Retail Payments in Europe: SEPA as efficiency driver

Transcription

1 Francisco Tur Hartmann Market Integration Division Retail Payments in Europe: SEPA as efficiency driver Finance IT Forum Sofia, 25 April 2013

2 Retail Rubric Banking and Retail Payments matter Social costs of retail payment instruments 1 % GDP or 130 billion euro for all EU27 Bank stability Effective retail payment service market associated with higher bank stability Better bank performance (cost/benefits) in countries with more developed retail payment services ECB working paper; Return to retail banking and payments (Dec 2009) Social relevance of retail banking Taking deposits, providing credit to real economy, and provision of payment services to firms and households are key public services Advisory Committee on the Future of Banks in the Netherlands ( Restoring Trust, Apr 2009) UK Treasury ( Banking reform: delivering stability and supporting a sustainable economy, Jun 2012)

3 Share Rubric of total social costs by payment instrument The social and private costs of retail payment instruments: a European perspective Source: ECB, 2012

4 Per Rubric transaction costs in Euro The social and private costs of retail payment instruments: a European perspective Source: ECB, 2012

5 Rubric The Antidote The Single Euro Payments Area

6 Rubric The Single Euro Payments Area Europe has had a single market for goods, capital, services, and people since 1993 a single currency since 1999 (and cash as of 2002) The missing piece of the puzzle has been a single area for cash-less retail payments

7 What is the Single Euro Payments Area? Rubric An area in which citizens, retailers, companies and public institutions only need: one bank account one type of credit transfer one type of direct debit one payment card to make and receive payments in euro all over Europe.

8 Who is the Single Euro Payments Area? Rubric SEPA comprises 32 countries (euro area 17 countries) and involves 516 million people (euro area 332 million) together making 86 billion payments (euro area 60 billion) Sources: Eurostat, ECB, BIS (population data 2011, payments data 2010)

9 Benefits of SEPA Rubric Consumers, companies, merchants can reach any account holder in SEPA easily & efficiently have legal certainty on terms and conditions of payments Companies operating cross-border can centralise their payment and liquidity management Banks, clearing & settlement infrastructures can offer their services SEPA-wide can reduce costs due to straight-through-processing Banks and non-bank service providers can develop innovative services based on agreed standards, e.g. internet & mobile payments, e-invoicing

10 Rubric SEPA Building Blocks

11 Elements to build a single payment service Rubric Agreed set of instruments Standards Harmonised business rules Legislation

12 Development of the legal framework Rubric Regulation on cross-border payments (2001,2009) Equal charges for cross-border and domestic transactions (credit transfers, cards and direct debits) Payment Services Directive (2007) Harmonised terms & conditions Increased consumer protection New type of Payment Service Provider (PSP): Payment Institution with lower regulatory requirements than a bank, but without deposit-taking, with granting credit only from its own funds

13 Development of the legal framework Rubric End-date regulation* (2012) Sets deadlines for migrating credit transfers and direct debits in euro from national to EU-wide rules and standards By 1 February 2014, credit transfers and direct debits should be carried out in accordance with the technical requirements Non-euro area PSPs to comply by 31 October 2016 Technical requirements: IBAN, no BIC, and ISO XML * Regulation of the European Parliament and of the Council of 14 March 2012 establishing technical and business requirements for credit transfers and direct debits in euro and amending Regulation (EC) No 924/2009

14 Rubric Are we fit for the new challenges? Where do we stand?

15 Migration progress in figures: SCT Rubric Solid SCT adoption rate has been reached already (due to early migration by public administrations and some corporates) SEPA agenda also encompasses c2b and b2c domains, where progress is not enough Stakeholders in DE, EE, IE and NL are lagging behind

16 Migration progress in figures: SDD Rubric Countries that originally work on the basis of the debtor mandate flow model achieved more progress (e.g. BE, GR, SI), even though they are subject to additional efforts Among five largest direct debits markets (DE, FR, ES, NL, AT) that together account for more than 90% of direct debits in the euro area only in Austria is the uptake of SDD somewhat more advanced

17 Migration challenges for banks Rubric Banks have important role to play both in terms of their internal preparation and in facilitation of end-users migration. On both fronts there is an urgency for improvement. Banks should consider how: To make customer servicing channels SEPA compliant To deal with big bang late migration if such occurs To keep their reputation if teething problems persists

18 Preparedness Rubric of Payment Service Providers ECB SEPA MIGRATION REPORT MARCH 2013

19 Preparedness Rubric of big billers ECB SEPA MIGRATION REPORT MARCH 2013

20 Preparedness Rubric of Public Administrations ECB SEPA MIGRATION REPORT MARCH 2013

21 Rubric Governance

22 Shared responsibility Rubric Legal Framework SEPA Catalyst, Operator Business Rules, Standards European Commission Eurosystem European Payments Council Consumers, merchants, corporations, public administrations

23 What role for a central bank? Rubric A basic task shall be to promote the smooth operation of payment systems May provide facilities and may make regulations, to ensure efficient and sound payment systems within the Union and with other countries Typical roles: operational, oversight, and acting as a catalyst for change Other authorities: legislator, financial sector regulator, competition authority, banking prudential supervisor, consumer protection authority, etc.

24 Governance Rubric Good governance of projects related to retail payment services is essential to advance market development, innovation and security; about weighing various interests. Ease of use Competition Regulation Security Cooperation Self-regulation

25 Rubric SEPA Council In several reports, the Eurosystem has considered improvements to the overall governance of SEPA and also the establishment of a stakeholders forum ( SEPA Council ), in which both the demand and the supply side would participate. The European Commission was of the same view and announced its intention, in September 2009, to set up a new SEPA governance structure at the EU level to improve the governance of the SEPA project and to ensure its timely realisation.

26 Rubric GOVERNANCE: SEPA COUNCIL Mr Jonathan Faull, Director General Mr Benoît Cœuré, Member of the Executive Board Supply side Demand side

27 Rubric SEPA Council (Part II) In recital (5) of the SEPA-end date Regulation that entered into force on 31 March 2012, the co-legislators asked COM for a review of the governance arrangements of the whole SEPA project before the end of At the same time, the SEPA Council s mandate requires COM and ECB to evaluate the efficiency and functioning of the SEPA Council by the end of Concerns of stakeholders on the current set-up of SEPA governance.

28 Rubric SEPA Council (Part II) The ECB s view is that the new governance should have a strong mandate and a scope beyond SCT and SDD migration. The mission of the revised SEPA governance structure should be to facilitate the creation of an integrated, competitive and innovative market for retail payments in euro in the EU and to ensure a level playing field for market actors. A multi-stakeholder structure, with a permanent first high level layer, assisted when necessary by workstreams at a second layer formed on an ad-hoc basis for working on specific topics.

29 Rubric Cards & Innovation

30 Rubric payment in Europe 2012 Card STANDARDS, STANDARDS, STANDARDS

31 Inconsistent Rubric implementation of the PSD

32 Rubric Big fee differences

33 Internet Rubric Payments: What s the issue? Sufficient choice in order to meet customers /retailers needs, while avoiding fragmentation by establishing integrated European service offerings. Provision of user-friendly and, at the same, time highly secure online e-payment services. Fair and open market access and market entry by new players. At the same time, a level playing field for incumbent Payment Service Providers and new players has to be provided. Transparent pricing, which also allows for cost recovery of efficient service providers. Adaptation of the legal framework to cope with the requirements for a competitive, efficient, secure, and online e-payments market. Source: 4 th Meeting of the SEPA Council, Feb. 2012

34 Innovation can be built on basic products Rubric Further innovation is necessary in the retail payment chain

35 Rubric Concluding remarks

36 Guess where? Rubric Consumer fee for transferring EUR 100 by means of a bank transfer: EUR Duration of such a credit transfer: 3 days Possibility of a direct debit transaction: none Card payments at POS: not widely accepted Internet payments, m-payments: unavailable Europe, for intra-eu cross-border transactions, about 10 years ago Data source: European Commission, Study, 2001

37 Substantial Rubric improvements Execution Time Average execution time in working days Payment Services Directive (2007/64) Data Source: European Commission, 2001

38 Substantial improvements - Fees Rubric Average fee for a 100 EUR cross border transfer Regulation 924/2009 (replacing Reg 2560/2001) (EU12) 1994 (EU12) 1999 (EU11) 2001 (EU11) 2001 (EU15) 2003 (EU15) 2005 Data Source: European Commission Staff Working Document, 2006

39 Rubric Contact details Francisco Tur Hartmann Disclaimer The views expressed in this presentation are those of the speaker and do not necessarily reflect those of the European Central Bank.