MyBank The simple, safe way to be part of E-SEPA Presentation for banks June 2011

For banks Overview Background to EBA CLEARING approach Description of the envisaged solution Benefits 2

For banks BACKGROUND

For banks 4 E-Commerce growth Estimated growth rates in some key EU countries (source: Forrester research)

For banks Background Growing merchants’ demand and regulators’ requests for online- payments solutions to support e-commerce growth Risk of sub-optimality and inefficiencies from potential proliferation of solutions and resulting fragmentation Several bank groups suggested that EBA CLEARING launches an initiative to create a pan-European e-payments solution in order to ensure reach and overcome problematic interoperability issues EBA CLEARING Board decided to explore potential solutions for ‘e- services’ at a pan-European level, taking into account the EPC work on an e-Payments framework and, above all, the requirements of the European web-merchants industry 5

For banks EBA CLEARING examined so far the following aspects: scope and meaning of ‘e-services’ application and usage of such services in the market requirement for infrastructure services to support a solution interface, security and messaging requirements business model aspects (a priori no MIF) First conclusions and basic principles for the solution: real-time authorisations to the largest extent web-technology based and fully secure 4-corner model, open to all PSPs supporting SEPA schemes in a first phase re-usable for various payment instruments and currencies other than EUR Background 6

For banks EBA CLEARING has developed a strategy describing the key principles of a pan-European e-services solution that facilitates the banks’ service offerings to their customers when buying and selling on the Internet. The strategy is written up in a Blueprint document that describes the e-service solution, as well as the mechanics of how such a service would work in a four corner mode. The blueprinting Phase 1 is now completed. The Blueprint document has been published for consultation at EBAday on 15 th June. Phase 1 : creating a Blueprint document 7

For banks Next steps The BP document serves as a basis for a broad market consultation to better validate the proposition and to take into consideration all relevant stakeholders’ requirements and expectations, in particular the priority for delivery of different components. Based on the input to be received, it is envisaged to form a Pilot Group (November 2011) of willing banks and e-merchants for a Live Pilot in May

For banks THE E-SERVICES SOLUTION

For banks Illustration EBA CLEARING solution. 10 MyBank

For banks Illustration 11 MyBank

For banks Simplicity and security EBA CLEARING will facilitate the delivery of a solution that provides for a simple and secure customer experience throughout Europe. is a button to be displayed on the website of web- merchants in SEPA as a payment channel option Consumers click on this button to complete their purchase in a secure manner via the banking channel of their bank MyBank 12 MyBank MyBank is a working title during the consultation phase.

For banks A secure customer experience 1.When customers click, they select their bank name and are taken to their bank’s online banking log-on page for payment 2.In the secure online banking account environment, they confirm their payment instruction and are then returned to the retailer’s website.  The buyer’s personal bank account data remains with his bank 3.The button will support a guaranteed “Push” payment (credit transfer), but also the creation and update of single or recurring SEPA Direct Debit mandates 4.The merchant receives an ‘authorisation’ in real time and the payment will follow. The first payment instruments supported will be SEPA Credit Transfer and SEPA Direct Debit 13 MyBank

For banks is an Internet-based solution initially designed for use with a browser, but can also be adapted for web-enabled smart phone apps, or physical devices such as POS terminals MyBank itself is not a payment instrument, it enables existing payment instruments In later phases, the same solution will be extended to other payment methods and non-EUR instruments and e-identity services What is MyBank? 14 MyBank

For banks BENEFITS

For banks Online banking is uniquely positioned to offer e-payment services 16

For banks Responding to end-users’ needs Merchants a single, safe and simple pan-European solution to enable their customers to purchase products and services both at national and cross-border level a reduction of the growing amount of online fraud found with existing solutions a solution offered by banks, who they trust and with whom they already have a relationship Consumers a simple solution that they can trust when shopping online no need to communicate credit card or other bank details to a third party a solution offered by banks, who they trust and with whom they already have a relationship 17

For banks Providing important benefits to the banks puts the bank into the heart of an e-commerce transaction, every time its customers buy or sell on the web reduces the risk of disintermediation allows the bank to make full use of the new SEPA instruments and of its investments into adapting its own systems to SEPA provides opportunities for growth in new ways in the internet world MyBank 18

For banks Will people really be interested in MyBank? Yes. There is no other pan-European product in this space offering both Credit and Debit functions. The Merchants are organising themselves at a pan-European level and have requirements that MyBank meets. The same is evolving at the Consumer organisations. The regulators are pushing for innovative payment solutions. The banks can open themselves to new revenue opportunities. 19

For banks So what will EBA CLEARING do? Set up the solution: –Provide the technical specifications, legal texts –Run a testing, building and delivery program –Build Reach among the banks –Onboard with the Merchant and Consumer stakeholders Act a solution manager: –Run the adherence processes –Oversee the evolution of the solution EBA CLEARING will invoice the participants of the solution for these activities on a cost recovery basis. 20

For banks What else will EBA CLEARING do? Directory Service EBA CLEARING will provide the technical directory of all the buyer and seller banks, required to make this solution work. Routing Services Seller banks need to capture the messages from the sellers, enrich them, and send them to the validation service of the Buyer bank. Such a routing service can be created in-house, or can be outsourced to a third party. To ensure availability at launch, EBA CLEARING will offer a routing service as an optional service to participants. Seller Creditor services Smaller sellers may need help with getting this solution onto their website. Seller banks may wish to offer plug-in services to their customers as an extension of the Routing service, on a ‘white label’ basis. 21

For banks Sounds Good. It is expensive, right? Not really. The EBA CLEARING part should not be more expensive than equivalent national schemes as the fixed costs will be shared. For a few thousand Euros a year and a couple of cents per transaction, you have a real-time, pan-European online authorisation solution for Credits, Debits and later Cards. OK, but I have in-house work to do. Yes. And its hard to estimate how much time that will really take you, depending on how sophisticated and open your systems are. As a seller bank, its easy to outsource this, and in any case the seller will pay for additional services. As a buyer bank, its about your internet banking side. The good news is that integration is probably easier than you think. 22

For banks Are you interested in this initiative? What elements of this do you find are the most appealing? What are the drivers? Would you be interested in being a pilot bank? Do you have customers who are interested in being a pilot merchant? What do you think? 23

For banks If you want to know more, please ask to receive the Blueprint document on If you have more questions, please contact: How can I be part of it? 24

For banks EBA CLEARING 40 rue de Courcelles, F Paris Tel