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SEPA - Single Euro Payments Area

SEPA stands for Single Euro Payments Area and will be realized per 2 August 2014. It is a pan-European project whose objective is to harmonise Europe‘s payment systems. SEPA primarily covers the euro area countries, but also the remaining EU countries and Iceland, Liechtenstein, Norway, Switzerland, Monaco and San Marino.

Definition and Objectives

EU Regulation 260/2012 establishing technical and business requirements for credit transfers and direct debits in euro entered into force on 31 March 2012.

Its key elements are:

  • The regulation applies to payments within the European Union and to/from EEA countries executed as credit transfers and direct debits in euros. The regulation essentially applies to bulk / mass payments in euros, and does not cover the following, amongst others: express transfers, cheques, bills of exchange, card payments, payments through systems for large amounts, or payments in other currencies.
  • From SEPA Migration End Date credit transfers and direct debits in euros within the EU and to EEA countries may only be executed if they comply with the requirements specified in the Regulation, which include the mandatory use of the IBAN as an account identifier and the ISO 20022 format for electronic instructions.
  • Payment service providers in the EU participating in domestic credit transfers and direct debits must be reachable for relevant SEPA procedures (for non-euro countries this applies only from November 2016).
  • After SEPA Migration End Date, domestic payments may be made without providing the BIC (Bank Identifier Code). From February 2016 this option also applies for cross-border SEPA payments within the EU.
  • Migration of existing pre-authorised payment mandates and direct debit orders to the SEPA Direct Debit Mandate procedure.
  • With regard to SEPA Direct Debis, consumers are entitled to block their account for direct debits from certain creditors, to give only certain creditors access to their account, or to automatically reject payments in accordance with certain criteria.
  • In EU Regulation 924/2009 („EU Pricing Regulation“) the limit of EUR 50,000 has been abolished.

Benefits of SEPA

  • More transparency and greater convenience for the customer
  • Faster processing due to standardised regulation
  • Cross border direct debits througout 32 European countries
  • Strict return and reversal rules in case of non-execution of payments
  • Guaranteed execution periods, thereby better
    liquidity planning
  • SEPA direct debits B2B among coporate customers 
  • (SEPA Direct Debit B2B) - execution of payments
    more quickly and assurance of finality of payment
  • Increased security based on state-of-the-art
    technical standards (ISO 20022)

As the benefits of SEPA for companies depend on the company profile, we would be pleased to advise you on the optimisation and timing of your SEPA implementation strategies.

SEPA Credit Transfer

  • Transaction currency is euro.
  • Validity area within the EEA, technically also possible with Switzerland and Monaco.
  • Mandatory use of IBAN (and BIC), whereat regarding BIC the following applies: Domestic payments may be made without providing the BIC. For cross-border payments within the SEPA-area the BIC is mandatoryuntil 1 February 2016, afterwards optional.
  • New uniform data  in XML-format (e.g. payment reference, a standard 140 characters for the purpose of payment)
  • Uniform processing of payments through standard formats for domestic and crossborder payments
  • New payment slip („PAYMENT ORDER“) with IBAN (and BIC)
  • Shared Costs („SHA“) – originator and beneficiary pay their own cost
  • Guaranteed maximum processing time of 1 bank business day until the amount is credited to the beneficiary‘s account
  • Replaces the national procedures for domestic bulk payments, EU cross-border payments and partly foreign bulk payments in euro within the EEA at the latest by SEPA Migration End Date

SEPA Direct Debit Core

The scheme is available to both consumers and non-consumers.
 

  • The amount to be debited is denominated in euro
  • Validity area domestic and cross-border within the EEA, technically also possible with Switzerland and Monaco
  • Mandatory use of IBAN (and BIC), whereat regarding BIC the following applies: Domestic payments may be made without providing the BIC. For cross-border payments within the SEPA-area the BIC is mandatory until 1 February 2016, afterwards optional.
  • Enlarged model for direct debit instructions and reversals (e.g. CID Creditor Identification, mandate data)
  • Standardised processing time from the moment instructions are received (at specified due date) until the debtor‘s account is debited.
  • Indication of Due Date: on due date both debit on the debtor‘s account and credit on the creditor‘s account take place.
  • Clearly defined processes, periods and procedural requirements which are applicable throughout Europe
  • Standard settlement of reversals of SEPA direct debits
  • Legal certainty through the Payment Services Directive (PSD – legal framework for payment services), which has been implemented in Austria through the Austrian Payment Services Act (Zahlungsdienstleistungsgesetz – ZaDiG)
  • Replaces the existing direct debit and pre-authorised payment mandate procedures in euro within the EEA at the latest by SEPA Migration End Date

SEPA Direct Debit mandate (for consumers and non-consumers)

A SEPA direct debit can only be carried out if a SEPA direct debit mandate has been agreed between the debtor and the creditor. 

The contents of a SEPA direct debit mandate have a standard format for use throughout Europe and they are an integral component of an agreement with the creditor, a specimen is attached for your information.

 

The creditor is required to archive the SEPA direct debit mandate and electronically transmit the contents with every SEPA direct debit. For information about banks, which are participating in SEPA Direct Debit Scheme please see the website of European Council.

 

 

SEPA Direct Debit B2B

The scheme can only be used for direct debits between two contracting parties if these are both non-consumers.

  • The amount to be debited is denominated in euro
  • Validity area inland and cross-border within the EEA, technically also possible with Switzerland and Monaco.
  • Mandatory use of IBAN (and BIC), whereat regarding
  • BIC the following applies: Domestic payments may be made without providing the BIC. For cross-border payments within the SEPA-area the BIC is mandatory until 1 February 2016, afterwards optional.
  • Enlarged model for direct debit instrucionts and reversals (e.g. CID Creator Identification, mandate data)
  • Standardised processing time from the moment instructions are received (at specified due date) until the debtor‘s account is debited. 
  • Indication of Due Date: on due date both debit on the debtor‘s account and credit on the creditor‘s account take place
  • Shorter processing time, final payment is assured (the customer cannot request a reversal of the payment).
  • Clearly defined processes, periods and procedural requirements which are applicable throughout Europe
  • Standard settlement of reversals of SEPA direct debits
  • Legal certainty through the Payment Services Directive (PSD – legal framework for payment services), which has been implemented in Austria through the Austrian Payment Services Act (Zahlungsdienstleistungsgesetz – ZaDiG)

SEPA Direct Debit B2B mandate (for non-consumers only)

A SEPA direct debit B2B payment can be executed only if a SEPA direct debit B2B mandate has been agreed between the debtor and the creditor.

The contents of the SEPA direct debit B2B mandate have a standard format for use throughout Europe, and they are an integral component of an agreement with the creditor; a specimen is attached for your information.

The debtor is required to inform his bank of the mandate data (creditor ID, mandate reference) in a timely manner before the SEPA direct debit B2B payment is executed.

The creditor is required to archive the SEPA direct debit B2B mandate and electronically transmit the contents with every SEPA direct debit B2B payment. For informations about banks, which are participating in SEPA Direct Debit Scheme please see the website of European Council. Please note a bank‘s accessibilty in terms of the specific product SEPA Direct Debit B2B.

SEPA Direct Debit - Creditor Identifier (CID)

The Creditor Identifier is part of the EU-wide SEPA standardisation process. Creditors are registered with an uniform, clear and standardised identification number (creditor identifier) throughout the entire SEPA area.

This identification number is indispensable for

  • the agreement for debiting payments under the SEPA Direct Debit procedure at Bank Austria.
  • the issuance of SEPA Direct Debit Mandates and SEPA Direct Debit B2B Mandates
  • the submission of SEPA Direct Debit and SEPA Direct Debit B2B collections.

The CID can be requested at Bank Austria. They are issued by the Austrian central bank (OeNB). Creditor IDs already issued (e.g. from Germany) can also be used in Austria.

For further information please see the website of the Austrian central bank.

IBAN / BIC conversion service

All SEPA products can be executed only with IBAN and BIC. Your business partners therefore have to obtain the IBAN and BIC.

We advise against converting the IBAN and BIC via the Internet or other providers.

Bank Austria offers its customers an interbank solution for obtaining/verifying their IBAN and BIC for Austrian account relationships in exchange for the country routing code and account number.

FAQ

To what extent does the introduction of the SEPA euro payments system affect the ten new EU countries?

Generally, all EU member states that have adopted the euro as their domestic currency are affected by SEPA. The remaining member states of the European Union and the countries within the European Economic Area (EEA) can participate in the SEPA euro payments scheme to a limited extent (only in regard to euro payments).

 

Will local payment procedures for bills of exchange and cheques also be adapted?

Local paper-based payment procedures for bills of exchange and cheques will not be affected by SEPA.

 

How will my company benefit from SEPA?

Uniform payment instruments for all transactions within the EU and EEA countries. Potential to increase efficiency through a standardised Europe-wide direct debit system. Uniform SEPA data formats enable processing of all domestic and European payments independent ofthe bank and payment destination. Improved liquidity management through specification of a due date for SEPA direct debits. Potential for streamlining EUR bank account structures.

 

When can I start using the new SEPA scheme?

The SEPA scheme was launched on 28 January 2008. SEPA Credit Transfers have been available since then provided that the payee’s bank also participates in the scheme. SEPA Direct Debits have been available since 1 November 2009.

 

Do I have to switch to the SEPA scheme?

From SEPA Migration End Date all domestic and cross-border credit transfers and direct debits in euros within the EU and EEA have to be switched to SEPA schemes (SEPA Credit Transfer, SEPA Direct Debit). Currently existing payment products may not be accepted any longer by the banks.

 

Do I have to make changes to my payment processing software?
You can continue to use the Bank Austria software solutions (such as BusinessLine, BusinessNet) which are currently available as the current payment transaction procedures will also be employed until further notice. As soon as you wish to use the new data formats that are supported by SEPA (XML structure) in your internal processes, you must have the appropriate changes made to your own software. Moreover, a switch to the latest MBS-Version (6.0) is necessary, while the request for download will be communicated separately. Electronically generated instruction data have to comply with the most recent rulebook versions (please see STUZZA website).

Will new payment transfer forms be used for SEPA

The new forms of ordering SEPA payments on paper are available at Austrian banks. The payment order replaces the existing payment slips, forms and transfers based on account numbers and bank routing codes.

Using the payment order, domestic euro transfers can be requested on paper from Austrian accounts using an IBAN, and after adding the BIC details, also transfers to all other European SEPA countries (including Monaco and Switzerland).

 

When national payment service procedures are discontinued on SEPA Migration End Date, the payment slips, forms and transfer used in Bank Austria with bank routing codes and account numbers will no longer be valid; this means that payment instructions will only be accepted by Austrian banks on the “PAYMENT ORDER” form (with an IBAN).

 

In the interests of ensuring a quick and smooth changeover we recommend that our corporate customers using payment slips should take the first step as soon as possible.


Will electronic account statements be adapted under the SEPA scheme?

Electronic account statements will be available in a SEPA-compliant XML-format too (camt.52, camt.53, camt.54). The parallel use of the old formats (MT940, MT942, CREMUL, DEBMUL) will be permitted.

 

Can I still submit/collect my payment transactions in EDIFACT format?

Until further notice payments still can be submitted/collected in EDIFACT-format, the changeover to the SEPA format can be done gradually. From SEPA Migration End Date domestic and cross-border credit transfers and direct debits in euros within the EU and EEA have to be instructed in the SEPA-compliant formats.

 

Will the value dates be different for incoming SEPA transactions?

Value dating is currently not affected by processing/delivering payments via SEPA.

 

What is the difference between ZaDiG, PSD and SEPA?

The EU regulation “Payment Services Directive” (PSD) was implemented in Austria in 2009 through the Austrian Payment Services Act (“Zahlungsdienstegesetz - ZaDiG”). The PSD constitutes the legal framework for the realisation of uniform European payments transactions and is valid for all currencies of the member states. SEPA only affects payments in euro of today’s euro zone. Additionally all other EU-countries plus Norway, Island, Liechtenstein, Monaco, Switzerland and San Marino are included with their euro payments.

Glossary

Acquirer
An acquirer is a service provider in the (credit) card business who signs a contract with a merchant on the acceptance of card payments.

AOS, Additional Optional Services
Additional services that banks can offer in connection with SEPA products.

APC, Austrian Payments Council
The Austrian Payments Council is the Austrian counterpart to the European Payments Council (EPC). The APC assesses and analyses international requirements to find a common position on the topics in the EPC and to prepare for coordinated implementation. See also Austrian Payment Council 

AZV, Auslandszahlungsverkehr
German abbreviation for international payment transactions.

BIC, Bank Identifier Code
The BIC is an 8 or 11 character alphanumeric code that identifies a bank or branch of a bank.

CID, Creditor Identifier
The creditor ID is an 18 character alphanumeric code that identifies the customer giving a SEPA Direct Debit mandate.

EBA, Euro Banking Association
The EBA´s activities include the operation of a clearing and settlement mechanism known asSTEP2 for processing transfers within Europe.

ECB, European Central Bank
Founded on 1 June 1998 as the successor of the European Monetary Institute, the European Central Bank is based in Frankfurt and manages the single currency and the common fiscal policy of the euro currency zone at the third level of the Economic and Monetary Union. The ECB forms the euro system together with the central banks of the member states that have adopted the euro.

EDIFACT, Electronic Data Interchange For Administration Commerce and Transport
EDIFACT is an international, multi-industry standard that defines formats for the electronic exchange of business data.

EEA, European Economic Area - Member States
In addition to the EU member states: Norway, Iceland and Liechtenstein.

EEMU, European Economic and Monetary Union
The EEMU is an important component of the European Union. One of its attributes is the introduction of the euro. All EU member states belong to the EEMU.

EMV Standard, EuroCard/MasterCard/VISA Standard
The EMV standard was created by MasterCard and VISA to establish a uniform technical framework for chip cards and the related processing of payments.

EPC, European Payments Council
A working platform of 42 European banks including the European associations of financial institutions and a number of payment services providers (EBA).

ESCB, European System of Central Banks
A currency authority comprising the European Central Bank (ECB) and the central banks of all EUmember states. The central banks of all countries that did not adopt the euro at the beginning of the third phase of the Economic and Monetary Union (EMU) are also members of the ESCB.

Euro Countries
Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Luxembourg, Malta,
the Netherlands, Portugal, Slovakia, Slovenia, Spain.

European Commission
The EU Commission is the political force behind the EU´s Community policies and prepares drafts for directives and regulations, and contributes to the Community´s law-making process. It holds a monopoly on legislative initiative, monitors compliance with Community law and represents the interests of the Community vis-à-vis national organisations and non-member countries.

EU, European Union - Member States
Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Germany, Estonia, Finland, France, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, the United Kingdom.

IBAN, International Bank Account Number
Internationally standardised, clear account designation (ISO standard). Generally consists of a country code, a bank code (country routing code), account number and a check digit.

IZV, Inlandszahlungsverkehr
German abbreviation for domestic payment transactions.

Mandate
A mandate is generally an order or an authorisation to act on a party´s behalf that does not contain precise instructions on the action to be taken.

Mandate Reference
The mandate reference is a reference number assigned by the payee, which consists of up to 35 alphanumeric characters.

PACS, Payments Clearing and Settlement
UNIFI (ISO 20022) formats for the processing of SEPA payment transactions between banks (interbank format).

PAIN, Payments Standards Initiation
UNIFI (ISO 20022) message types for customer-bank interaction.

PSD, Payment Services Directive
The Payment Services Directive contains guidelines for the uniform European legal framework for payment transactions.

SEPA, Single Euro Payments Area

SEPA Member States
Member states of the EU, the EEA, Switzerland, Monaco and San Marino.

SC, SEPA Cards

SCT, SEPA Credit Transfer

SDD, SEPA Direct Debit

STP, Straight Through Processing
Straight through processing of data, fully automated processing of transactions.

SWIFT, Society for Worldwide Interbank Financial Telecommunication
International association of financial institutions which maintains a telecommunications network (SWIFT network) for the exchange of messages between these member institutions. The association forwards financial transactions between banks, brokers, stock exchanges and other financial institutions.

UNIFI (ISO20022), Universal Financial Industry message scheme
UNIFI (ISO 20022) is the designation for a library of new message types for financial institutions created by the International Standardization Organization (ISO) on the basis of XML syntax. These message types are to replace the MT (message type) formats used in the SWIFT network. The UNIFI formats are also called MX formats.

XML format, Extensible Markup Language
XML is a computer language for data exchange. Formats are defined in this language through standardisation for the transmission of payment transaction data.

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