Getting Your Company Ready For SEPA
To realize the benefits of uniform SEPA payment instruments for your business, you need to upgrade existing payment applications as a first step. If your company plans to set up a SEPA implementation project, several features of the SEPA schemes and standards will also have an impact on internal processes.
The following aspects, among others, need to be considered:
IBAN AND BICI
BAN (International Bank Account Number) and BIC (Bank Identifier Code) will be the only permissible account and bank identifiers for SEPA transactions. Whereas until now they have been used only for cross-border payments in most countries, with SEPA they apply to national payments as well. The paying customer must provide IBAN to identify the beneficiary's account and should provide the related BIC to his bank unless otherwise agreed with the bank.
DIRECT DEBIT COLLECTIONS: THE SEPA MANDATE
The SEPA Direct Debit Scheme defines the requirements regarding the authorization of a creditor to collect direct debits; it also details the requirements to be observed by the debtor bank to debit the account of a debtor. In many SEPA countries, such authorizations – or mandates – previously issued by debtors and in place today do not conform to the requirements of the SEPA mandate.
UNIFI (ISO 20022) XML MESSAGE STANDARD
A common data format used by all parties in a payment transaction is essential for the cost-efficient handling of billions of payments. The realization of SEPA therefore requires agreement on a common set of data to be exchanged in a common syntax.
SEPA Direct Debit
SEPA Core Direct Debit
The SEPA Core Direct Debit Scheme applies to transactions in euro. The debtor and creditor must each hold an account with a credit institution located within SEPA; the credit institutions executing the direct debit transaction must be scheme participants.
SEPA B2B Direct Debit
The SEPA Business to Business Direct Debit Scheme (B2B) will be the basis for the development of products catering to business customers who wish to make payments by direct debit as part of their business transactions.
The most important differences between the SEPA Core Direct Debit Scheme and the SEPA Business to Business Direct Debit Scheme are:
- In the B2B Scheme the debtor is not entitled to obtain a refund of an authorized transaction; this ensures certainty of payment for the creditor
- The B2B Scheme requires debtor banks to ensure that the collection is authorized by checking the collection against mandate information; debtor banks and debtors are required to agree on the verification to be performed for each direct debit
- A debtor bank cannot offer the scheme to a debtor who is a 'consumer' under the law of the country where that debtor bank is providing the payment service;
- Responding to the specific needs of the business community the B2B Scheme offers a significantly shorter timeline for presenting direct debits and reduces the return period
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SEPA Credit Transfer
The SEPA Credit Transfer Scheme enables payments services providers to offer a core and basic credit transfer service throughout SEPA, whether for single or bulk payments. The scheme's standards facilitate payment initiation, processing and reconciliation based on straight-through-processing (STP). The scope is limited to payments in euro within SEPA countries; the credit institution executing the credit transfer must be a scheme participant.
There is no cap on the amount of the payment carried under the scheme.
The Benefits Of SEPA
HAVE SEPA PAYMENT PRODUCTS CUSTOMTAILORED FOR YOU
The SEPA schemes recognize that individual banks and communities of banks will provide complementary services based on the schemes in order to meet further specific customer needs.
DO BUSINESS EVERYWHERE IN SEPA
The existence of a multitude of different national payment systems and formats posed a significant obstacle to the aspirations of companies seeking opportunities in foreign markets. Availability of a standardized payment infrastructure in SEPA opens up new possibilities to expand your business beyond national borders.
TAKE ADVANTAGE OF INNOVATIVE SEPA SCHEMES
The SEPA Credit Transfer Scheme and the SEPA direct Debit Schemes developed by the EPC introduce a variety of innovative features, which will facilitate the streamlining of payment processing at any company, regardless of whether business is being done domestically or cross-border.
DECREASE IT COSTS
The introduction of the UNIFI (ISO 20022) XML message standards – the SEPA data format – allows for rationalization, which in turn will significantly reduce the costs associated today with the maintenance of the different national payment formats and related IT-standards, including system administration.
STREAMLINE THE BACK OFFICE
Uniform settlement periods and exception processes for all European countries will significantly reduce current complexities.
OPTIMISE CASH MANAGEMENT
Companies maintaining accounts in other European countries to handle local payments will be able to centralize such accounts and the associated liquidity. Current differences between domestic and cross-border payments in SEPA will be eliminated.
MAKE PAYMENT FACTORIES WORK FOR YOU
The realization of an integrated euro payments market will boost the trend towards outsourcing payments. SEPA allows the acquisition of significant additional volumes by payment factories which in turn will generate scale and scope advantages.
