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De Nederlandsche Bank. SEPA and the Payments Services Directive Michael van Doeveren 3rd Conference of the Macedonian Financial sector on Payments and Securities settlement Systems Ohrid 28 June 2010. Agenda. SEPA-basics SEPA-products

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De Nederlandsche Bank

SEPA and the Payments Services Directive Michael van Doeveren

3rd Conference of the Macedonian Financial sector on Payments and Securities settlement Systems Ohrid 28 June 2010


  • SEPA-basics

  • SEPA-products

  • Payment Services Directive

  • Migration

  • Closing remarks

The euro is the common currency of 16 countries today, but retail paymentsare still organised nationally

SEPA means an uniform payments market retail payments


How to realise sepa
How to realise SEPA? retail payments

  • Self-regulation: European Payment Council of banks develops standards and products

  • Payment Services Directive: legal harmonisation

Epc technical harmonisation
EPC Technical harmonisation retail payments

Two kinds of agreements in EPC:

1. About interbank processing:

  • Credit transfer rulebook

  • Direct debit rulebook

    2. Restructuring of the market:

  • SEPA Cards-framework (SCF)

  • Clearing & Settlement Framework

  • Single Euro Cash Area

European payment market

EU retail payments

European Payment Market

Bron: ECB, Eurostat

Payment trends in the eu
Payment Trends in the EU retail payments

  • Number of transactions per type of payment instrument (billions)

Source ECB

Sepa migration is like a cascade
SEPA Migration is like a Cascade retail payments

Banks, Payment Institutions,

Card schemes and processors:

offer: SEPA products

New infrastructure

Governments, firms and merchants:

Realise migration


Adoption of new

products like cards

SEPA is of all of us!

BIC retail payments

  • BIC: Bank Identifier Code

  • Issuing agent (on behalf of ISO): SWIFT












Branch code

Bank code


code (ISO)





BIC: standardised construction

IBAN retail payments

  • IBAN : International Bank Account Number

  • Administrator of Register of national IBANs (on behalf of ISO): SWIFT


code (ISO)



Bank identifier

Domestic account


  • Remarks:

    • The Bank Identifier in an IBAN is country specific

    • The length of the bank identifier varies from country to country

    • Each country has its own Basic Bank Account Number system

  • Summary:

    • Country code and check-digits : uniform

    • Bankidentifier and BBAN : country specific

Iban examples
IBAN examples retail payments

IBAN Examples

Finland FI21 1234 5600 0007 85

France FR14 2004 1010 0505 0001 3M02 606length 27

Germany DE89 3704 0044 0532 0130 00

IrelandIE29 AIBK 9311 5212 3456 78

Luxembourg LU28 0019 4006 4475 0000

NetherlandsNL91 ABNA 0417 1643 00length 18

Norway NO93 8601 1117 947

Poland PL61 1090 1014 0000 0712 19812874 length 28

United KingdomGB29 NWBK 6016 1331 9268 19

(composition: country code check digits Bankidentifier branchindentifier BBAN)

Source: 20080811 IBAN Registry

  • Remarks:

    • IBAN and BIC contain both bank identifiers, but they could differ

    • IBAN and BIC contains both a country code, but they could differ

Sepa credit transfer in use since 28 january 2008
SEPA Credit Transfer retail payments(in use since 28 January 2008)

  • SEPA Credit Transfer: Standard for bank to bank credit transfers in euro (mass payments)

  • Payments are made for the full original amount

  • IBAN and BIC are obliged

  • ISO 20022 UNIFI standards (XML-language)

  • 140 characters of remittance information are delivered to the beneficiary

  • Unstructured or restructured remittance information as agreed between partners

Sepa direct debit introduced on 2 november 2009
SEPA Direct Debit retail payments(introduced on 2 November 2009)

  • SEPA Direct Debit: Standard for bank to bank Direct Debits in euro (B2C and B2B)

  • Payments are made for the full original amount

  • IBAN and BIC are obliged

  • ISO 20022 UNIFI standards (XML-language)

  • One-off or recurrent

  • A mandate is signed by the debtor (e-mandate)

  • Pre-notification (mostly 14 calender days in advance)

  • Refunds (PSD: 8 weeks) and returns

Impact of sepa for cards
Impact of SEPA for Cards retail payments


  • Use of cards in the whole SEPA area: any card at any terminal


  • More choise: terminal, acceptance of brands, acquiring

    Banks and payment schemes

  • Change of markets, new products, new systems

Legal harmonization payment services directive
Legal harmonization: Payment Services Directive retail payments


  • Proportional supervisory regime for non-bank payment service providers

  • Transparency requirements

  • Rules about the relationship of the payment service provider and user

Scope payment services
Scope: payment services retail payments

1. Services enabling cash to be placed on a payment account

2. Services enabling cash withdrawals from a payment account

3. Execution of payment transactions; direct debits, payment

transactions through a payment card, credit transfers

4. Execution of payment transactions where the funds are

covered by a credit line for a payment service user:

5. Issuing and/or acquiring of payment instruments.

6. Money remittance.

7. Execution of payment transactions where the consent of the

payer to execute a payment transaction is given by means of

any telecommunication, digital or IT device and the payment

is made to the telecommunication, IT system or network

operator, acting only as an intermediary between the

payment service user and the supplier of the goods and


Payment institution
Payment Institution retail payments

What is a payment institution?

Non bank provider of payment services, and:

End users

Transferable balances: no cash

Owns customer funds temporarily

Pure intermediary

Payments are a main activity

Payment institutions
Payment institutions retail payments

Proportional prudential supervision


Capital requirements

Internal processes

Rights and obligations
Rights and obligations retail payments

Information requirements - single payment transactions

Information to the payer

priorafter receipt

Transaction Identifier, payee

Amount of the payment

Charges payable

exchange rate used

Date of receipt order

Information needed Execution time


Reference exchange rate

Information to the payee

Reference, payer



Exchange rate

Credit value date

Rights and obligations1
Rights and obligations retail payments

Information requirements - Payments via framework contract

prior after receipt

Information for payee

Transaction identifier, payee



Exchange rate used

Debit value date

Payment service provider


Product features


Safeguard requirements

Transaction identifier, payer



Exchange rate used

Credit value date

Rights and obligations2
Rights and obligations retail payments

Other obligations for the provider

d + 1

No sending of unsolicited payment instruments

User provides incorrect unique identifier: reasonable efforts to recover funds

And more..

Rights and obligations3
Rights and obligations retail payments

Obligations for the user

Act according to the contract

Reasonable safety measures

Direct notification of loss/theft

And more..

Psd summing up
PSD summing up retail payments

PSD provides harmonisation of:

  • Market access: besides credit institutions and electronic money institutions also payment institutions

  • Rights and obligations

  • Implementation in national legislation 1november 2009: done by most countries

European law other items
European law: other items retail payments

Regulation 924/2009 (renewal of regulation


  • No price difference between domestic and cross border direct debits

    Adaptation of the electronic money directive

  • Greater consistency with the PSD

  • New prudential regime

Need for Standardisation! retail payments

Standardisation sepa for cards
Standardisation SEPA for Cards retail payments

Four card domains of action:

  • Card to terminal (EMV)

  • Terminal-to-acquirer (EPAS, ERIDANE)

  • Acquirer-to-issuer (ISO 8583 and ISO 20022)

  • Certification of cards and payment terminals

What is emv
What is EMV? retail payments

  • EMV: Europay, MasterCard, VISA

  • Worldwide standard for

    • Chip on cards

    • (readers) ATM & EFT POS terminals

    • Debit and credit cards


  • Much safer than magstripe

Status migration emv cards
Status Migration: EMV Cards retail payments

Status 1 January 2010 (Source: EPC)

Status migration emv atm s
Status Migration: EMV ATM’s retail payments

Status 1 January 2010 (Source: EPC)

Status migration emv pos terminals
Status Migration: EMV POS Terminals retail payments

Status 1 January 2010 (Source: EPC)

Sepa awareness dutch end users
SEPA Awareness Dutch end-users retail payments

  • SEPA awareness SMEs fairly low

  • SEPA awareness public sector and large companies very high

  • Public sector and large companies well informed about SEPA consequences

Transition stage dutch end users
Transition stage Dutch end-users retail payments

  • 90% of SMEs have not made any SCT & SDD preparations yet

  • ± 20% of large companies and public sector can accept and make SCTs

  • ± 60% of large companies and public sector is busy with SDD preparations

Concluding remarks
Concluding Remarks retail payments

The success of SEPA depends on:

  • SEPA for Cards means ‘Any card at any terminal’. This requires time.

  • Further European standardisation, which is not easy

  • An end date for national payment instruments

  • Interchange fees and payment fees

  • Well organised stakeholder involvement and consultation

  • Innovation at a European level (e-SEPA, contactless payments, mobile payments)

Questions? retail payments