SEPA II

Payment Scheme Requirements

The SEPA Regulation require that a payee’s payment service provider, which is reachable for a national credit transfer under the payment scheme, must be reachable in accordance with the rules of an EU-wide payment scheme for credit transfers initiated by a payer to a payment service provider located in any State.  A payer’s payment service provider which is reachable for a national direct debit under a payment scheme must be reachable in accordance with the rules for European-wide payment schemes for direct debits initiated by a payee through a payment service provider located in any State.  The latter obligation applies to direct debits which are available to consumers as payers under the payment scheme.

A payment scheme  to be used by payment service providers for the purpose of carrying out credit transfers or direct debits must comply with the following conditions.   The rules must be same for the national and cross-border credit transfers within the EU and similarly for national and cross-border direct debit transactions within the EU.

Participants in the scheme represent a majority of payment service providers within the majority of Member States and constitute a majority of payment service providers within the Union, taking account only payment service providers that provide credit transfers or direct debits respectively.

In the latter case, where neither the payer nor the payee is a consumer only States where such services are made available by payment service providers and only payment service providers providing such services shall be taken into account.

The operator or participants in a retail payment scheme within the EU must ensure their payment system is technically interoperable with other retail payment schemes throughout the EU to the use of standards developed by the international or European standardisation body.  They shall not adopt business rules that restrict interoperability of retail payments within the EU.  The processing of credit transfers and direct debits must not be hindered by technical obstacles.

Transfer Requirements

Payment service providers must carry out credit transfer and direct debits in accordance with the following requirements.

• They must use the payment account identifier specified in the annex to the Regulation for identification of payment accounts regardless of the location of the payment service provider.
• They must use message formats specified in the regulation annex when transmitting payment transactions to another payment service provider or via a retail payment scheme.
• They must ensure payment service users use a payment account identifier specified in the annex whether the payer’s payment service provider or the payee’s payment service provider or the sole payment service provider in the payment transaction allocated in the same State or in the different States.
• They must ensure that payment service users who are not consumers or a micro-enterprise initiate or receive individual credit transfers or individual direct transfers that are not transmitted individually, but are bundled together for transmission that the message formats in the regulation annex must be used.

Payment service providers shall carry out credit transfers in accordance with following requirements subject to any obligations laid down in national law implementing Directive 95/46. Payer’s payment service provider must ensure that the payer provides the data set out below. The payers PSP must provide the data elements set out.  The payee’s permanent service provider must provide or make available the data specified.

Payment service provider shall carry out direct debits in accordance with the following requirements subject to any obligations laid down in national law implementing Directive 95/46.

• The payee’s payment service provider must ensure the payee provides the data elements below with the first direct debit or one off direct debit, any subsequent payment transaction.
• The payer gives consent both to the payee and payer’s payment service provider directly or indirectly via the payee, the mandates together with the later modifications and cancellations are stored by the payee or by a third party on behalf of the payee and the payee is informed of his obligation by the payment service provider.
• The payee’s payment service provider must provide the payer’s payment service provider with the data elements specified below:
• The payer’s payment service provider must provide or make available to the payer the elements specified below:
• The payer must have the right to instruct his payment service provider to limit a direct debit collection to a certain amount or periodicity or both.
• Where a mandate under a payment scheme does not provide for a right to a refund, to verify each direct debit transaction and to check whether the amount and periodicity of the submitted direct debit transaction is equal to that agreed in the mandate, before debiting their account, based on the mandate-related information.
• To block any direct debits to the payer’s payment account or to block any direct debits initiated by one or more specified payees or to authorise direct debits only initiated by one or more specified payees.
• Where neither the payer nor payee is a consumer, payment service provider is not required to comply with the three rights mentioned above (i.e. limit direct debit collection, verify and block).  The payer’s payment service provider must inform the payer of the above rights.

Upon the first direct debit transaction or a one-off direct debit transaction, any subsequent transaction the payee shall send the mandate related information to his payment service provider and the payee’s payment service providers shall transmit the same to the payer’s payment service provider with each direct debit transaction.

In addition to be above requirements, the payee accepting credit transfers shall communicate its payment account specified below until 1 February 2014 for national payment transactions and also 1 February 2016 for cross-border payment transactions, but only where necessary its BIC to its payers when a credit transfer is requested.  Before a first direct debit transaction, the payee shall communicate its payment account identifier, the BIC of a payer’s payment service providers shall be communicated until 1 February 2014 for national transaction and for 1 February 2016 for a cross-border transactions by the payer but only where necessary.

Where the framework agreement between the payer and payee’s payment service provider does not provide for a right to refund, the payer’s payment service provider shall verify each direct debit transaction to check whether the amount of the submitted direct debit transaction is equal to the amount and the periodicity agreed in the mandate before debiting the payer’s payment account based on mandate related information.

A payer’s payment service provider and payee’s payment service provider shall not levy additional charges or other fees. The read-out process to automatically generate a mandate for those payment transactions initiated through or by means of a payment card at the point of sale, which results in direct debit.  A valid payee authorisation to collect recurring direct debits and legacy scheme prior to February 2014 shall remain valid after that date and shall be considered as representing consent to the payer’s payment service provided to execute recurring direct debit collected by that payee in the absence of national law or consumer agreements continuing the mandate.

Fees

Without prejudice to the below, no MIF direct payment debit transactions or other agreed remuneration with an equivalent object shall apply to a direct debit transaction. For R-transactions an MIF may be applied provided that the following conditions are applied:

• the arrangement aims at efficiently allocating costs to the PSP or the PS user of which, has caused the R-transaction, as appropriate, while taking account the existence of transaction costs and ensures that the payer is not automatically charged and the PSP is prohibited from charging payment service users in respect of a given type of R-transaction fees that exceed the cost borne by the provider for such transactions;
• the fees are strictly cost based;
• the level of the fees does not exceed the actual costs of handling an R-transaction by the most cost-efficient comparable service provider that is a representative party to the arrangement in terms of volume of transactions and nature of services;
• the application of the fees prevent PSPs from charging additional fees relating to the costs covered by those interchange fees to their respective users;
• there is no practical or economically viable alternative to the arrangement which would lead to an equally or more efficient handling of R-transactions at lower or equal cost to consumers.

For the purposes of the first paragraph, only cost categories directly and unequivocally relevant to the handling of the R-transaction shall be considered in calculation of the R-transaction fees.

A payer making a credit transfer to a payee holding a payment account located within the EU shall not specify the Member State in which the payment account is to be located, provided the payment account is reachable in accordance with the above principle (Article 3 general principle of reachability).

A payee accepting a credit transfer or using a direct debit to collect funds from a payer holding a payment account located within the EU shall not specify the State in which the payment account is to be located, provided the payment account is reachable in accordance with the above principles.

Compliance & Enforcement

States must designate a competent authority responsible for ensuring compliance with this Regulation.  The competent authorities must have necessary powers for performance of their functions.

Penalties shall be laid down for the infringement of the Regulation and all necessary measures to ensure that they are implemented, shall be taken.  Penalty shall be laid down for infringement.  They must be effective, proportionate and dissuasive.  States shall notify the Commission of their rules and measures by 1 August 2013 and notify amendments.

States shall establish adequate and effective out-of-court complaint and redress procedures for the settlement of disputes concerning rights and obligations arising under the Regulation between payment service users and payment service providers.

Technical Requirements

The payment account identifier must be IBAN.  The standard message format must be the ISO 20022 XML standard.  The remittance field must allow for 140 characters.  Remittance reference information and other data provided above must be passed in full without alteration between providers.

Once the required data is available in electronic form, payment transactions must allow for a fully automated, electronic processing in all process stages through the payment chain, end-to-end straight through processing, enabling the entire payment process to be conducted electronically without need for re-keying or manual intervention.  This also apply to exceptional handling of credit transfers or direct debit transactions, whenever possible.

Payment schemes must set no minimum threshold for the amount of the payment transaction allowing for credit transfers and debits but are not required to process payment transactions with zero amount.  Payment schemes are not obliged to carry out credit transfers and direct debits exceeding the amount of €1 billion.

Credit Transfers

In addition to the above, the following applies to credit transfers:

The data elements required are as follows:

• the payer’s name and IBAN of the payer’s payment account,
• the amount of the credit transfer,
• IBAN of the payee’s payment account,
• where available, the payee’s name,
• any remittance information.

In the case of credit transfers, the data required is the above plus

• payee identification code,
• name of payee reference party,
• purpose of the credit transfer,
• category of credit transfer.

The following mandatory data elements are to be provided by the payer’s PSP to the payee’s PSP:

• BIC of each if not otherwise agreed between them,
• identification code of the payment scheme,
• settlement date of the credit transfer,
• reference number of the credit transfer message.

Direct Debits

In addition to the requirements at point one above, i.e. before the in addition part, the following applies to direct debit transactions:

The data elements required are:

• type of direct debit, recurrent, one-off, first, last or reversal, payee’s name,
• IBAN of the payee’s,
• the payer’s name where available,
• IBAN of the payer’s payment account to be debited,
• unique mandate reference,
• date on which it was signed,
• amount for collection,
• where taken over by a payee other than the payee who issued the mandate, the unique mandate reference as given by the original payee,
• payee’s identifier,
• where taken over, the identifier of the original payee who issued the mandate,
• any remittance information, any purpose of the collection, any category of purpose.

Direct Debit Requirements

In the case of direct debits the payee’s service provider must ensure the payee provides the following:

• BIC of payer and payee’s payment service provider unless otherwise agreed between them.
• payer’s reference party’s name if present in dematerialised mandate,
• payer’s reference party’s identification code if present in dematerialised mandate,
• payee reference party’s name if present in dematerialised mandate,
• payee’s reference party identification code if present in dematerialised mandate.
• identification code of the payment scheme, the settlement date of the collection, payee’s PSP’s reference for the collection, type of mandate, type of direct debit, payee’s name,
• IBAN of payee’s account to be credited,
• where available,the payer’s name,
• IBAN of the payer’s payment account to be debited for collection,
• unique mandate reference,
• date of signing,
• amount of the collection,
• unique reference given by the original payee if transferred,
• payee’s identifier,
• identifier of the original payee if transferred,
• any remittance information.

The payer must provide:

• payee’s identifier,
• payee’s name, unique mandate reference, amount of collection, remittance information,
• identification code of the payment scheme.