Out-Law News 2 min. read
20 Jan 2014, 12:36 pm
The draft Regulation on SEPA migration (8-page / 171KB PDF) would, if introduced, give EU businesses until 1 August 2014 to meet the technical requirements for processing transactions made in euro currency.
A deadline of 1 February 2014 had been set as a date after which EU businesses within the 'single euro payment area' (SEPA) would no longer be able to process payments in euros using systems that do not conform to new standardised rules and formats. A variety of different payment processing systems, which conform to a range of different standards, are currently in operation in EU member states.
New rules have been designed to standardise payment schemes to help boost cross-border electronic payments across the SEPA zone. In geographical terms SEPA refers to all 28 EU member states, Iceland, Liechtenstein, Norway, Switzerland and Monaco.
However, earlier this month the European Commission said that some businesses had been slow to change their systems to adhere to the new requirements. It therefore proposed that the 1 February deadline be extended to give businesses more time to comply. In the interim period payments would be able to continue to be processed in accordance with national payment scheme standards.
To formalise the new deadline MEPs and EU Ministers must back the Commission's proposed SEPA migration Regulation.
According to the note sent by the General Secretariat of the Council to the Permanent Representatives Committee (COREPER) to the President of the Council of Ministers, and as a result of the need for urgency to pass the new Regulation before the 1 February, EU Ministers have been invited to pledge their backing for the draft Regulation if MEPs pass the text after a first reading in the European Parliament.
The SEPA regime refers to the process major banks including Barclays, BNP Paribas, Deutsche Bank and HSBC, and other members of the European Payments Council (EPC), have backed to help establish standardised payment schemes and frameworks in a bid to make it easier for cross-border electronic payments to go through across the SEPA zone. In geographical terms SEPA refers to all 28 EU member states, Iceland, Liechtenstein, Norway, Switzerland and Monaco.
EU member states are subject to set EU rules that underpin the SEPA system, which were first introduced through common rules for the authorisation and the revocation of direct debits set out in the wide ranging Payment Services Directive. Further technical specifications for the payment systems, and compliance deadlines, are set out in the SEPA Regulation and the rulebooks that have been developed alongside it.
Under the SEPA Regulation, payment service providers must establish "payment schemes" that have the same "rules" for the purpose of carrying out cross border and national credit transfers (CTs) and direct debits (DDs). The measures are designed to ensure that different payment systems are "technically interoperable" with one another.
The Regulation sets out certain requirements that payment service providers must conform to when conducting those transactions, which include using a particular "payment account identifier" and "message formats", among other things.
The 1 February 2014 deadline had been imposed on EU member states to ensure their systems conformed to SEPA standards for euro currency transactions. Non-euro currency nations will have to make the migration by 31 October 2016.
Technology and payments law expert Angus McFadyen of Pinsent Masons, the law firm behind Out-Law.com, said previously that should businesses not comply with the SEPA standards there is a "stark risk" that their "euro payments or collections will not go through".
"This is because they will not be sending the right messages in the right formats to their banks in order to allow their banks to effect those transactions," he said.