11 July 2017

EPC: An update on the implementation of the SEPA Instant Credit Transfer scheme

In less than five months, the EPC’s SEPA Instant Credit Transfer (SCT Inst) scheme will be operational. To shed some light on the implementation status of SCT Inst in Europe, EPC interviewed Jean-Yves Jacquelin, who chairs the EPC Scheme Evolution and Maintenance Working Group.

Q. How many PSPs are expected to be ready by November 2017, when SCT Inst goes live?

We regularly monitor the adherence plans of PSPs, which are still evolving. For the moment, PSPs from five countries are expected to adhere to SCT Inst by November 2017. These countries are Austria, Spain, Finland, Italy and Latvia. In addition, other countries will join SCT Inst in 2018, such as Germany, Portugal, Belgium, Sweden, and some PSPs from the Netherlands.

Q. From an infrastructure perspective, are the Clearing and Settlement Mechanisms (CSMs) ready for the scheme’s go-live date of 21 November?

Seven large CSMs have already confirmed they will be able to support SCT Inst transactions from November 2017 onwards. We expect other CSMs to announce their compliance with SCT Inst in the coming months.

Q. What main challenges do PSPs face in the implementation of the SCT Inst scheme?

We have identified four types of challenges:

Technical obstacles

PSPs who wish to offer SCT Inst services have had only one year to prepare since the scheme was unveiled by the EPC in November 2016 with the publication of its rulebook. This is a very challenging timeline, considering that PSPs need to adapt their IT systems and ensure real-time processing and 24/7/365 availability in order to adhere to the SCT Inst. This is not an easy task and it requires time and investments.

Business case

Even if our society is increasingly mobile and fast, the initial request for this pan-European instant credit transfer scheme came from the Euro Retail Payments Board and not directly from the customers themselves. PSPs need to decide to adhere to SCT Inst, based on their vision and business case. Specifically, the scheme currently sets a limit of 15,000 euros per transaction. Though this parameter is not set in stone and might evolve further after November 2018, it might initially limit the relevance of the scheme for corporate customers.

Risk management

One of the concerns PSPs often share with us is that SCT Inst transactions would be highly attractive for fraud and money laundering. PSPs have to adapt their systems to prevent these risks, while still respecting the target of ensuring that each SCT Inst transaction takes just ten seconds. This is quite challenging.

Uncertainties in the CSM space

There will be no lack of infrastructure on offer for PSPs willing to propose SCT Inst services. However, PSPs are worried they might have to participate in more than one clearing solution to ensure full reachability. As yet there is no guarantee of concrete interoperability between the different CSM solutions. 

Q. In your opinion, when will SCT Inst really take off at SEPA level?

The SEPA Regulation ((EU) No 260/2012 Art 4(b)) stipulates that any new credit transfer (or direct debit) scheme must reach a majority of PSPs within a majority of Member States which constitutes a majority of PSPs within the Union, after three years. I think SCT Inst will easily reach that target, and I suggest a more challenging goal.

I imagine a kind of 5/50 rule: five years after implementation, fifty percent of the SEPA credit transfer transactions should be processed under the SCT Inst scheme. In other words, by the end of 2022, fifty percent of all SEPA credit transfers would be instant.

Full interview

© EPC