SEPA requirements overview

Main components of SEPA

Based on XML

» ISO Standard 20022 - www.iso20022.org

SEPA processes in rulebooks and implementation guidelines

» Defined by EPC - www.europeanpaymentscouncil.eu

» Version 6.0 / 4.0 - effective from 17 November 2012

» New version 02/2014

» Objective: full electronic end-to-end STP w/o manual steps

IBAN and BIC

» replace national account numbers and bank codes

» IBAN = International Bank Account Number

» BIC = Bank Identifier Code, BIC = Businnes Identifier Code

» IBAN only

SEPA Credit Transfer (SCT)

» Replaces the national formats for credit transfers

SEPA Direct Debit (SDD)

» Replaces the national formats for direct debits

» Two types: SDD Core for consumers (payer) and SDD B2B for businesses

» Requires the usage of mandates

» Must be created and sent to the payer up to several days before due date (settlement date)

SEPA R-Messages

» Cancellation messages for SEPA transactions (REJECT, RETURN, REVERSAL, REFUND)

AOS (additional optional services)

» Competitive offerings provided by banks (e.g. Prenotes)

Inter Bank Clearing

» SEPA pacs messages (bank to bank)

Customer Payments Initiation

» SEPA pain messages (customer to bank)

SEPA legal rules

REGULATION (EU) No 260/2012 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 14 March 2012 establishing technical and business requirements for credit transfers and direct debits in euro and amending Regulation (EC) No 924/2009

» IBAN only

» Black and white list and to limit a direct debit collection to a certain amount or periodicity

   or both

SEPA Credit Transfer (SCT)

Customer Credit Transfer

» Message pacs.008.001.02

Returns – credit transfers resent between banks

» Message pacs.004.001.02

Rejects – credit transfers resent by CSM (Clearer)

» Message pacs.002.001.03

Request for Cancellation (Recall)

» Message camt.056.001.01

Negative Answer to a Request for Cancellation (Recall)

» Message camt.029.001.03

For inter bank payments

» SCT: pacs.008.001.02

» Reject: pacs.002.001.03

» Return: pacs.004.001.02

Transfer within 1 business day

Reject within 1 business day

Return within 3 business days

SEPA Direct Debit (SDD)

SEPA UCI

» Unique Credit Identifier

» Identification of the person creating/presenting SDDs

» Can be locked by debtor

SEPA Mandate

» Authorization from the payer to the payee, allowing the payee to draw SDDs from payer

» Mandates are mandatory for SDD B2B and SDD Core

» Every Mandate needs a Mandate-ID

» The combination of UCI and Mandate-ID is unique within SE

» Can be locked by debtor

» Lifecycle: one off, first, recurrent, last

» Is valid for exactly one debtor‘s bank connection

» Get invalid after 36 months of not being used

SDD Core

» For debiting ‚consumers

» Payment requires a mandate

» Check of mandate not required

» Period for presenting an SDD: 2 – 14 business days (depends on lifecycle)

» Period for returns: up to 13 months

SDD CORE1

» Period for presenting an SDD: 1 – 14 business days (depends on lifecycle)

SDD B2B

» For debiting business customers

» Payment requires a mandate

» Period for presenting an SDD: 2 – 14 business days

» Check of mandate obligatory

» Period for returns: up to 2 business days

Time Cycle

» Based on TARGET Days Calendar

Dates

» Settlement Date

» Debit Date

» Due Date

» These dates are in general the same!

» Settlement Date is mandatory

The Creditor (payee)

» Receives and stores the signed mandate from the debtor

» On this basis he collects the direct debits

The Creditor Bank (bank payee)

» The bank where the creditor’s account is held

» Has an agreement with the creditor about it’s rules and agreements

The Debtor (payer)

» Receives and stores the mandate from the debtor

» Informs the debtor bank about the mandate

The Debtor Bank (bank payer)

» The bank where the debtor’s account is held

» Has an agreement with the debtor about it’s rules and agreements

The CSM (clearer)

» The CSM (clearer)

Collections between banks

» Message pacs.003.001.02

Rejects – collections resent before Settlement Date

» Message pacs.002.001.03

Returns – collections resent after Settlement Date

» Message pacs.004.001.02

Reversals – reimbursement of erroneous collections after settlement date

» Message pacs.007.001.02

Requests for Cancellation – request to recall a collection before settlement

» Message camt.056.001.02 – not defined by EPC rule book 4.0

Refusal – claims initiated by the debtor before Settlement not to pay a collection

» Not covered by EPC booking scheme

Revocations – request by the creditor to recall an instruction before settlement

» Not covered by EPC booking schem

The processing flow

» Agreement on mandate

» Pre-notification

» Direct debit transaction

» Direct debit return

Debtor Mandates

» For inbound direct debits

» Mandates are assigned to a specific account (IBAN)

» Are being checked for existence, locks, validity, type

Creditor Mandates

» For outbound direct debits

» Mandates are assigned to the creditor (UCI)

» Must be added to collection information

» Type of mandate defines type of collection

» Type and lifecycle define the earliest possible settlement date

Amendment of Mandates

» Is handled between debtor and creditor

» Debtor and creditor must inform their banks

» Amendments are included in the next collection

SEPA customer payments

Credit Transfers

» Message pain 001.001.02

Direct Debits

» Message pain.008.001.01

» Customer must provide Mandate information (UCI, Mandate-ID etc.)

» Customer must provide valid settlement date

» Customer must provide amendments of the mandate

Payment Reversal

» Message pain.007.001.02

» Customer to bank reversal instruction for collections

» Optional

Master Data

» Enhanced by BIC + IBAN

Credit Transfer

» Bank details enhanced by IBAN

» Add IBAN to payment information

» Determine the BIC belonging to IBAN

» More additional information

   - End-to-End-ID

   - Payment-ID

   - Remittance Information (max. 140 characters)

Debit Transfer

» Bank details expanded by IBAN

» Add IBAN to payment information

» Determine the BIC belonging to IBAN

» More additional information

   - End-to-End-ID

   - Payment-ID

   - Remittance Information (max. 140 characters)

Mandate Information

» Stored mandate management transactions

» Assigned to bank details, payment order, standing order, reference accounts

» Selected on debit creation