SEPA Session info Big Billers Banque nationale de Belgique - 18/01/2013.

SEPA Session info Big BillersBanque nationale de Belgique - 18/01/2013

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PSD & SEPA

Payment Services Directive (PSD)► Legal framework for payments in the EEA► Introduced by the EC – transposed into national law► Purpose:● raise the level of protection for consumers (right to a refund)

● guarantee better execution times for payments

● increase transparency of fees and commission

● provide a legal framework for SEPA

► Scope:● new SEPA products

● existing payment schemes, such as DOM80

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PSD & SEPA

Single European Payments Area (SEPA)► Initiative of the European Commission,

supported by the ECB and the EPC.► Applies to the countries of the EEA +

Switzerland + Monaco (the SEPA zone)► Standardisation of payments in EUR ● SEPA Credit Transfer

● SEPA Direct Debit

● SEPA Cards

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SEPA - End date regulation

2009 2010 2011 2013

Start SCT

"End Date Regulation” voted by European Parliament & endorsed by EC

(Feb 2012)

Start SDD

SDD

SCT

2014

End Date for domestic tools

(Feb 2014)

In 1 year

Local systems

… …2008 2012

Today

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SEPA - End date regulation

Schemes

Formats

Consumer protection

• End of domestic CT and DD schemes in euro countries as from 01/02/2014

• Mandatory use of ISO XML 20022 format to banks as from 01/02/2014

• IBAN mandatory as from 01/02/2014

• BIC no longer required for domestic transactions as from 01/02/2014

• BIC no longer required for cross-border transactions as from 01/02/2016

• New protection measures for direct debits consumers

(white/black list, limit amount, etc.) as from 01/02/2014

SEPA Credit Transfer

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Graphic 1: Transfers in SEPA format (2008 - November 2012)

(% of the total number of bank transfers)

Sources: European Central Bank (ECB) and the Centre for Exchange and Clearing (CEC).

1,91%

16,07%

33,33%

38,83%

44,71% 45,09%

47,66%52,30%

58,03%59,80%

61,25%

1,80%

6,20%

13,90%16,86%

20,50% 21,07%23,71%

27,16%29,57% 30,30%

30,18%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

55%

60%

65%

CEC

Euro area CSMs

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SCT Migration Project

1. January 2008 : SCT Start – up

2. October 2011 : End of Legacy Paper Acceptance (BE)

3. 2011 – 2012 : Communication campaign Febelfin / NBB

4. End Date : 01/02/2014 no domestic payments types can be used

8

40%to go

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SCT Migration Client Impact

► Clients must use the IBAN

► Clients must provide the BIC● Domestic payments: until 01/02/2014● Cross-border payments: until 01/02/2016

► Clients must use the ISO20022 payment standards, when initiating payments by file upload

● Important change with regards to Domestic Credit Transfer: Beneficiary name is a mandatory field for all SCT payments

► Reporting:● Clients should upgrade to CODA v2.3● Clients may request XML reporting as of 01/02/2014

If you are using an ERP package or accounting package, your systems would probably be impacted.

Please contact your software provider for more information

SEPA Direct Debit

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Migration to SDD in Belgium(July 2011 - July 2012)

1,38% 1,74% 2,10% 1,93%2,65%

18,98%

12,43% 13,61% 14,72% 11,89%15,66% 15,32% 12,86%

0,45% 0,56% 0,56% 0,51% 0,65%0,51% 0,49% 0,60% 0,58% 0,55% 0,69% 0,65% 0,59%

98,17% 97,69% 97,34% 97,56% 96,70%

80,52%

87,08% 85,79% 84,71%87,56%

83,65% 84,04% 86,55%

0

10

20

30

40

50

60

70

80

90

100

jul/11 aug/11 sep/11 oct/11 nov/11 dec/11 jan/12 feb/12 mar/12 apr/12 may/12 jun/12 jul/12

% V

olum

es

% SDD CORE % SDD B2B % legacy direct debit (DOM80)

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SDD transactions in Europe

Source: ECB

0,00

0,50

1,00

1,50

2,00

2,50

0

2

4

6

8

10

12

14

% s

hare

of S

DD

s

Tran

sacti

ons

(mill

ions

)

Volume Share SDD

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Breakdown of the total direct debit mandates on the total number of creditors registered in Belgium

(in percentage)

100%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

% M

anda

tes

Number of companies

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(Provisional) plans for migration towards the SDD by some of the big billers

2009 2010 2011

November April

StartSDD

End dateRegulation

Q2 Q3 Q4Q1

2012 2013

Q2 Q3 Q4Q1

01/02 2014

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Mandate management - SDD vs DOM80

2) Prenotification (bill)

New!!

Debtor

Creditor bankDebtor bank

5) Debit

1) Mandate

6)

4)

3) XML collection file + MRI

Creditor

4) collection

6)

Clearing & settlement mechanism

New!!

Debtor

Creditor bankDebtor bankMandate management

CreditorMandate management

6) Credit

1) Mandate

Informs

Debtor bank

1b) mandateconfirmation

B2B!!

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Mandate management - Migration from DOM80 to SDD

► Possible to keep existing mandates on transition from DOM80 to SDD Core

► Existing mandates are kept at the debtor’s bank► Once the mandate has been migrated, it is

impossible to return to DOM80► A creditor can use DOM80 and SDD Core alongside

each other (but not for the same mandate)

► New mandates are required on transition to SDD B2B

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The mandate reference must be allocated by the creditor and is limited to 35 positions. It is advisable to keep the reference short and simple. This will make it easier for debtors to confirm mandates.

Mandate management - The mandate

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New SDD creditor: Creditor receives Creditor ID from the bank (in the form of a certificate):

Positions 3 and 4: Check digit (does not apply on ‘Business Code’)Positions 8 to 35 (max.): Country-specific ID

a) either identical to the creditor's Belgian business number (10 positions)

b) or ‘bank code’ + ‘D’ + a bank counter (max. 24 positions)

Mandate management - Creditor ID

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Mandate management - Changes

SDD rulebook says for changes in:

1. Unique Mandate Reference

2. creditor identification

3. creditor name

4. debtor’s account numberA. to another number within the same bank

B. to another number with another bank

The creditor must report the amendments to the Creditor bank as part of the next collection (as a “mandate amendment”). Additional attention point: in case 4.B, the creditor must send the next collection as a “FIRST”.

The paper mandate must be updated as well. Necessary to counter refund requests! B2B? a new confirmation is needed for all amendments except n°3 (Febelfin Consensus) Creditor to evaluate if new mandate might not be more opportune instead of working with

a mandate amendment

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The creditor needs to notify the debtor of an upcoming collection► Initiative of the European Payments Council, supported by the EC

and the ECBNo earlier than 1 year and no later than 14 days before the execution date

► based on an invoice or similar document

Possible deviations:► Agree a shorter period than 14 days with the debtor► in a separate agreement between the debtor and creditor► using a clause in the mandate (clearly separated from the

compulsory parts)► a single payment plan instead of individual invoices for recurring

payments

SDD in detail - Prenotification

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SDD Core

D-14Pre-notification

D-5 one off/first

D-2Recurrent

D+5return

D+8wrefund

D+13mrefundunauthorized

DDue date = settlement

SDD B2B

D-14Pre-notification

D+2return

D-1 DDue date = settlement

D+13mrefundunauthorized

DPivot date= due date

D-1D-5Pre-notification

DOM80

D+1Settlement/unpaid

D+8wrefund

D+13mrefundunauthorized

SDD in detail - Timeline

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SDD in detail - R transactions

1.

SDD Sequence type sent by the Creditor

Type of R-trx

Before Due Date: Pacs.002 Reject or Request for Cancellation (RFC)

Camt.056

After Due Date: Pacs.004 Return/Refund

Next collection with same mandate based on R-transaction received

First Reject/RFC First

First Return/Refund Recurrent

Recurrent Reject/RFC/Return/Refund Recurrent

Last Reject/RFC Last

Last Return/Refund Mandate expired.

One OFF Reject/RFC One-OFF

One OFF Return/Refund Mandate expired

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► The refund right is unconditionalThe debtor requests the refund without having to give a reason and

the debtor's bank immediately reimburses the debtor without any loss to the debtor.

► The creditor will● be debited for the original amount + a refund compensation

fee

● see the result in his statements / CODA reporting incl. the original reference

SDD in detail - R transactions

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4 possible scenarios:► Migration from DOM80 to SDD (Core)

► Transition from DOM80 to SDD B2B

► Starting with SDD Core

► Starting with SDD B2B

Starting with SDD

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Starting with SDD - Migration from DOM80 to SDD Core

► Sign creditor contract► Manage mandates● Avoid creation of new DOM80 mandates if needed

● Overview of existing DOM80 mandates (incl. IBAN/BIC) from NBB via your bank

assign unique mandate references

► Send collections ● Send prenotification (invoice)

● Send collection file to the bank (mandate lifecycle!)

► Follow up on collections ● Once the collection has been booked, the mandate has been irrevocably

migrated.

► Cancellation of the DOM80 creditor number

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Starting with SDD - Transition from DOM80 to SDD B2B

Impossible to migrate; new mandates are required!► Reachability check

http://epc.cbnet.info/content/adherence_database► Sign creditor contract ► Manage mandates● avoid creation of new DOM80 mandates if needed

● create new mandates + inform debtor about the need to confirm the mandate

► Send collections ● send prenotification (invoice)

● send collection file to the bank (mandate lifecycle!)

► Follow up on collections► Cancellation of the DOM80 creditor number

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► Sign creditor contract ► Manage mandates● create new mandates

► Send collections ● send prenotification (invoice)

● send collection files to the bank (mandate lifecycle!)

► Follow up on collections

Starting with SDD - SDD core

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► Reachability check http://epc.cbnet.info/content/adherence_database

► Sign creditor contract ► Manage mandates● create new mandates

● inform debtor about the need to confirm the mandate

► Send collections ● send prenotification (invoice)

● send collection files to the bank (mandate lifecycle!)

► Follow up on collections

Starting with SDD - SDD B2B

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The SDD migration project

Inventory Preparation Testing ImplementationPlanning

Start now !

Business as usual

Procedures

Involved parties

Databases

IT architecture

Migration plan

Communicationplan

Training plan

SDD contract

Manage mandates

Collectionset up

Adaptprocedures

Tools

Collection files

Reporting

Inform debtors

Send collections

Follow up

Do not underestimate required time & efforts

Communication

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Communication: Regulation,considérant 15

► "Il est indispensable que tous les acteurs, notamment les citoyens de l'Union, soient informés de façon appropriée et dans un délai raisonnable, de manière à être pleinement préparés aux changements que le SEPA apportera. Par conséquent, les principales parties prenantes, telles que les prestataires de services de paiement, les administrations publiques et les banques centrales nationales, ainsi que les personnes effectuant régulièrement des paiements devraient mener de larges campagnes d'information spécialisées, proportionnelles aux besoins et adaptées à leur public si nécessaire, afin de sensibiliser le public et de préparer les citoyens à la migration vers le SEPA. Il y a lieu notamment de familiariser les citoyens à la migration du code BBAN au code IBAN. Les comités de coordination nationaux sont les mieux placés pour coordonner ces campagnes d'information."

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Communication plan NBB (March 2012 – February 2014)

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Communication - Support NBB

► Toolkit● One pager

● Videos

● PPT Presentations

● Links: ECB, EPC, Febelfin,...

► Other● Presentations

● Documentation

● Op demand...

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Communicatie - Support NBB

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Useful SEPA links

► SEPA Belgium (www.sepabelgium.be)

► Febelfin (www.febelfin.be) “Mijn geld en ik" – "Betalingen van a tot z – Betalen in de praktijk”

► NBB (www.nbb.be/sepa)“Betalingssystemen – SEPA”

► European Payments Council (EPC)(www.europeanpaymentscouncil.eu)

► ISO 20022 standard (www.iso20022.org)