SEPA


1. Sepa


EVOLUTION OF PAYMENT SYSTEMS

Sepa is the acronym for "Single Euro Payments Area". Its objective is to carry out bank transfers and direct debit orders in a simple and fast manner, as occurs today across the country.


The Single Euro Payments Area includes 32 countries:

  • the 15 EU countries that employ the euro (Italy, Germany, France, Spain, Portugal, Greece, Austria, Finland, Ireland, the Netherlands, Belgium, Luxembourg, Slovenia, Cyprus and Malta);
  • the 12 EU countries that use another currency nationally but which make payments in euro (United Kingdom, Sweden, Denmark, Estonia, Latvia, Lithuania, Poland, Czech Republic, Slovakia, Hungary, Bulgaria, Romania);
  • another 5 countries (Switzerland, Norway, Iceland, Liechtenstein, the Principality of Monaco).


EU Regulation no. 260/2012 (Sepa end-date Regulation) set 1 February 2014 (the so-called Sepa end-date) as the deadline for migration of domestic payment instruments to the corresponding Sepa instruments.


Within the SEPA

›› National bank transfers (including transfers where the funds are provided in cash by the payer to the Bank)
›› National direct debits


Outside of the SEPA

›› collection orders
›› payments against notice
›› collections against notice
›› bank and postal slips


Exceptions to the SEPA

For financial direct debits (linked to financial instruments/investment transactions) and standing orders, considered to be niche products, the END DATE has been postponed to 01/02/2016.


SEPA instruments are based on the new UNIFI ISO-20022 XML European standards, which replace the format of the records previously used at the national level. The use of common standards will allow companies to manage collection and payment orders more efficiently, as well as the relative reporting and, with it, reconciliation of the accounting and commercial flows.


Use of this standard will be mandatory for banks starting from 1 February 2014. To mediate the requirements of companies in the transfer to the SEPA, the Bank of Italy has envisaged the possibility to defer the requirement of using XML format to 1 February 2016. However, companies may use the XML format even before 1 February 2016.


The derogation on use of XML messaging will therefore allow companies, effective 1 February 2014, to choose from

  • Use of the SCT and SDD Sepa compliant functions (XML record);
  • Use of the bank transfer and direct debit functions duly modified by the CBI Consortium for settlement in XML.



2. SCT bank transfer


What changes for consumers and companies

From 1 February 2014, euro bank transfers within the SEPA will be replaced by the new basic payment instrument: the Sepa Credit Transfer (SCT). These are its main characteristics:

  • the transactions are solely in Euros, without any limit on the amount;
  • the maximum execution time is one business day, regardless of the SEPA destination country;
  • SHARE tariff basis - the payer and beneficiary respectively sustain the fees charged by the ordering bank and the beneficiary bank;
  • the original amount of the payment is always transferred entirely, without any deductions up to the beneficiary;
  • the IBAN and BIC are the only identifying codes used in carrying out the payments - from 2014, the BIC for domestic bank transfers will no longer be mandatory and, from 2016, it will no longer be mandatory for European ones;
  • payment information (remittance info) may be a maximum of 140 characters long.


What changes for consumer customers

Nothing changes for consumer customers, who will continue to order bank transfers at the branch as well as through virtual channels (internet and phone banking) using the same methods as today. Current bank transfers are automatically transformed into SEPA bank transfers by Credem, without any cost to the customer.


What changes for companies

The main changes regard companies that order bank transfers via remote banking services.


Companies must adapt their IT systems to use the new European formats (UNIFI ISO-20022 XML), which envisage additional information compared to the current requirements.


To encourage gradual migration to SEPA, the regulations have envisaged that companies adapt to the new standards by 1 February 2016. Banks will provide services for conversion from the current format to SEPA standards.


During this transition period, companies must however provide all of the information necessary to allow Banks to make the conversion.


In particular, companies must pay attention to entering information useful for reconciliation of the payment (namely, remittance information), limiting the number of characters to 140.


This information will be sent to the beneficiary in its entirety and will allow creditor companies to efficiently manage their internal accounting processes, with significant decreases in administrative expenses.



3. Sepa Direct Debit


What changes for debtors and creditors

It is the new European collection tool that will replace the current Direct Debit (ordinary and fast). At the same conditions, the SDD (Sepa Direct Debit) will reach all bank accounts in the SEPA that allow direct debit.


Sepa Direct Debit is activated exclusively by the Creditor, based on a mandate received from the Debtor. The mandate is the paper or electronic document, signed by the debtor, that authorises the creditor to send collection orders to the debtor's current account.


The product envisages two distinctive formats:

  • SDD CORE useable by creditors for customers classified by their banks as CONSUMERS as well as for debtors classified by their banks as NON-CONSUMERS (such as Micro enterprises and Commercial enterprises/companies). When using this format, the Payer has the right to obtain, upon simple request, reimbursement of an authorised transaction within 8 weeks from the debit.
  • SDD Business to Business, used by creditors exclusively with respect to debtors who qualify as NON-CONSUMERS ("Micro enterprises" and "Commercial enterprises/companies"). This format does not allow for the possibility of reimbursement of the debtor customer.


Both forms of debit can be used for recurring or single debits. In the latter case, the debtor authorises the creditor to send a single debit order.


What changes for the debtor

The current direct debits on one's account as of 1 February 2014 will automatically be transformed into Sepa direct debits at no charge for the debtor, who will continue to make their usual recurring payments (for e.g., gas, water, telephone, etc.).


Debtor customers must receive a mandatory notice from Creditor Companies at least 30 days prior to the payment date of the Sepa direct debit or, in any case, by 31/12/2013.


Sepa direct debits will continue to be debited with the date and value date equal to their expiry.


The debtor may give orders to the Bank to refuse all Sepa Direct Debits:

  • submitted currently and in the future by a creditor company indicated by the debtor;
  • from a certain country;
  • with an amount higher than the amount indicated by the debtor.


What changes for the creditor

The Sepa direct debit allows a creditor to order, via their own bank, a debit on a debtor's account (at the same bank or at a different bank), based on an authorisation (mandate) signed by the debtor and issued to the creditor.


Within the SEPA, each creditor is assigned a unique code known as the Creditor Identifier. The creditor identifier is important because it allows unequivocal identification within the entire SEPA of the company collecting via direct debits.


The company may ask its bank for this code if it does not have it.


With Sepa direct debit, creditor companies, contrary to the current scenario, are required to:

  • Collect, save and dematerialise data of the mandates signed by debtors. In particular, in the individual collection orders sent to its bank, the creditor company must include the main data contained in the mandate;
  • Notify the debtor (for example, in the invoice) at least 14 days prior to debiting in the account, with regard to the transaction details, the amount and the expiry date. The creditor and debtor may also agree on different timing.


To send SDD collection orders, companies are required to adapt their information and management systems to make them compliant with Sepa regulations in terms of required information as well as technical standards (XML messaging).


European legislation envisages that DD authorisations already signed by the debtor remain valid and be transformed into Sepa mandates, maintaining full legal validity. However, to send collection orders valid on existing DD authorisations, banks must be provided with all of the information required by the Sepa legislation.


4. Creditor Identifier


The SEPA creditor identifier

Within the SEPA, each creditor is assigned a unique code known as the Creditor Identifier. The creditor identifier is important because it allows unequivocal identification within the entire SEPA of the company collecting via direct debits.


It is obligatory information on the Sepa direct debit mandate and on the individual collection flows.


An initiative was carried out in Italy to envisage automatic generation of the code for all creditors participating in the Electronic Archive Alignment.


Structure of the Creditor Identifier:


The creditor identifier is composed of:

  • ISO code of the country in which the code was issued (IT); 
  • Control code determined based on specific calculation algorithms; 
  • Business code indicated by the Creditor for business requirements (if not used, ZZZ is entered); 
  • Tax code of creditor company. In the event of companies participating in the Electronic Archive Alignment procedure for which no tax code/VAT number if available, an insignificant identifier code is generated (NOTPROVIDEDXXXXXXXXXXXX). 


These companies may ask their bank to generate a formally correct code.

The company may ask its bank for this code if it does not have it.



5. SEDA - SEPA Electronic Database Alignment


ARCHIVE ALIGNMENT FOR SDD SEPA

The SEDA service is an additional optional service of Sepa direct debit formats defined by the Italian banking community and consisting of the exchange between creditor company and debtor bank, through the Alignment Database, of electronic flows regarding the information contained in the Sepa mandates.


The Sepa service offers similar functions to those currently envisaged by the Electronic Archive Alignment.


The Creditor Company may use the products in the following modes:

  • Basic: sending of the SEDA flows allows the creditor to receive an electronic feedback from the debtor Bank on the data of mandates collected and on their validity;
  • Advanced: the creditor requests management of the mandate by the debtor's Bank. The debtor provides the mandate to its bank and the latter agrees to dematerialise and save the mandates.


The SEDA formats can be illustrated as follows:


Issue of the SEDA service is envisaged, without prejudice to extensions, for October 2013. The remuneration model for the SEDA service and the relative contractual scheme are still in the process of definition by the banking system.


6. Faq


ANSWERS TO FAQ ON SEPA


General information


1. What does the acronym SEPA stand for?
Sepa is the acronym for "Single Euro Payments Area". Its objective is to carry out bank transfers and direct debit orders in a simple and fast manner, as occurs today across the country.


2. What Countries form part of the SEPA?
The Single Euro Payments Area includes 31 countries:

  • the 15 EU countries that employ the euro (Italy, Germany, France, Spain, Portugal, Greece, Austria, Finland, Ireland, the Netherlands, Belgium, Luxembourg, Slovenia, Cyprus and Malta);
  • the 12 EU countries that use another currency nationally but which make payments in euro (United Kingdom, Sweden, Denmark, Estonia, Latvia, Lithuania, Poland, Czech Republic, Slovakia, Hungary, Bulgaria, Romania);
  • Another 4 countries: Switzerland, Norway, Iceland, Liechtenstein.


3. What is the objective of the SEPA?
The objective of SEPA is to allow European citizens to carry out payments in the euro zone at conditions that are as efficient and secure as those currently existent in the individual Countries, and to ensure that each customer may access their account regardless of the physical location in which they operate and use that account for every payments in the euro zone.


4. What currencies does SEPA use?
Sepa collections and payments may be carried out exclusively in euros. Therefore, for transactions in other currencies, the Sepa procedures and standards cannot be applied, but foreign transactions must be carried out (e.g., international bank transfer).


5. What is the end date for migration to SEPA?
EU Regulation 260/2012 (the SEPA end-date Regulation) has set 1 February 2014 as the end date for migration of domestic collection and payment instruments to the corresponding Sepa instruments.

SCT bank transfer


1. What is the Sepa Credit Transfer (SCT)?
It is the new basic payment instrument to carry out euro bank transfers among customers with accounts within the SEPA. In Italy, the Sepa Credit Transfer will replace the BON (Bonifico Ordinario Nazionale - National Ordinary Bank Transfer).


2. What are the maximum execution times for a Sepa bank transfer?
The maximum execution time for the Sepa bank transfer is one business day subsequent to submission of the order. The Sepa bank transfer format does not envisage the possibility for companies to make payments managing the value date.


3. Are the IBAN and BIC still required in order to make a bank transfer?
Payments sent to an Italian Bank must solely contain the IBAN (International Bank Account Number). For payments to other Sepa countries, the BIC (Bank Identifier Code, also known as Swift Code) must also be provided until 1 February 2016.


4. How much does a Sepa bank transfer cost?
A Sepa bank transfer has the same cost as a domestic bank transfer and, as is currently the case in Italy, the payer and beneficiary respectively sustain the charges and commissions applied by the ordering bank and beneficiary bank (SHARE tariff basis). Therefore, the original amount of the payment is always credited entirely to the beneficiary's account, without deductions.

Sepa Direct Debit


1. What is Sepa Direct Debit?
It is the new European collection tool that will replace the current Direct Debit (ordinary and fast). The SDD (Sepa Direct Debit) is a European collection instrument that allows, at the same conditions, the possibility to reach all bank accounts in the SEPA that allow direct debit.


2. What is SEPA CORE Direct Debit?
It is a type of SDD format useable by creditors for customers classified by their banks as CONSUMERS as well as for debtors classified by their banks as NON-CONSUMERS (such as Micro enterprises and Commercial companies). When using this format, the Payer has the right to obtain, upon simple request, reimbursement of an authorised transaction within 8 weeks from the debit;


3. What is the Sepa Business-to-Business Direct Debit?
It is a type of SDD format used by creditors exclusively with respect to debtors who qualify as NON-CONSUMERS ("Micro enterprises" and "Commercial enterprises/companies"). This format does not allow for the possibility of reimbursement of the debtor customer.


4. What is the Sepa Mandate?
It is the document signed by the debtor that authorises the creditor to send collection orders to the debtor's current account. The mandate may be a paper document, signed by the debtor. Alternately, it may be an electronic document, created and signed via secure IT methods.


5. What is the Creditor Identifier?
It is a unique code assigned to the Creditor, allowing the same to be identified within the SEPA. The Creditor Identifier allows the debtor and the debtor's bank to identify the Creditor in the event of complaints and repayment requests.


6. What does the Creditor Identifier consist of?
For Italy, this code consists of an alphanumeric string of 23 characters as follows:

  • the first 2 digits contain IT, which is the ISO code for Italy;
  • the 3rd and 4th digits are two control characters calculated based on a specific algorithm; 
  • the 5th to 7th positions contain the Business Code chosen by the company for business purposes (otherwise, the conventional value "ZZZ" may be entered in these fields);
  • the 8th to 23rd positions contain the tax code/VAT number of the Beneficiary Company, with five zeroes entered to the left (as fillers) if the national identifier code is a tax code or VAT number.


7. Who assigns the Creditor Identifier?
Banks are responsible for issuing or obtaining the code for their customers.


8. What is SEDA?
It is an additional optional service (AOS) requested by Italy, in order to avoid regression of the existing collection system. It will replace the Electronic Archive Alignment procedure for management of the SDD mandate. The basic SEDA allows the Creditor to send the debtor's bank the request for direct debit, amendment or cancellation of a mandate. The advanced SEDA is an optional service provided by the bank to Debtor customers in order to request direct debit, amendment or cancellation of the SDD mandate.

Migration of DD Orders


1. Will the current DD authorisations remain valid?
Current DD authorisations on the debtor's account as at 1 February 2014 will be automatically transformed into Sepa direct debits, without any action required by the Customer, who will continue to make the usual recurring payments (light, gas, etc.).


2. How do the existing DD authorisations transform into SDD Mandates?
The decision to migrate to the SDD Core or B2B format is the responsibility of the beneficiary, which must inform the debtor of migration to the new SDD service, with notice of at least 30 days with respect to the service activation date and, in any case, no later than 31 December 2013. The notice must indicate the type of debit format which the Creditor intends to apply.


3. How do I choose the SDD format to which to migrate?
Choice of the SDD format depends on the category of the debit account attributed to the debtor. In the case of "consumer" debtors, existing DD authorisations must be transformed into SDD CORE. In the case of non-consumer debtors, the Business to Business format may be used.


4. How do I acquire information on the existing DDs?
A new function of the Electronic Archive Alignment has been provided in order to allow companies to ask the debtor bank for the information necessary to manage collections via SDD. By sending an "authorisations information request", it is possible to identify the IBAN of the debited account and the category of said account, which may be consumer or non-consumer.