and tax constraints
Corporates still need Banks able to Support them with Local Services throughout Europe
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24. SEPA Background
SEPA Credit Transfer
SEPA Direct Debit
SEPA Benefits
SEPA Status and Outlook

25. Current Status 28 January 2008: SEPA Credit Transfer (SCT) went live
More than banks have joined the scheme
Broad reachability achieved (95% of payment volume)
SCT Migration
File conversion by some banks
First clients with “real” XML files
Public sector starts to move
2 November 2009: SEPA Direct Debit (SDD) went live
Some banks have joined the scheme
Only limited reachability achieved (70% of DD volume)
SDD migration expected to start from November 2010
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26. SCT Statistics (1) % of European ACH Volumes
The SCT is not a mass payment instrument yet…
Source: ECB
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27. SCT Statistics (2) XCT vs SCT
…but is widely used for cross-border payments
* Credit transfers that are in line with the convention on credit transfers in euro of the European banking industry, i.e. retail payments of up to 50,000 euro per transaction.
Source: EBA
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28. SDD Statistics Number per Day
SDD volumes are currently negligible
There are various reason for this…
Source: EBA
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29. Dependencies for SCT/SDD Migration
End date for existing domestic schemes
Reachability of debtor banks
Validity of existing mandates
Core SDD with D-1 submission deadline
Information/education of consumers
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30. 1. End Date for existing domestic Schemes Approach of the European Commission
End-date consultation during summer 2009
Result: majority favors end dates
End 2009 / Beginning 2010: Resolutions by European Parliament and ECOFIN Council ask Commission for end dates
Working paper for regulation of end dates published in June 2010:
Regulation by EU Commission (to be published in September/October 2010)
End date for EUR credit transfers 1 year after entry into force / 2 years for EUR direct debits
4 years for both CTs and DDs for non-Euro countries
But only for EUR-transactions
End-to-end format (ISO 20022) regulation (not just inter-bank)
Niche products (<10 % of total volume of an instrument within a country) can be excluded for 3 years after entry into force
EPC rules not considered – instead definition of so-called “Essential Requirements”
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31. 2. Reachability of Debtor Banks (1)
Reachability dependent on EPC adherence process and EU Regulation 924/2009
EPC Adherence Process:
>3.000 banks have joined Core SDD scheme
Of that >2.700 also joined B2B scheme
70% reachability
“Register of Participants”:
EBA routing tables
For comparison:
>4.400 banks have joined SCT scheme
95% reachability
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32. 2. Reachability of Debtor Banks (2)
Reachability dependent on EPC adherence process and EU Regulation 924/2009
Regulation 924:
Mandatory reachability for Core SDD for all banks in the Euro-Zone by November 2010
November 2014 for non-Euro-Zone EEA countries
Optional reachability for B2B SDD remains
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33. 3. Validity of existing Mandates
Continued legal validity for Core SDD ensured for most countries
No solution found yet for Germany
Currently, need to obtain new mandates
Due to recent developments in Germany, a solution is expected
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34. 4. Core SDD with shortened Submission Deadline
Of interest for certain countries
D-5/D-2 can potentially have negative effects, e.g:
Delayed liquidity
Increased risk
More complicated processes
D-5/D-2 does not make sense for countries where no mandate check occurs
Status: Under discussion as an AOS in e.g. Germany
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35. Expected Migration Scenario
Currently:
Slow SCT migration
Voluntary SDD adherence process for banks
Until November 2010:
SDD pilots
Mandatory reachability for Core SDD of all banks in the Euro-zone
From November 2010:
Slow SDD migration
201?:
End date for existing domestic instruments
Mass migration to SCT and SDD
Corporate Preparation
Analysis
Budgeting
Planning
Implementation
End of Project
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