SEPA migration: European Regulation proposal
- On December 16, the European Commission released its official Regulation proposal “establishing technical requirements for credit transfers and direct debits in Euros and amending Regulation (EC) No 924/2009”. As presented during a Public Hearing one month before, this legal project will set SEPA migration business model framework and modalities.
- This text expands the accessibility requirement already imposed on direct debits to credit transfers.
- The Council and Parliament will have to set national instruments deactivation end-dates. In fact, this project sets the migration timeline against the future publication's D date:
- D+1 year: compliance of all credit transfers in Euros,
- D+2 years: compliance of all direct debits in Euros.
- As expected, the Commission provides a series of requirements based on EPC instruments (without mentioning SCT, or SDD).
- All niche national instruments, derived from transfers or debits, will also have to migrate. Their calendar can be expanded by the national regulator, to:
- 3 years for instruments with volumes below 10% of the migrated instrument from which they derive (ex: French paper-initiated interbank payment orders TIP),
- 5 years for card-initiated transactions resulting in transfers/debits and identified by an IBAN/BBAN (as opposed to BIN).
- Finally, debit interchange dismantlement was delayed until SDD migration end-date. An exception can be made for return messages (rejects, reimbursements, cancellations, etc.) if the calculation relies on the most efficient PSP, to induce improvement of the liable party (which originated the return) and relies on limited, transparent costs that are not charged to the customer.
- In France, the AFTE approves interchange suppression but regrets the lack of visible date, as is the case for deactivation end-dates. It worries about the fact that today there are no products to replace niche instruments.
- At first sight, one may think that two years may not be enough to migrate to SDD, which did not reach 0.1% of the European volumes per year after its introduction. Nevertheless, a compromise about end-dates must be agreed upon by the Council's 27 States. The Parliament will be reminding them of the end-dates during these negotiations, as it twice expressed its wish for an end-date prior to end-2012 –even if this may now appear quite unrealistic.
- Also, we should note that the Regulation would provide some relief to the debtors' banks. Their interchange income would last for two more years after the enforcement, or by mid-2013, instead of end October 2012 in the current legal framework.
- Eventually, specific national products are impacted, including the German ELV (card-initiated payment resulting in a debit) and all online or mobile payments using transfers or direct debits (iDEAL, giropay, eps, etc.).
See November 2010 Watch