De Nederlandsche Bank Eurosysteem Migration of the Netherlands to the Single Euro Payments Area Michiel van Doeveren Equens-DACT SEPA-training Utrecht 6 december 2011 De Nederlandsche Bank

Eurosysteem Johannes Vermeer – The Milkmaid 1658

De Nederlandsche Bank Eurosysteem Agenda Backround of SEPA SEPA-products Impact of SEPA National SEPA Migration Plan and status of migration Concluding remarks

De Nederlandsche Bank Eurosysteem End of 2009NLEU 17EU 27 Inhabitants (mio) GDP (Eur bio) , ,790.8 Inst. offering payment services 3196,5478,700 Payment accounts (mio) Transactions (bio) POS terminals (ths) 3406,4288,555 ATM’s (ths) Cards (mio) European Payment Market Bron: ECB, Eurostat EU

De Nederlandsche Bank Eurosysteem Payment Trends in the EU Source ECB Number of transactions per type of payment intrument (billions)

De Nederlandsche Bank Eurosysteem The euro is the common currency of 17 countries today, but retail payments are still organised nationally € € € € € € € € € €€ € € € € € €

De Nederlandsche Bank Eurosysteem SEPA means an uniform payments market EU € € € € € € € € € €€ € € € € € €

De Nederlandsche Bank Eurosysteem Impact 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 buyer seller good/service debitpayment instruction bank payment instruction debitcredit payment information payment information Payment chain clearing

De Nederlandsche Bank Eurosysteem SEPA Credit Transfer (in use since 2008) SEPA Credit Transfer: Standard for bank to bank credit transfers in euro (mass payments) Payments are made for the full original amount IBAN and BIC are obliged ISO UNIFI standards (XML-language) 140 characters of remittance information are delivered to the beneficiary Unstructured or restructured remittance information as agreed between partners

De Nederlandsche Bank Eurosysteem SEPA Direct Debit (introduced in 2009) SEPA Direct Debit: Standard for bank to bank Direct Debits in euro (B2C and B2B) Payments are made for the full original amount IBAN and BIC are obliged ISO UNIFI standards (XML-language) One-off or recurrent A mandate is signed by the debtor (e-mandate) Pre-notification (mostly 14 calender days in advance) Refunds (PSD: 8 weeks) and returns

De Nederlandsche Bank Eurosysteem SEPA Regulation End dates:  1 February 2014 uniform end-date national credit transfers and national direct debits  1 August 2015 niche products SCT and 1 August 2016 niche products SDD Conversion facilities IBAN for consumers and XML services for firms until 1 August 2016 Technical requirements: consumer demands w.r.t. the SDD, white listing, black listing, maximum size and frequency No MIF SDD after Role of Trilogue European Commission published the draft SEPA-Regulation on 16 December 2010

De Nederlandsche Bank Eurosysteem SEPA for Cards Vision of the Eurosystem (1) The Consumer can choose between different debit card brands The Merchant can choose which debit cards brands he or she accept The cards market is competitive, reliable and efficient, as well as for card holders, merchants as for processing More aspiration is needed in the SEPA for cards: need for an additional European debit card scheme Further card standardisation is vital

De Nederlandsche Bank Eurosysteem SEPA for Cards Vision of the Eurosystem (2) All technical and legal barriers are eliminated Interchange fees should not be misused to generate excess revenues for the banking system, at the costs of merchants and cardholders Preference for no MIF-model: see for example the MasterCard and VISA cases Ideal situation: ‘Any card at any terminal’

De Nederlandsche Bank Eurosysteem Migration to SEPA Aim: a smooth migration to SEPA To organise nationally Market driven within the limits of the SEPA- Regulation Speed can differ between countries Stakeholders’ involvement and communication are important tools for success Clear end dates

De Nederlandsche Bank Eurosysteem Infrastructure SEPA proof for mass migration SEPA proof infrastructure Public campaign Communication from umbrella organisations, intermediaries, banks SEPA proof software packages Support migration end-users Software suppliers Communication Banks Support migration end-users Large-scale enterprises SCT SMEs SCT only Consumers Large-scale enterprises all SMEs SCT & SDD Early movers Growing use of IBAN Early movers Mass migration Specifications SEPA proof basic products for businesses SDD adapted to consumer protection measures regulation 1 February: end-date SCT & SDD migration SCTSDD Possible use of niche products after end-date

De Nederlandsche Bank Eurosysteem Migration status SCT Transactions processed in SEPA format as % of total transactions

De Nederlandsche Bank Eurosysteem Aim of the SEPA Migration Monitor Insight into the status of SEPA migration of corporates, public authorities and software suppliers 1. Awareness of the meaning and implications of SEPA 2. Stage of preparations 3. Actual use of SEPA payment instruments 4. Development of software packages

De Nederlandsche Bank Eurosysteem Results: Awareness users Large companies, public authorities and a large part of the local authorities and software companies know what SEPA is. More than 80% of the SME doesn’t know what SEPA is. 36% of the middle-large companies doesn’t know what SEPA is.

De Nederlandsche Bank Eurosysteem Results: Awareness users Information needs  SME: general information  Middle-large companies: general information  Large companies: exact end dates; e-mandates  Local authorities: exact end dates; general information  Public authorities: nowhere, progress introduction in NL Most often named information sources  SME: homebank, accountant, DNB  Middle-large companies: homebank, DNB, government  Large companies: homebank, DNB, government  Local authorities: homebank, ICT provider, DNB  Public authorities:SPPS, DNB

De Nederlandsche Bank Eurosysteem Results SEPA Credit Transfer (SCT) A small percentage now only pays with SCT With the local authorities the situation is hardly changed since the last monitor. With the large companies a worsening seem to have taken place. A large part of the SMEs is still far behind, but did progress. Now 78% has done nothing yet.

De Nederlandsche Bank Eurosysteem Results SEPA Direct Debit (SDD) With the public authorities and large companies a worsening seems to have taken place in comparison to the last monitor. With the local authorities the situation hasn’t changed. With the middle-large companies a small improvement is visible. By now 4% uses the SDD. 93% of the SMEs has done (almost) nothing in preperation.

De Nederlandsche Bank Eurosysteem Results softwareproviders

De Nederlandsche Bank Eurosysteem Concluding Remarks The success of SEPA depends on: An end date for national payment instruments (SEPA-Regulation) SEPA for Cards means ‘Any card at any terminal’. This requires time. Further European standardisation, which is not easy Well organised stakeholder involvement and consultation The implementation of the Netherlands’ SEPA Migration Plan

De Nederlandsche Bank Eurosysteem Questions?