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The formal 1 February 2014 migration deadline applies in 17 euro area countries. On 20 January 2014, the European Central Bank stated: “The December [2013] figures show that, if the current pace of migration continues, the vast majority of stakeholders will complete their migration by 1 February 2014". The latest qualitative SEPA indicators published by the European Central Bank in January 2014 confirm this outlook. The qualitative indicators take into account the specificities of the respective country with regard to migration progress by payment service providers (PSPs), ‘big billers’, public administrations and small and medium-sized enterprises (SMEs). According to this data, which reflects the assessment of national central banks, it is expected that on 1 February 2014 all PSPs, ‘big billers’ and public administrations will be ready. SMEs in 15 euro area countries are expected to achieve SEPA-compliance by this date.
To avoid difficulties for market participants in the euro area that have not achieved compliance with Regulation (EU) No 260/2012 on time, the European Commission introduced on 9 January 2014 a proposal to “give an extra transition period of six months during which payments which differ from the SEPA format can still be accepted” after 1 February 2014. The EU co-legislators, i.e. the European Parliament and the EU government ministers represented in the Council of the EU, indicated that they intend to finalise the legislative process required to amend Regulation (EU) No 260/2012 as proposed by the European Commission in the course of February 2014.
Consequently, payment service users and providers in the euro area are forced to determine their course of action as of 1 February 2014 based on the assumption that the EU co-legislators will amend Regulation (EU) No 260/2012 to effectively delay the migration deadline in the euro area to 1 August 2014 and the application of penalties for processing payments that do not comply with this Regulation to 2 August 2014. Market participants will also have to rely on the assumption that a new EU Regulation amending Regulation (EU) No 260/2012 will “have a retroactive effect as from 31 January 2014” as proposed by the European Commission.
In this edition of the EPC Newsletter, Javier Santamaría, Chair of the European Payments Council (EPC), reports on latest related developments and market reactions to this European Commission proposal. The EPC emphasises that once the EU co-legislators have effectively modified the deadline for compliance with Regulation (EU) No 260/2012 in the euro area, it will be crucial that relevant public authorities clarify the implications to payment service users and providers immediately. It is the responsibility of the public authorities determining the SEPA compliance requirements to avoid a situation where uncertainty around applicable legal deadlines would impact ongoing migration efforts and further delay the completion of migration.
This edition also includes the EPC’s analysis of the European Commission’s proposal for the revised Payment Services Directive (PSD2). The EPC has identified considerable scope for amendments with regard to the proposed new set of rules related to the activity of so-called third party payment service providers offering payment initiation or payment account information services. The EPC also sees a pressing need for review of the proposed new Article 67, (entitled ‘Refunds for payment transactions initiated by or through a payee’), regarding the details of the unconditional refund right for direct debits. Last but not least, this edition features comment from guest contributors on the implications of the proposed PSD2 and other regulatory initiatives impacting the euro payments market.