07 March 2013

EPC: The long road to harmonisation - Transitional arrangements in EU Member States permissible under SEPA Regulation

IBAN and BIC: possible derogations from the February 2014 deadline by EU Member States

In accordance with Article 5 (1) (c) of the SEPA Regulation, payment service providers (PSPs) must ensure that PSUs (i.e. payers and payees) "use the payment account identifier specified in point (1) (a) of the Annex", namely the IBAN. A payee accepting credit transfers must communicate its IBAN and the BIC of its PSP, "but only where necessary", to its payers (see Article 5 (4)). Similarly, a payer wishing to make a payment by direct debit must communicate its IBAN and the BIC of its PSP, "but only where necessary" (see Article 5 (5)). The SEPA Regulation stipulates the timelines for application of the so-called 'IBAN only' rule. Article 5 (7) of the SEPA Regulation states: "After 1 February 2014 for national payment transactions and after 1 February 2016 for cross-border payment transactions, PSPs shall not require PSUs to indicate the BIC of the PSP of a payer or of the PSP of a payee."

Article 16 (6) however, provides that EU Member States have the option to defer application of the 'IBAN only' rule for national transactions to 1 February 2016. Moreover, the SEPA Regulation allows EU Member States to derogate from Articles 6 (1) and (2) by allowing PSPs to provide consumers with conversion services for national payment transactions, enabling them to continue using the national account identifier (Basic Bank Account Number - BBAN) instead of the IBAN until 1 February 2016 (see Article 16 (1)).

ISO 20022 XML message standards: possible derogations from the February 2014 deadline by EU Member States

Article 2 (17) of the SEPA Regulation defines the ISO 20022 XML message standard as "a standard for the development of electronic financial messages as defined by the ISO, encompassing the physical representation of the payment transactions in XML syntax, in accordance with business rules and implementation guidelines of Union-wide schemes for payment transactions falling within the scope of this Regulation." The 'implementation guidelines of Union-wide schemes' referred to in this definition would include, for example, the implementation guidelines published by the EPC with regard to the SCT and SDD Schemes, which are available on the EPC Website. Article 5 (1) (d) of the SEPA Regulation states that PSPs "must ensure that where a PSU 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 specifies that such message formats are the ISO 20022 XML message standards.

Article 16 (5) of the SEPA Regulation allows EU Member States to waive the requirement to use the ISO 20022 message formats for PSUs that initiate or receive individual credit transfers or direct debits that are bundled together for transmission until 1 February 2016, except in cases where a PSU requests such a service.

European Central Bank makes available fact sheets on national implementation of the SEPA Regulation

The Commission indicated its intention to publish a list of derogations applicable at national level once all EU Member States have notified the Commission. As some EU Member States are lagging behind the 1 February 2013 notification deadline set out in Article 16 (7) of the SEPA Regulation, this list has not yet been posted on the Commission Website. The European Central Bank (ECB) Website however provides country-specific fact sheets on the transitional arrangements chosen by individual EU Member States; i.e. use of the possible derogations detailed above, based on information currently available. The ECB website states: "This overview of 'national facts' will be updated and completed when new information becomes available".

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