EPC Roadmap One year on, how are we doing? EPC Strategy Off-site, Durbuy, 2 October 2005 Gerard Hartsink, EPC Chair PRES EPC042/05

Governing Council ECB (Eurosystem) Third progress report, Dec “A SEPA for the citizens is recommended to be achieved in January 2008 by offering citizens and commercial enterprises the chance to use pan-European instruments also for national payments” “The national banking communities in the Euro area are expected to translate the pan- European SEPA objectives into national migration plans in 2005” End game for Euro area (EU12): –Credit transfer optional for euro area from 2008 at the latest –Pri-euro optional for euro area from 2008 at the latest –Direct debit optional for euro area from 2008 at the latest –Cards issued in euro area accepted in any ATM or POS in euro area well in advance of 2010 Phasing out of national instruments by the end of 2010 at the latest EPC Strategy Off-site - Durbuy, 2 October

A new legal framework for payments in the internal market (EU25), Dec “The EU needs to create a single market for payments in which everybody will be able to make any payment as easily, safely, efficiently and inexpensively as within national borders, so that there are no obstacles to the free exchange of goods and services in the internal market” Characteristics of an integrated payment market: –A level playing field and enhanced competition between payment service providers –A consistent level of consumer protection and improved transparency –A potential for improved efficiency “ A consistent legal framework forms the basis for consolidation and modernisation of the payment infrastructure, better integration of payment systems and the development of pan-European applications” Mr. Charlie McCreevy: “If necessary, the Commission will make some agreed industry standards mandatory” (10 March 2005) Potential cost savings “Euro 50 – 100 billion” (EC incentive paper, 3 May 2005) COMMISSION OF THE EUROPEAN COMMUNITIES EPC Strategy Off-site - Durbuy, 2 October

Declaration by EPC following Roadmap approval on March 2005 We will deliver the two new Pan-Euro Payment Schemes for electronic credit transfer and for direct debits. We will also design a Cards Framework to define a single market for cards. The scheme rulebooks and the cards framework definition will be delivered by end 2005, and the services will be operational by January We know from feedback from our community in the eurozone that by the beginning of 2008 the vast majority of banks will offer these new Pan-Euro services to their customers. We are also convinced that a critical mass of transactions will naturally migrate to these payment instruments by 2010 such that SEPA will be irreversible through the operation of market forces and network effects. SEPA will be delivered by the banking industry in close conjunction with all stakeholder communities (consumers, SMEs, merchants, corporates and government bodies) and supportive public authorities. The community of European banks is strongly committed to this ambitious programme of action, based on self-regulation and a full recognition of the role of market forces and competition. EPC Strategy Off-site - Durbuy, 2 October

SEPA Timeline Design & preparation Implementation & deployment Co-existence & gradual migration Programme activities 2 Milestones 1.SEPA instruments available to citizens 2.Critical mass migrated so SEPA is irreversible 1 design specification implementation pilots national migration early adopters programme management, planning, communication, monitoring launch EPC Strategy Off-site - Durbuy, 2 October

Progress against deliverables ECB (as in progress report 2004)EPC Progress Credit Transfer- Credeuro Resolution mandatory from Jan 2006 (approved in June 2005) - Rulebook V1.0 – approved in Sept Rulebook V2.0 – to be approved in Dec 2005 Direct Debit- Rulebook V1.0 – approved in Sept Rulebook V2.0 – to be approved in Dec 2005 Cards- SEPA Cards Framework – approved in Sept 2005 Priority Payments- Value added service - EBA priority payment service under development E & m payments - Propositions to be developed by December 2005 Cash- SEPA Cash Framework under development for December 2005 and final approval in March 2006 EPC Strategy Off-site - Durbuy, 2 October

Challenges ahead for direct debits and credit transfers For two new SEPA payment schemes National Consultation Process (Sept – Nov 2005) Legal review & documentation incl. Schemes Adherence Agreements Interchange arrangement for direct debits Scheme Management model Some principles for clearing & settlement (PE-ACH model) to be refreshed Managing SEPA user expectations Implementation by banks (and their service providers) and available for their customers at the latest in January 2008 EPC Strategy Off-site - Durbuy, 2 October

Challenges for other payment instruments Next steps to industry compliance with SEPA Cards Framework Next steps for the SEPA Cash Framework Next steps for standards for mobile payments Next steps for standards for e-payments (web retailers) EPC Strategy Off-site - Durbuy, 2 October

Agenda EPC Strategy Off-site For implementation, adoption and migration Challenges EPC Roll-out Committee (from Sept 2005) Programme Management models Building blocks implementation plans 2008 of SEPA schemes and SCF Building blocks national migration plans 2008 – 201X Communication plan Next steps and implementation plans for complementary deliverables EPC workplan 2006 Dialogue with: ECB: Mrs. Gertrude Tumpel Gugerell EC: Mr. David Deacon EPC Strategy Off-site - Durbuy, 2 October

Opinions on achievements and challenges? Lessons learned so far? Challenges of implementation of January 2008 commitment? Communication challenges? Challenges of migration from 2008 – 201X? EPC Strategy Off-site - Durbuy, 2 October