1. PROFESSIONALISM – TEAM SPIRIT - INNOVATION 1 Cross-border eInvoicing in eRegion – Banks Perspective Martin Mihelčič mailto:martin.mihelcic@skb.si Merkur Day 2004

2. PROFESSIONALISM – TEAM SPIRIT - INNOVATION 2 AGENDA Role of the banks in Electronic Invoice Presentment and Payment (EIPP) process Barriers to moving forward – current bank’s priorities in EU SEPA – Single European Payments Area How to promote e-invoicing

3. PROFESSIONALISM – TEAM SPIRIT - INNOVATION 3 Role of the banks in Electronic Invoice Presentment and Payment (EIPP) process Bank is seen in two different roles: 1)as an active entity in B2B or B2C schemes where should be interested to decrease its internal costs and improve cost/income ratio, 2)as a player in the supply chain where is making profit by offering the payment services to the customer. Banks are in situation that they have to invest in developing e- solutions and, on the other hand, they lose the profit from offering the traditional (paper based) payment services.

4. PROFESSIONALISM – TEAM SPIRIT - INNOVATION 4 Barriers to moving forward – current bank’s priorities in EU ProjectsEU banksSLO banks Deadlines EURO currency  2007 Basel II  2007 EMV  2005 SEPA  2010 Banks have to answer today to the different request from the environment (central banks regulations, EU regulations,...) which sounds more important than lowering the costs by implementing the e-Invoicing solutions.

5. PROFESSIONALISM – TEAM SPIRIT - INNOVATION 5 EMV Chip Implementation EMV stands for Europay, MasterCard and VISA chip standard. It means replacement of all magnetic stripe cards with chip ones. To achieve this goal banks should: 1) upgrade all acquiring channels (POS terminals, ATM’s), 2) invest to the processor upgrade, 3) issue chip cards. Majority of banks are in situation that they have to invest a lot of money without clear business case. In UK the main driver was decrease of fraud. e-Invoicing There is one possible benefit from this project if bank is launching the multi-functional chip card with digital certificate on it. In that case a lot of individuals will get a chip card – of course they still need a reader and SW support.

6. PROFESSIONALISM – TEAM SPIRIT - INNOVATION 6 BASEL II. Framework The International Convergence of Capital Measurement and Capital Standards: a Revised Framework, or the “Basel II Framework,” offers a new set of standards for establishing minimum capital requirements for banking organisations. It was prepared by the Basel Committee on Banking Supervision, a group of central banks and bank supervisory authorities in the G10 countries, which developed the first standard in 1988. The technical challenge for both banks and supervisors has been to determine how much capital is necessary to serve as a sufficient buffer against unexpected losses. If capital levels are too low, banks may be unable to absorb high levels of losses.

7. PROFESSIONALISM – TEAM SPIRIT - INNOVATION 7 SEPA – Single European Payments Area SEPA final goals are quite in line with e-Invoice required conditions. There are a lot of actions which should decrease the payment costs, make payments more faster, standardize new payment channels solutions, etc. STPStraight-Through Processing IBANInternational Bank Account Number BICBank Identifier Code IPIInternational Payment Instruction ePIelectronic Payment Initiator MT 103+SWIFT message format PE-ACHpan-European Automated Clearing House

8. PROFESSIONALISM – TEAM SPIRIT - INNOVATION 8 ePI – electronic Payment Initiator

9. PROFESSIONALISM – TEAM SPIRIT - INNOVATION 9 ePI – electronic Payment Initiator is connecting modern XML world with SWIFT - - - -- -- - -- -

10. PROFESSIONALISM – TEAM SPIRIT - INNOVATION 10 How to promote e-invoicing? Banks SHOULD be very interested to implement the e-invoicing internally because they produce a lot of paper documentation in bank to bank or bank to customer process. BIG players (corporates) are very important because they can push their suppliers to fulfil certain standards in business communication.