Single European Payments Area Belgian Financial Forum, 30th May 2006 __________________________________________________________________ Antoon Termote Senior General Manager Group Payments, KBC Group SEPA-components : Credit transfers and direct debits

30th May 2006Belgian Financial Forum2 Political objective of the European Commission March 2000 (Lisbon Summit) Make Europe the most dynamic and competitive economy by This means: Strengthening the Internal market by removing obstacles to trade in goods and services Developing efficient, cheap and secure payment system and instruments Setting up a New Legal Framework for all payments in the Internal Market

30th May 2006Belgian Financial Forum3 SEPA-Timeline for action EURO EC Reg EC Reg 2560 cap increase € SEPA for citizens SEPA for infrastructure

30th May 2006Belgian Financial Forum4 SEPA structure SEPA will be built on three pillars supported by the NLF that creates the legal base NEW LEGAL FRAMEWORK SEPA DIRECT DEBIT SCHEME SEPA CREDIT TRANSF SCHEME SEPA CARDS FRAME- WORK IBAN/BIC Infrastructur e

30th May 2006Belgian Financial Forum5 SEPA applicability EFTA EU 25 Eurozone Present situation National schemes and standards Usage and habits divergent from country to country Different laws SEPA 1 Product standard 1 ? Infrastructure 29 countries

30th May 2006Belgian Financial Forum6 The SEPA framework is standardizing the bank-to-bank payment process. Originator‘s Bank Originator Beneficiary’s Bank Beneficiary PE-ACH Phone Banking ?CODA ? SEPA “products” including bank value-add EPC rulebooks

30th May 2006Belgian Financial Forum7 SEPA Credit Transfer Customer Account Number : IBAN - BIC Form : new layout (after 35 years) Execution Time : 2010  all transfers D+1 File layout Cut-off time : now continuously ; SEPA depends on operator STP Free message length Structured message : to be defined

30th May 2006Belgian Financial Forum8 SEPA Direct Debit Mandate : at beneficiary Mandate revocation : with beneficiary Payer complaint : up to 6 weeks File layout Cut-off time file remittance Value dating payer and payee Pan-European system

30th May 2006Belgian Financial Forum9 IBAN & BIC Belgium IBAN BE BIC BANKBEBB France IBAN FR BIC BANKFRPP882 The Netherlands IBAN NL97 BANK BIC BANLNL2A

30th May 2006Belgian Financial Forum10 Credit Transfers in practice Present situation Use of SRI 1 Value date IEP 2  D+3 Use of BBAN credit transfer form 1 Structured Remittance Information 2 Intra EEA EUR Payments SEPA No SRI available Value date IEP from 2008  D+3 from 2010  D+1 No SEPA credit transfer form available Belgian application Continued support of SRI on Belgian level Value date IEP from 2008  D+3 from 2010  D+1 Belgian SEPA credit transfer form will be created

30th May 2006Belgian Financial Forum11 Draft Belgian Credit Transfer Form

30th May 2006Belgian Financial Forum12 Direct debits in practice Present situation National system Refusal order possible till D+4 days Administration mandates at debtors bank SEPA Pan-European orders will be possible Refusal order possible till D+6 weeks Administration mandates with creditor Belgian application National and cross- border orders in one system Extension refusal period till D+6 weeks Migration of administration to creditor

30th May 2006Belgian Financial Forum13 Impact on Consumers European dimension : –bank tariffs  converge –consumer protection  common –account number  change to IBAN –bank accounts with same payment instruction  common standards –time-schedule & cut-off time  common –Straight Through Processing  common –cross-border direct debits  new product Belgian dimension : –one-of direct debit  new product –long period (6weeks) to refuse direct debit order

30th May 2006Belgian Financial Forum14 Impact on SME & Corporates European dimension : Idem Private customers + –interfaces with ERP –use of ISO standards –guaranteed remittance dates –optimize number of bankaccounts and bankrelations –steering of payment traffic depending on ‘European’ conditions Belgian dimension : –administration direct debit with companies (creditor) –uncertainty on collection of direct debit orders (long refusal period)

30th May 2006Belgian Financial Forum15 Payments market in the Eurozone Depending on the country, current behaviour is very different. To what extent will SEPA influence the pattern of behaviour ? What will be the effect of standardization on competition ? What will be the effect on the processing of payment transactions ? Source: World Payments Report

30th May 2006Belgian Financial Forum16 Changes in Euroland The banks rose to the challenge … … but neither is the Commission satisfied … (Consultative Paper on SEPA Incentives, 13 Feb 06) … nor is the European Central Bank ! (Towards a Single Euro Payments Area, 4th progress report, 17 Feb 06)

30th May 2006Belgian Financial Forum17 Making the dream become a reality SEPA is a goal for the European Union, designed to make Europe the World’s leading economy by 2010 All stakeholders are involved to realize SEPA (retail, wholesale, public authorities, government, national bank, banks, …)