UN/CEFACT – Geneva, 16 February 2012 11 Roadmap for the Single Euro Payments Area Public –...

UN/CEFACT – Geneva, 16 February 2012 11

www.europeanpaymentscouncil.eu

Roadmap for the Single Euro Payments Area

Public – private sector cooperation

Gerard HartsinkChair - European Payments Council

UN/CEFACTGeneva, 16 February 2012


Agenda

Expectations ECB, EC and European Parliament

EPC commitment and deliverables

EPC cooperation model and communication

Conclusions


• Vision: “An euro area in which all payments are domestic, where the current differentiation between national and cross-border payments no longer exists”

• Expected deliverables for the Euro area (EU17):• SEPA credit transfer and SEPA direct debit • Additional European Card Scheme• E-Payments and m-Payments

SEPA vision ECB and EC

• Objectives Payment Services Directive

• The EU needs to create a single market for payments

• Benefits for users and providers• Enhanced competition by opening markets• Encouraging innovation• Increased market transparency • Ensuring a level playing field

* 7th Progress Report 2010 and ** PSD 2008

**

*


European Parliament Resolutions 12 March 2009 and 10 March 2010

▪ “Emphasises its continued support for the creation of SEPA, which is subject to effective competition and in which there is no distinction between cross-border and national payments in euro;

▪ Calls on the Commission to set a clear, appropriate and binding end-date, which should be no later than 31 December 2012, for migrating to SEPA instruments, after which all payments in euro must be made using the SEPA standards;


ECOFIN Council2 December 2009

1 REITERATES the importance of and its support for the full realisation of the Single Euro PaymentsArea (SEPA), which aims at achieving an integrated and competitive internal market for euro payments for the benefit of citizens and businesses and in this regard WELCOMES the Communication from the Commission: "Completing SEPA: a Roadmap for 2009-2012" .......

2 WELCOMES the substantial progress achieved by industry with the successful launch of the SEPA Direct Debit (SDD) following the earlier launch of the SEPA Credit Transfer (SCT);

5 CALLS upon industry to complete its work in relation to the outstanding technical standards required in the cards market by mid 2010, …….


SEPA Roadmap*

• 1. Foster migration

• 2. Increase SEPA awareness and promote SEPA products

• 3. Ensure a sound legal environment and strengthen SEPA compliance

• 4. Promote innovation

• 5. Ensure necessary standardisation, interoperability and security

• 6. Clarify and improve SEPA governance: SEPA Council

1. enhance stakeholder participation and consultation2. increase transparency3. enlarge membership to payment institutions

* European Commission, 10 September 2009 and ECOFIN 2 December 2009

COMMISSION OF THE EUROPEAN COMMUNITIES


SEPA Regulation (1)

•The SEPA Regulation: In December 2010 the European Commission tabled proposal for ‘Regulation Establishing Technical Requirements for Credit Transfers and Direct Debits in Euros’

•In February 2012 the European Parliament adopted the SEPA Regulation, which will be endorsed by the Council of the European Union in March 2012 (publication in the Official Journal of the EU)

•Deadline for migration to SEPA

•1 February 2014 for euro area countries•31 October 2016 for non euro area countries•February 2016 niche products in euro countries


SEPA End-Date Regulation (2)SEPA End-Date Regulation (2)

Points in SEPA Regulation Required review and actions

•IBAN and BIC ● Review of Rulebooks and Implementation Guidelines required

•SDD mandatory mandate checking ● Obligation for Scheme Participantsobligations ● Optional feature in SDD Rulebook to be

reviewed

•Mandatory use of ISO 20022 XML ● B2C Implementation Guidelines are standards for Payment Service Users recommended and not mandatory

•Empowerment European Commission ● Impact on Rulebooks (master agreement) technical requirement through delegated act ● Impact on Implementation Guidelines with

ISO Standards● Impact on ISO Standards

•Review of SEPA governance ● EPC governance is not the same as SEPA governance

● EPC proposal to SEPA Council


Green Paper 11 December 2011

“Towards an integrated European market for card, internet and mobile payments”

• Objective: “……… to validate or contribute to the commissio’n’s analysis and help the right way to improve market integration”

• Drivers: - more competition

- more choice and transparency for consumers

- more innovation

- more payment security and customer trust

• Follow up: “proposal, if applicable, will be adopted by Q4, 2012 or Q1, 2013”


Agenda




Conclusions


Competitive and cooperative space in SEPA (two side market)

Bank B

Competitive Space

Cooperative Space Competitive Space

Bank A

Credit Transfer

Direct Debit

Card POS Transaction

Card ATM Transaction

Cooperative space for Business Rules

Cooperative space for Standards

Public Administrations

Corporates

SME’s

Consumers

Public Administrations

Corporates

SME’s

Consumers

MerchantsMerchants

Priority Payments


SEPA Credit Transfer & SEPA Direct Debit

• Three layer structure: competition and/or cooperation

• Payment services layer to customers by banks (competition)

• Scheme layer: rules and standards for SCT and SDD (cooperation)

• Processing layer inclusive clearing and settlement (competition)

• Rulebooks and Implementation Guidelines

• Rulebook = master agreement for scheme participants

• Implementation Guidelines = MIG (Message Implementation Guideline) based on ISO 20022 and ISO Identifier Standards (BIC ISO 9362 and IBAN ISO 13616)

• Current releases : Nov 2011 (Approved releases from 17 Nov 2012)

• SCT version 5.1 ● SCT version 6.0

• SDD version 5.1 ● SDD version 6.0

• SDD B2B version 3.1 ● SDD B2B version 6.0


SEPA Credit Transfer & SEPA Direct Debit

• Scheme Management Committee (with an independent Chair) approves Scheme Participants

• SCT Implementation

• So far over 4491 SEPA Credit Transfer Scheme Participants

• So far about 20% of the euro credit transfers have been migrated to SCT

• SDD Implementation

• So far 3912 SDD core and 3384 SDD B2B Scheme Participants

• So far about 1% of the euro direct debit transfers have been migrated to SDD


Customer Stakeholder Forum

• Objective - alignment on functionalities of SCT and SDD schemes and Implementation Guidelines

- CSF is not a forum inside the EPC, but a forum of the buy-side and the supply-side for the EPC Scheme Management

• Co-chaired - Chair End User Committee

- Chair EPC

• Participants EUC - Corporates : EACT, Business Europe, FAEP, CEA

- Retailers : Eurocommerce

- SME’s : UAPME

- Consumers : BEUC

- Public Administrations : None

• EPC Scheme - Chair, Vice-chair SPS (and some members), Chair SSG, Management EPC Secretary General

• Observers - ECB and European Commission


• The ECOFIN concluded on 2 November 2009 “calls upon the industry to complete its work in relation to outstanding technical standards required in the cards market by mid 2010,….”

• The EPC has no policy or mandate to create an additional European Card Scheme as asked for by the European Public Authorities

• The EPC created the SEPA Cards Framework*

• enable European customers to use general purpose cards to make payments and cash withdrawals in euro throughout the SEPA area with the same ease and convenience than they do in their home country,

• no differences whether they use their card(s) in their home country or somewhere else within SEPA,

* SEPA Cards Framework: approved June 2006

SEPA for Cards


SEPA for Cards Framework: principles and standards

• SEPA Cards Framework (version 2.1 December 2009)

• Provides a single framework for the payment function of cards for

• Banks• Card schemes• Service providers

• Clarified in 17 Q&A’s (Published 11 June 2008)

• SEPA for Cards objective requires more standardisation (SCF 3.6.3)

• SEPA Cards Standardisation Volume: Book of Requirements

• version 6.0 approved December 2011

• volume 7 expected December 2012


Book of Requirements: standards

• BoR: requirements for card standardisation, security and certification

• Functional requirements (BoR chapters 1 - 4)

• Security requirements (BoR chapter 5)

• Certification: SEPA Cards Certification Management Body (SCCMB) (BoR chapter 6)

• Focus to adopt open global standards

• Cooperation and alignment with partners: EMV, PCI, ISO


• Objective - Combine the efforts of all stakeholders for the “SEPA for Cards” objective

• Co-chaired - Chair retailers team

Chair EPC Cards WG

• Participants - Representatives with technical expertise from the different stakeholders in the cards value chain

- Five representatives of five groups of stakeholders: ◦ banks

◦ retailers

◦ scheme owners

◦ vendors

◦ operators

• Observers: - ECB and European Commission

* Approved June 2009

Cards Stakeholders Group


Agenda




Conclusions


Governance cooperation: SEPA Council

COMMISSION OF THE EUROPEAN COMMUNITIES

Objectives:

• Promote Realisation SEPA Vision

• Monitor and support migration process

• Promote product innovation to meet the

needs of end-usersFSC: public administration

Representatives of suppliers

Representatives of buyers

Representatives of the public sector


SEPA Governance model

National Level• Communication• Migration Planning• Implementation

European Level• Promote SEPA

vision• Support migration• Promote innovation

COORDINATION CHALLENGE: STAKEHOLDERS ARE EUROPEAN AND/OR NATIONAL

SEPA CouncilSEPA Council

National SEPA National SEPA CommitteeCommittee

Consumers

Merchants

Corporates

PublicAdmins

SMEs

ECBEuropean

Commission

- SEPA - SEPA Design Design - Euro - Legal Payments Framework Policies - Oversight

EPC

- Rulebooks- Frameworks

National Customer

Associations

ConsumerAssociations

MerchantsAssociatons

CorporateAssociations

PublicAdmins

NCBNational

Government

National Banking

Associations

Buyers Public Sector Suppliers


* Alignment with other stakeholders** Decision-making bodies

*** Strategy and process body

-M CHANNEL WORKING GROUP

(MC WG)

STANDARDS SUPPORT GROUP

(SSG)

LEGAL SUPPORTGROUP(LSG)

INFORMATION SECURITY SUPPORT GROUP ( ISSG )

CASHWORKINGGROUP

CASH WG)

CARDS WORKING GROUP

(CARDS WG)

SEPA PAYMENT SCHEMESWORKING

GROUP (SPS WG)

**PLENARY SCHEMEMANAGEMENTCOMMITTEE**

CUSTOMERSTAKEHOLDER

FORUM*

PROGRAMMEMANAGEMENT

FORUM (PMF)

NOMINATIONAND

GOVERNANCECOMMITTEE

AUDITCOMMITTEE

COORDINATIONCOMMITTEE***

CA SUPERVISORY BOARD ( CASB)

CARDSSTAKEHOLDER

GROUP*

-e COMMERCEPAYMENTS

WORKING GROUP(ECP WG)

SECRETARIAT

CLEARING &SETTLEMENT

FFFFF

EPC Organigram 2011


Stakeholders involvement

Domain Buy-side

Payment Services

Processors Schemes Vendors Other Standard

bodies

Observers

SCT Scheme

SDD Scheme

Rulebooks and

Implementation

guidelines

Customer Stakeholders Forum

- BEUC

- Eurocommerce

- EACT

- UEAPME

- EIA

ISO TC68

ISO 20022

ECB

EC

CSM Forum ISO TC68

ISO 20022

ECB

Cards

Standardisation

Programme

CSG CSG CSG CSG ISO

EMV

ECB

EC

e-Payments

(Framework)

CSF*

m-Payments

Rules and

Standards

CSF* GSMA GSMA ISO

ETSI

EMV

Cash

Cassette

Standards

CSF* ESTA EURIPCA ESTA ECB

* CSF: since Q1, 2011


SEPA End-date Regulation: Recital 5

"Self-regulatory efforts of the European banking sector through the SEPA initiative have not proven sufficient to drive forward concerted migration to Union-wide schemes for credit transfers and direct debits on both the supply and demand sides. In particular, consumer and other user interests have not been taken into account in a sufficient and transparent way. The voice of all relevant stakeholders should be heard. Moreover, this self-regulatory process has not been subject to appropriate governance mechanisms, which may partly explain the slow uptake on the demand side. While the recent establishment of the SEPA Council represents a significant improvement to the governance of the SEPA project, fundamentally and formally governance still remains very much in the hands of the European Payments Council (EPC). The Commission should therefore review the governance arrangements of the whole SEPA project before the end of 2012 and where necessary make a proposal. This review should examine, inter alia, the composition of the European Payments Council (EPC), the interaction between the EPC and an overarching governance structure, such as the SEPA Council, and the role of this overarching structure."


SEPA Council

EC/ECB +

Supply (Banks / PIs) and Demand (Users)

Political Political

layerlayer

Mobile Payment²

Cards²

Cash²

E-payment²

Current EPC to be reorganised; «NewORG» to serve the banks for the cooperative

space of payment services³:

1. Forms industry position in stakeholders’ structure and SEPA Council discussions

2.Provides technical support at stakeholders’ request

Multi-Multi-stakeholder stakeholder realisation realisation

layerlayer

EUROPEAN INTERBANK LAYERScheme

Management adherence and

compliance functions for SEPA Schemes (SCT, SDD Core,

SDD B2B....). To be further discussed

Stakeholders*: structure «à la CSG1» established and managed by the SEPA

Council *Banks in SEPA are one sector in a layered, multi-

stakeholder structure

The operations of stakeholders structure

could be subcontracted to

«NewOrg» under the SEPA Council responsibility.SCT, SDD Core, SDD B2B²

Stakeholders Stakeholders positioning positioning

and organising and organising layerlayer

Oth

er s

take

hold

ers

• «Owns» the SEPA project, • decides on priorities and • arbitrates disagreements

between stakeholders

1. Inspired by the functioning of the ‘Cards Stakeholders Group”.2. Current work items (i.e. E-payments, mobile, etc.) are illustrative and may evolve in future.3. Concept of cooperative space for payment services to be clarified.

SEPA Governance – EPC Proposal


• EPC Shortcut Series:• Shortcut to SEPA• Shortcut to Who is Who in SEPA• The Most Popular Misunderstandings

about SEPA – Clarified• Shortcut to the SCT Scheme• Shortcut to the SDD Schemes• Shortcut to SEPA Data Format• Shortcut to SEPA Cards Framework• Shortcut to Business (10 Best

Reasons to Practice SEPA)• Shortcut for the Public Sector (10 Best

Reasons to Practice SEPA)• Shortcut for Merchants (10 Best

Reasons to Practice SEPA)

• EPC Brochures:• SEPA for Business • SEPA for Consumers• SEPA Direct Debit for Consumes• SEPA for IT Providers • SEPA for the Media• SEPA for the Public Sector

(available in all EU languages courtesy of ECB and national central banks!)

EPC on Social Media• Follow EPC on Twitter• Join EPC on LinkedIn• Read the EPC Blog

Free Online EPC Newsletter

EPC Videos and Podcasts

EPC Communications


Agenda




Conclusions


Conclusions

• SEPA will create a single market for euro payments and enhance competition as asked for by the ECOFIN, the Governing Council of the ECB and the European Parliament

• SEPA is created via co-regulation for legislation by the public authorities (Payment Services Directive) for business rules and standards by market participants

SEPA will be achieved with the SEPA end date regulation on 1 February 2014

• SEPA implementation is taking care of by the SEPA Committees in the 17 Euro countries and the additional 15 SEPA countries with support of the SEPA Council

• The standardisation program for cards, e-payments and mobile payments is complex. The European Public Authorities are not happy with the progress made so far and published a Green Paper

UN/CEFACT – Geneva, 16 February 2012 11 Roadmap for the Single Euro Payments Area Public –...

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