18 April 2012

EPC: Get ready for SEPA by February 2014 – ISO 20022 is the new language of payments

Article 5 (1)(d) of the SEPA Regulation states that payment service providers must ensure that where a payment service user "that is not a consumer or a micro-enterprise, initiates or receives individual credit transfers or individual direct debits which are not transmitted individually, but are bundled together for transmission, the message formats specified in point (1)(b) of the Annex are used". Point (1)(b) of the Annex to the SEPA Regulation clarifies that the message formats referred to in Article 5 are the ISO 20022 XML message standards. Article 16 (5) of the SEPA Regulation, however, allows EU Member States to waive the requirement to use the ISO 20022 message formats for payment service users until 1 February, 2016.

Dr Warncke, Group Financial Controller at Villeroy & Boch, adds: "We executed our first ISO 20022 FileAct payments in August 2008. In the fall of 2008, 90 per cent of our supplier payments were done through SWIFT using ISO 20022. The implementation of the ISO 20022 message standards reduces the complexities and application development times required to manage our payment architecture. Adapting to this global standard also allowed us to increase security and improve internal processes." To be specific, Dr Warncke outlines that the implementation of the ISO 20022 message standards has enabled Villeroy & Boch to achieve the following:

• a wider set of structured and enhanced message information with the transaction, thereby raising the efficiency in end-to-end automation;
• reduced application development times;
• decreased number and complexity of interfaces;
• reduced support and maintenance costs, by avoiding customised or proprietary formats;
• increased security;
• improved internal processes.

He continues: "Consequently, we could cut down the costs associated with the maintenance of different national data formats and related IT standards". Last but not least, Dr Warncke points out it is "also very important to keep in mind that the ISO 20022 message standards are a global standard. Taking into account that Villeroy & Boch is a globally active company, we certainly aim to further harmonise our payment business, based on the ISO 20022 message standards." He concludes: "The SCT and SDD Schemes work very well for us. I do however see room for improvement in the application of ISO 20022 message standards. ISO 20022 is the new language in payments. Nevertheless, we notice that there are quite a lot of different dialects of this language used across SEPA. Ideally, we would like to see fewer dialects and further harmonisation regarding the use of this standard. This would allow us to achieve even more efficiency gains with ISO 20022."

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