De Nederlandsche Bank Eurosysteem The Single Euro Payments Area Michael van Doeveren Conference Financial Sector of Macedonia on Payments and Securities Settlement Systems Ohrid 25 June 2008 De Nederlandsche Bank

Eurosysteem Agenda What is SEPA? Why SEPA? How to realise SEPA? Impact of SEPA Uncertainty, concerns and benefits Migration Closing remarks

De Nederlandsche Bank Eurosysteem What happened before….. Interaction public sector and banks: 1990 EC paper ´Making payments in the internal market´ 1992 EC paper ´Easier Cross Border Payments – breaking the barriers´ 1997 EC Directive cross border payments 1999 ECB ´Improving cross border retail payment services´ 1999 introduction euro 2001 Bolkestein regulation (2560/2001) 2001 ECB ´Towards an integrated infrastructure for credit transfers in euro´ 2002 introduction euro coins and banknotes 2002 start EPC 2005 EC concept Payment Services Directive 2006 EPC agreement SEPA Rulebooks and Frameworks … SEPA…and going on

De Nederlandsche Bank Eurosysteem What is SEPA? Single Euro Payments Area

De Nederlandsche Bank Eurosysteem

De Nederlandsche Bank Eurosysteem What is SEPA? Political vision: The euro area will be an internal ´domestic´ market for retail payments generate scale economies and promoting competition Concretely: European payment instruments for both cross-border and domestic payments in euro: credit transfers, direct debit and cards

De Nederlandsche Bank Eurosysteem Why SEPA? European Politics Improvement European economy: Lisbon agenda Economics Internal market: volume and competition Banks To prevent ‘further regulation’ after Regulation 2560/2001 Especially Cross-border banks can profit from new market circumstances

De Nederlandsche Bank Eurosysteem The European payment market - currently Belgium IrelandGreece FranceAustria ItalyLuxembourg NetherlandsGermanySpain

De Nederlandsche Bank Eurosysteem The European payment market – future (SEPA) Consu- mers Companies (incl government) Retail Bank ABank BBank C PEACH Manager (SME) Credit Transfer Direct Debit Main market participants and payment products: Users of payment services: Providers of payment services: Payment transactions processor: Management entity for payment products ACHBilateral Master card VISA Euro Alliance ?

De Nederlandsche Bank Eurosysteem How to realise SEPA? Self-regulation: European Payment Council of banks develops standards and products Payment Services Directive: legal harmonisation

De Nederlandsche Bank Eurosysteem EPC Technical harmonisation Two kinds of agreements in EPC: 1. About interbank processing: Credit transfer rulebook Direct debit rulebook 2. Restructuring of the market: SEPA Cards-framework (SCF) Clearing & Settlement Framework SECA

De Nederlandsche Bank Eurosysteem EPC Roadmap Three phases Design and preparation (EPC) Implementation and organisation Dual period of gradual migration

De Nederlandsche Bank Eurosysteem SEPA Programme Design & preparation Implementation & deployment Co-existence & gradual migration Programme activities 2 Milestones - SEPA instruments available in market - Critical mass migrated/SEPA irreversible subject to the commitment of all stakeholders Design & specification implementation pilots national migration early adopters programme management, planning, communication, monitoring launch

De Nederlandsche Bank Eurosysteem Milestones Credit transfer and Direct debit European Rulebooks are the basis for products of the banks Framework for clearing and settlement Credit transfers from 28 January 2008 on Direct debit from end 2009 on Cards SEPA Cards Framework After 2010 only SEPA-cards

De Nederlandsche Bank Eurosysteem Role public sector SEPA is a project banks: self-regulation via EPC However… European Commission  Payment Services Directives  Public users are the early adopters Eurosystem: catalyst role  5 th Progress report July 2007

De Nederlandsche Bank Eurosysteem Legal harmonization: Payment Services Directive Content: Proportional supervisory regime for non- bank payment service providers Transparency requirements Rules about the relationship of the payment service provider and user

De Nederlandsche Bank Eurosysteem Role of NCBs To ensure a smooth migration to SEPA Self-regulation: banks are in the lead Policy development and monitoring in the Eurosystem Monitoring national implementation Organizing stakeholder involvement (e.i. Consulting group SEPA NL) Analysis, communication and planning

De Nederlandsche Bank Eurosysteem Trends in payments in the EU

De Nederlandsche Bank Eurosysteem Potential for SEPA compliancy NL

De Nederlandsche Bank Eurosysteem Impact of of SEPA Consumers Use IBAN and BIC Use of cards in the whole SEPA area Firms (private and public) Easier cash-management and administration Standard formats (ISO XML) Use of IBAN and BIC Centralisation of accounts and direct debits Retailers More choise: terminal, acceptance of brands, acquiring Banks Change of markets, new products, new systems

De Nederlandsche Bank Eurosysteem Hurdles! Uncertainties: No concrete products offered! Legal framework in preparation Concerns: User adoption of SEPA products Price development (cards!) Maintaining existing efficiencies Continuity of payments

De Nederlandsche Bank Eurosysteem Benefits of SEPA Efficiency, level playing field and transparency lead to cost benefits for society in the long run Reduction costs for average user of payment services in Europe Comfort/User-friendliness Innovation

De Nederlandsche Bank Eurosysteem Migration Aim: a smooth migration to SEPA To organise nationally Market driven Speed can differ between countries Stakeholder involvement and communication are important tools for success

De Nederlandsche Bank Eurosysteem Transition plan of the Netherlands Objective: an orderly and efficiently change over from domestic payments to SEPA Scope: all existing payment instruments Consequences and choices for different stakeholders Market driven migration Identifying barriers and changes Mid 2009 evaluation of the migration and choice about phasing out domestic instruments

De Nederlandsche Bank Eurosysteem Points of concern SEPA National Forum on the Payment System Price developments Range of options open to consumers and retailers, caterers and other regarding debit card brands User-friendliness of migration to IBAN and BIC Safety of SEPA direct debit Prolongation of direct debit contracts and mandates Standardisation in the Bank-client domain Interbank Swich support service Dispute handling Accessibility of the noncash payment system Consultation process

De Nederlandsche Bank Eurosysteem Fifth SEPA progress report Eurosystem July 2007 (messages) Complete Clarity needed on all features of SEPA Direct Debit by December 2007 Further card standardisation is vital Need for one additional European Debit card scheme Co-branding can help card schemes to gain the time needed for the development of a long-term strategy Infrastructures should comply with SEPA-compliance criteria Security of SEPA payment instruments needs to receive more attention Reachability is the key

De Nederlandsche Bank Eurosysteem Closing remarks The first phase of SEPA (SCT) was introduced succesfully on 28 January 2008 SEPA will transform the European landscape SEPA is good and has benefits for all users! But cost come first… Implementation and transition will be planned carefully User involvement has to be stimulated SEPA is the start for new developments: e-invoicing, e- and m-payments etcetera