donderdag 21 april 2011

Facing the Facts in April 2011

logo-european-counsilThe EPC Newsletter tracks the progress of SEPA migration

 

SUMMARY

Each issue of the European Payments Council (EPC) Newsletter monitors the latest available data reflecting the rate of SEPA market uptake. In addition to providing a SEPA migration progress report, this article also discusses the progress of the legislative process aimed at the adoption of a European Union (EU) Regulation establishing technical requirements for credit transfers and direct debits in euros. This forthcoming legislative act is commonly referred to as the SEPA Regulation. This article links to sources relevant to this EU legislative initiative and information on the EU legislative process. Gerard Hartsink tables the facts and the figures.

Key Information in this Article

  • Data cited in this article represents the latest figures available at the time of European Payments Council (EPC) Newsletter publication (21 April 2011).
  • As of February 2011, the share of SEPA Credit Transfers (SCTs), as a percentage of the total volume of credit transfers generated by bank customers, amounts to 15.7 percent (European Central Bank SEPA Indicators).
  • As of February 2011, the share of SEPA Direct Debit (SDD), as a percentage of the total volume of direct debits generated by bank customers, amounts to 0.09 percent (European Central Bank SEPA Indicators).
  • At the end of 2010, 81 percent of cards, 89 percent of points of sale (POS) and 96 percent of automatic teller machines (ATMs) in SEPA were EMV-compliant. EMV is an industry standard to implement chip and personal identification number (PIN) security for POS card transactions.
  • As of October 2010, the SCT migration rate for the replying public administrations in the euro area was 14.5 percent (European Commission's Fourth Survey on Public Administrations' Preparedness and Migration to SEPA published in February 2011).
  • The proposal for a Regulation establishing technical requirements for credit transfers and direct debits in euros, published by the European Commission in December 2010 states, in part, that credit transfers will be carried out in accordance with this Regulation twelve months after it comes into force; direct debits shall comply 24 months after it comes into force. The European Commission's proposal – commonly referred to as the SEPA Regulation – is under review by the European Parliament and the European Economic and Financial Affairs Council.

Percentage of banks in SEPA offering SEPA Credit Transfer services

The European Payments Council (EPC) launched the SEPA Credit Transfer (SCT) Scheme in January 2008. As of April 2011, nearly 4500 banks in 32 countries offered SCT services for euro payments. Today, the payment service providers (PSPs) offering SCT services represent more than 95 percent of payment volumes in Europe. Due to mergers and acquisitions, the absolute number of SCT Scheme participants (PSPs offering SCT services) has slightly decreased compared to previous Single European Payment Area (SEPA) market uptake reports featured in this newsletter. The EPC SCT Participant Register, which lists scheme participants, is publicly available at CBNET.info.

Percentage of SCT transactions compared to the total volume of credit transfers generated by customers

According to the SCT indicators compiled by the European Central Bank (ECB), the share of SCTs, as a percentage of the total volume of credit transfers generated by bank customers, amounts to 15.7 percent as of February 2011. The ECB SCT Indicators can be viewed at Europa.eu

A figure of 100 percent would indicate that only SEPA services are used and have fully replaced non-SEPA instruments. The SCT Indicators are based on aggregated data provided by clearing and settlement infrastructures in the euro area processing SEPA transactions. This data avoids double counting by excluding, for example, SEPA transactions sent via links between infrastructures. The data also excludes 'on-us' transactions (SCTs between accounts at the same bank) as well as transactions cleared between banks bilaterally or via correspondent banking. The ECB SCT Indicators also show SCT market uptake by country.

Percentage of banks in SEPA offering SEPA Direct Debit services

The EPC launched the SEPA Core Direct Debit Scheme (SDD Core) and the SEPA Business to Business Direct Debit Scheme (SDD B2B) on 2 November 2009. As of April 2011, 3909 banks, representing more than 80 percent of SEPA payments volume have signed up to the SDD Core Scheme. Of those, 3381 banks also adhere to the SDD B2B Scheme. The separate EPC Participant Registers for the SDD Core and the SDD B2B Schemes list the scheme participants taking part in the SEPA Direct Debit (SDD) Schemes. These registers are publicly available at CBNET.info.

All branches of banks in the euro area must be reachable for cross-border direct debits; e.g. SDD Core, since 1 November 2010 as mandated by Regulation (EC) No 924/2009 (Article 8). In April 2010 the European Commission services published a Note on Application of Article 8 of Regulation (EC) No 924/2009 - Reachabillity for Direct Debit Transactions. This guidance note states that it is the location of the branch of a credit institution (whether it is inside or outside the euro area), and not the location of the parent company, that determines whether the reachability obligation and deadline applies. Furthermore, no distinction should be made between branches with head offices located outside the European Union (EU) and those with head offices inside the EU.

Percentage of SDD transactions compared to the total volume generated by customers

According to the SDD Indicators compiled by the ECB, as of November 2010 the share of SDD Core, as a percentage of the total volume of direct debits generated by bank customers, amounts to 0.08 percent. The ECB SDD Indicators can be viewed at Europa.eu.

The figures are based on aggregated data from several clearing and settlement infrastructures/systems located in the euro area. As such, SDD transactions which are cleared bilaterally or processed within the same institution are excluded from this indicator.

SEPA for cards: tracking EMV roll-out

As reported in previous issues of the EPC Newsletter, good progress is being made in the realisation of a SEPA for cards, which aims to enable a consistent customer experience when making or accepting payments with cards throughout the euro area. The EPC's SEPA Cards Framework (SCF) outlines high level principles and rules which will deliver this consistent experience when implemented by banks and card schemes. The SCF recognises the EMV standard for SEPA-wide acceptance of payments with cards at very high levels of security. EMV is an industry standard to implement chip and personal identification number (PIN) security for point of sale (POS) card transactions. An important indicator on the progress in this area is the number of cards, POS and automated teller machines (ATMs) in the market that use chip and PIN for the authorisation of a card payment. More specifically, the percentage of EMV-compliant cards, POS and ATMs in SEPA is monitored.

At the end of 2010, 81 percent of cards, 89 percent of POS and 96 percent of ATMs in SEPA were EMV-compliant.

The progress of EMV roll-out, based on these EPC findings and other relevant data on the subject, are reflected by the ECB SEPA Card Indicators at Europa.eu

Public sector: SEPA ready?

In February 2011, the European Commission published its Fourth Survey on Public Administrations´ Preparedness and Migration to SEPA (see 'related links' below). The survey reflects migration by the public sector as of October 2010. The main findings of the survey are:

  • Public administrations' (PAs) migration to SCT has accelerated at an impressive pace over the last eight months. For the reporting period, the SCT migration rate for the replying PAs in the euro area was 14.5 percent versus 2.7 percent in the previous survey. For the first time, SCT migration by PAs exceeds the corresponding rate for the overall market (14.5 percent versus 9.6 percent in October 2010).
  • In particular PAs in Finland, Belgium, Austria, Spain, France and Germany have made significant progress over the last eight months.
  • Migration to SDD however, remains marginal due to the fact that in the case of many PAs, direct debits are generally not used. In October 2010, the SDD migration rate for the replying PAs in the euro area was 0.24 percent.

Setting a deadline for migration to SEPA

As confirmed by the findings of a study requested by the European Commission in 2007, the benefits for bank customers inherent to the SEPA harmonisation exercise are contingent upon swift migration to a single set of SEPA payment instruments by both the demand and the supply sides1. The EPC recognises the value of setting a deadline for migration to SEPA services. An end date for phasing out legacy euro payment instruments creates awareness, ensures planning security for all market participants and confirms the commitment to making SEPA a reality. In line with expectations expressed by EU finance ministers, the European Parliament and the ECB, the EPC believes that end dates must be set for the phasing out of existing national euro credit transfer and euro direct debit schemes to ensure that the high costs of running multiple payment schemes in parallel can be eliminated.

In the Seventh Progress Report on SEPA, published by the ECB / Eurosystem in October 2010, it is stated that the 'Eurosystem expects SCT and SDD to become the credit transfer and direct debit schemes used for euro payments in the EU. After the SEPA migration end date, they will have replaced national legacy credit transfer and direct debit schemes for euro payments'. The European Parliament called on the European Commission to set a 'clear, appropriate and binding end date, which date should not be later than 31 December 2012, for migrating to SEPA products'2. On 2 December 2009, the European Economic and Financial Affairs Council (ECOFIN - comprising the economics and finance ministers of the EU Member States) considered 'that establishing definitive end-dates for SDD and SCT migration would provide the clarity and the incentive needed by the market, ensuring that the substantial benefits of SEPA are rapidly achieved and that the high costs of running both legacy and SEPA products in parallel can be eliminated'. At its inaugural meeting in June 2010, the SEPA Council - bringing together representatives of both the demand and supply sides including the EPC - endorsed a formal declaration stressing 'their strong support for the establishment of end-date(s) for migration to SEPA Credit Transfers and SEPA Direct Debits by means of legislation at EU level'.

On 16 December 2010, the European Commission published a proposal for a Regulation establishing technical requirements for credit transfers and direct debits in euros. This is commonly referred to as the proposal for the forthcoming SEPA Regulation. The explanatory memorandum accompanying the proposal states that 'full integration of the payment market will only be achieved once Union-wide payment instruments replace completely the national legacy instruments'. The proposal clarifies that the end dates to be established for compliance with the technical requirements refer to the point in time when these requirements 'need to be fulfilled by Union-wide credit transfers and direct debits'. The proposal states, in part, that credit transfers shall be carried out in accordance with this Regulation twelve months after it comes into force. Direct debits shall comply 24 months after it comes into force.

This proposal is currently reviewed by the EU legislative bodies, i.e. the European Parliament and the European Council representing EU governments (see 'related links' below for more information on the EU legislative process and relevant sources).

The EPC published its updated response to the European Commission's proposal for a SEPA Regulation in March 2011 (see also 'related links' below).

Gerard Hartsink is the Chair of the EPC.

 

1 SEPA: Potential Benefits at Stake (Capgemini) available at EPC.eu

2 European Parliament Resolutions on the Implementation of the Single Euro Payments Area at EPC.eu

Bron: EPC.eu

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