SEPA

A newsletter from SEB’s SEPA Group  •  www.sebgroup.com/sepa April 2010

It’s been quite a while since the

last newsletter, but the work to achieve
a single euro payments area is still
going forward.

Even so, some obstacles remain. There

are, as you all know, not only a variety
of products to develop but also a great
number of countries to coordinate.
But the most significant hurdle on the
road to full SEPA adoption is the lack of
certainty regarding an end date for all
participating countries, which has led
to the process taking a different pace
in the various member states. By now
the PSD is more or less in place and
the development of SEPA products is SEPA migration going on
right now – in Finland
proceeding well, but because of this
uncertainty the migration of domestic
payments to SEPA lacks momentum.

As a contrast to this, Finland has
recently communicated that it has
decided to abandon the domestic
scheme now and take up SEPA
instruments fully before the end
of 2011. Read more about this in
Harri Rantanen’s and Olli Savolainen’s
article.
Also, from the interview with Björn
Flismark on page 2, it is clear that
a decision on end-date legislation is
in fact getting closer. Already by the
end of 2012 all stakeholders could
be pushed to adopt SEPA.
Welcome to this spring issue of
SEPA News!
Henrik Bergman
SEPA Global Product
Manager, SEB
The Finnish SEPA migration plan was updated in February 2010 as
a joint effort by the relevant stakeholders in the market. The original
national SCT December 2010 end-date got a 10 months extension
period.
Updated migration plan for SEPA Also Bank-to-Customer reporting will
Credit Transfer includes the following change (according to each bank’s own
firm deadlines: schedule). Banks in Finland have al-
• Creditors will include IBAN and BIC ready made a description of replacing
on all outgoing invoices as of 1 July local bank account reporting formats
2010 with the ISO 20022 standard. Interna-
tional creditors’ reference (ISO 11649)
• Officially, the SCT transition period
will be taken into use from 1 December
will end 2010 but both banks and
2010, enabling further automatic rec-
software providers may prolong
onciliation of cross border receivables.
their offering of legacy credit trans-
fer and payment format services Continues next page
until October 2011
• Payment files in Finnish national
legacy formats not accepted after
1 November 2011
• Banks will stop clearing local Finnish
payments by December 2011

1  
 A newsletter from SEB’s SEPA Group

Benefits and challenges for

corporates and banks
The national SEPA forum of corporates,
banks, authorities, software vendors,
consumer interest groups and mer-
chants constantly strives towards a
smooth migration by solving problems
and making suggestions for further
development. Thanks to this, SCT
already enables a service level at par
with the legacy instruments – hence
making it more and more lucrative for
corporates to migrate to SEPA.

By implementing SEPA properly for

Finnish transactions a corporate
customer is able to start using SEPA
payments for other countries too.
This will result in a harmonised and
consolidated, i.e. more efficient,
accounts payable process. Using one,
centralised IBAN bank account in
customer invoicing enables immediate
rationalisation of cash positioning and
euro flows forecasting.
Getting rid of local clearing systems,
interfaces and operations is beneficial
also for the banks. This will help us
offer services to customers even more
cost-efficiently than before.
However, these benefits are not for
free. Comprehensive planning and
implementation requires investments
and already scarce human resources.
All stakeholders need to do their
share…
SEB´s SEPA status in Finland
• Every sixth EUR transaction run in
SEPA mode
When can we expect a
complete migration to SEPA?
Björn Flismark, deputy chairman of the Euro Banking Association and
member of the European Payments Council, argues for an end date in
order to get all stakeholders on board and in sync. “The advantage is
that it sends a strong signal to all stakeholders that they must adopt
SEPA. Doing nothing is not an option since legacy payment services
will not be available anymore from a certain date”, he says.
The move towards SEPA seems to includes choice of what type of legis­
be a slow one. SEPA Credit Transfers lation to use.
started in January 2008 and two years
later only six per cent of payments are According to Björn Flismark it is most
done through SCT. And SDD has only likely that this will be a regulation
been operational since November which is directly applicable in all EU/
2009 with very few Direct Debits being EEA countries.
processed.
Another important question is if there
Is this the right time to talk about legis- is going to be one end date or separate
lation on end date for SEPA migration? end dates for SCT and SDD. One idea is
to have an earlier date for SCT.
“There are some that think so, among
others the new commissioner for the “However it would make things more
Internal Market and the European Par- complicated to have two end dates”,
liament for example”, Flismark says. says Flismark.

• Started to migrate its local file-based
transaction channel customers to
the global SEPA enabled channel,
Global Corporate Access
• Offer other than SEPA related services
in the same one-point-of-entry solution
Olli Savolainen,
Head of Cash Management,
Merchant Banking Finland
Harri Rantanen,
Manager, Formats & Standards,
Merchant Banking Finland
The new Commissioner Barnier said
in January that he intends to propose
legislation with the objective of setting
one or more deadlines for migration
to SEPA products for direct debits and
credit transfers.
The European Parliament adopted a
resolution in March 2010 asking the
Commission to set a binding end date
for migration to SEPA products by
31 December 2012, after which all pay-
ments in euro must be made using the
SEPA standards.
The Commission is now making a
so called Impact Assessment. This
The geographic scope is primarily the
Euro area even though it is likely that
the regulation would also cover non-
euro countries – but at a later time,
perhaps one or two years later.
“The timetable for proposal on legisla-
tion is mid 2010. This means that a reg-
ulation could be adopted this autumn
to come into force by the end of 2012.
This is a very challenging timetable
which will put a lot of pressure on all
stakeholders”.
Anna S Marcus,
SEPA PSD Communications Manager,
SEB

2  

SEPA Direct Debit launch
step by step
As expected the SEPA Direct Debit
(SDD) has not yet accelerated in
regards to users and transaction vol-
umes. It is natural that it takes longer
to adapt to new direct debit schemes
than to the SEPA Credit Transfer
for several reasons. Dependency to
the launch of the Payment Services
Directive which was delayed, major
fragmentation between practices in
different current domestic Direct Debit
schemes and being quite a complex
product involving the mandate
relationship between creditors and
debtors are natural reasons leading to
a drawn out period for the SDD market
take up. The European Central Bank
and the Commission have recently
officially requested banks, in a letter
to the European Payment Council, to
continue with further enhancements in
coming releases of the SDD schemes.
There are already fully functioning di-
rect debit schemes launched – both for
B2C and B2B purposes. The different
practices in local direct debit applica-
tions will however raise demand for
different optional services in the SDD.
3  
A newsletter from SEB’s SEPA Group
An example of such functionality is an
early distribution of mandate related
information to the debtor before the
first collection. If presented by the
debtor bank the payer will have the
chance to react early and block man-
dates that he may see as unauthorized.
SEB sees it natural that the SDD product
will need some gradual enhancement
over time. Focus for us is now the launch
of a SDD Creditor offering to make
up the SDD debtor offering already
launched for the Core scheme (B2B).
Launch of the SDD B2B Debtor and
Creditor products are planned for
the autumn. At then we expect to see
further interest for the SDD with the
new EPC scheme releases and also
probably some concrete declarations
on a SEPA migration end date which
would encompass migration of domes-
tic direct debit schemes to SDD in euro
countries.
Henrik Bergman
SEPA Global Product Manager, SEB
PSD stragglers
close to the finish
line
Almost all EU/EEA countries
have by now implemented
the Payment Service Directive
(PSD) in national law and most
banks are now finalising their
adaptation efforts.
Despite some delays, Finland and
Estonia will have national PSD
legislations into force in May. Sweden
is expected to have implemented the
directive by 1 July 2010. The Swedish
government bill on the complete legal
draft will however not be final before
end of April and the Parliament
adoption is planned as late as
beginning of June. Only Poland and
Iceland will thereafter be resting until
late 2010 with their adoptions of the PSD.
This means that from mid 2010 the
new routines and market practice
for payments based on the harmo-
nized legislation can be expected in
general in the EU/EEA markets. There
are still though some interpretation
notes being published on European
Commissions blog and discussions
in banking forums are ongoing about
which interbank practices that should
be applied.
For payment service users the changes
introduced with the PSD can now be
summarized. Worth to note is which
provisions for member state options
that have been applied in each country
as well as some significant variances
in national interpretations of the direc-
tive. Those variances are expected to
rule for a while but not to be perma-
nent. Already 2012 the European
Commission will perform a follow up
on the PSD with the objective to evalu-
ate its feasibility and further align the
national implementations.
Henrik Bergman,
SEPA Global Product Manager, SEB
 A newsletter from SEB’s SEPA Group

SEPA stakeholders gain

stronger voice
SEPA governance has been discussed for a long time. Some stake-
holders feel that they do not have enough influence. Others, like the
ECB and the Commission say that the SEPA process and the migration
must be much better coordinated.
As a result, the decision has been taken The creation of the SEPA Council is
to establish a SEPA Council which will another important sign of the importance
have the following members: that EU authorities attach to the success
One member each from Consumers, of SEPA. The EPC has played a central
Retailers, Businesses/corporates, role in the SEPA work for the last 8 years
Small and medium-sized companies and will continue to be an important
and national public administrations stakeholder. But is it clear that also other
stakeholders will now get a stronger
One member each from co-operative voice.
banks, savings banks, commercial
banks and payment institutions and Björn Flismark,
from European Payments Council Deputy chairman of the EBA,
Four members from Euro Central member of the EPC,
Banks Senior advisor GTS product
management and development,
The SEPA Council will be chaired by the SEB
European Central Bank and the European
Commission jointly. The tasks of the
SEPA Council will be:
Realisation of an integrated euro retail
payments market
Deliver on the SEPA vision with strategic
direction for EU retail payments
Monitor and support the SEPA migration
process
Ensure accountability and transparency
of the SEPA process