Treasury & Trade Solutions. SEPA Heat Map. November 2013

Transcription

1 Treasury & Trade Solutions SEPA Heat Map November 2013

2 SEPA Current Uptake across the market SEPA Credit Transfers Sept 56% % SEPA Credit Transfer is steadily increasing month-on-month and stands at 56% at the end of September. Currently the market is seeing the transition of domestic public sector (pension & welfare flows) and corporate traffic move to SCT. A number of country media campaigns have been launched to raise SEPA awareness in Middle Market organisations and with consumers Main reasons in the market for reject/returns are: Account identifier invalid (i.e. invalid IBAN or account number does not exist or wrong BIC) Account closed SEPA Direct Debits Sept. 6.8% % SEPA Direct Debit adoption is still lagging well behind, however momentum is building. Slower adoptions can be attributed to the complexity of adopting SEPA Direct Debits - technical changes, additional information requirements, changes to mandate processes and internal decision making. Majority of big billers are in the process of SEPA DD migration, a few have announced migration target date of January Main reasons for reject/returns are: Insufficient funds Not specified reason (by debtor bank) 2 Source: European Central Bank, Citi assessment

3 Citi observations and discussions in the market End Date SEPA Direct Debit adoption remains worrying low however EC/ECB/EPC are re-iterating that there is no official Plan B. Bank Readiness Many banks are making changes to their cash management infrastructures to become SEPA and ISO XML compliant. SEPA credit transfers - High market readiness. Citi is seeing sporadic issues with banks not yet recognising the Category Purpose Code (e.g. SALA for salary payments) contained within the SEPA messages. When these issues have arisen, the account holder has approached their bank and the issues tend to be resolved. However issues are reducing. For SEPA Direct Debit Medium market readiness. Bank infrastructure adjustments for SDD are additionally complex. Citi understand that there are many banks still preparing automated processes to meet SDD requirements. Market Discussions SEPA DD R Reason Codes A reject/return reason code should help the receiver of the R-transaction to understand why the original SEPA DD collection was not successfully executed. However an accurate reason code is not used in all markets - reason code Not specified reason is commonly used. In a number of European countries, more accurate reason codes are not used because of legal restrictions (e.g. data protection laws) or local business practices. An EBA working group has published further guidance to banks and the market. Germany COR1 service launched in Market on November 4 th. Big biller SDD status is tracking red (see following pages) German Bundesbank have started a SEPA information campaign in September. Ireland Market will adopt SEPA DD Core scheme. Large telecoms organisation beginning migration in early November. Local bank readiness to support the SEPA Direct Debit B2B scheme is low. Irish market is looking to introduce the SEPA Business Service primarily to support mid market collections - The proposed service will enable debtors, who are businesses, to waive their refund rights under the SEPA DD Core scheme (the 8 week refund timeline). Italy The market is awaiting the introduction of SEDA (SEPA Electronic Database Alignment). This is an Additional Optional Service (AOS) which seeks to a replace the legacy AEA (Allineamento Elettronico Archivi). Spain, France, Belgium A number of big billers are underway with migration of their flows, some challenges reported. Migration of large volumes in Spain market expected in January 2014 Slovakia Market is adopting a big bang migration to SDD in January Latvia will join the Euro on 1 st January 2014 and have 1 year to become SEPA compliant. 3 Sources: Citi assessment, European Payments Council

4 Country Readiness Country Readiness To assess SEPA s preparedness across the transaction chain, the Eurosystem has developed a set of qualitative indicators, which are updated on a quarterly basis by the national central banks, taking into account the specificities of the respective country. These indicators are published by the European Central Bank on a quarterly basis. Qualitative indicators are based on a common approach and cover market readiness of Banks Big Billers Public Administrations SMEs Traffic lights are primarily meant to indicate the level of preparedness of the different stakeholder groups within the respective country and are less of an indication for doing any cross-referencing between the various individual countries. Legend Preparations completed successfully Preparations in progress and expected to be ready on time Preparations not yet commenced and/or not expected to be ready on time Service offerings not envisaged and/or actively marketed by local PSPs and/or direct debits not used by public administrations Traffic lights are complemented by qualitative statistics for adoption of SEPA CT and SEPA DD by country, in addition to commentary from Citi on market adoption. Current Traffic lights reflect readiness view as at the end of Q3 2013*. Citi will publish further updates as and when the ECB obtains and publishes this data. 4 Source: European Central Bank, Citi assessment * Austria and Spain have not published Q3 data. The latest statistics available are Q2 data.

5 Country Heat Map - SEPA Austria Belgium Finland Q2 SCT uptake: 33% Q2 SDD uptake: 17.6% Niche Schemes: ATIB, ELV (exemption until 2016) Vendor - Wide adoption Payroll - Wide adoption Tax Accepting SEPA. Tax Payments have to be identified as by using specific indication in the Remittance Information and EndToEndIdentification SEPA DD - COR1 Direct Debit scheme will be supported by banks in the market. Q3SCT uptake: 64.13% Q3 SDD uptake: 20.4% Niche Schemes: N/A AOS - OGM-VCS Structured communication Vendor - Wide adoption Payroll - Wide adoption Tax Accepting SEPA SEPA DD For Belgian debtors, SEPA Direct Debit mandate is recommended to contain a field "In respect of the contract" with reference to the underlying contract. This reference can be direct (by use of a contract number, client number or invoice number) or indirect by description of the underlying contract such as "Distribution of electricity". Also DOM number Is recommended to be used in the Unique Mandate reference number field in addition to legacy scheme ID. Q3 SCT uptake: 100% Q3 SDD uptake: N/A Niche Schemes: N/A AOS AOS1 (payment date) and AOS2 (structured remittance) Vendor - Fully migrated to SEPA Payroll - Fully migrated to SEPA Tax - Fully migrated to SEPA. Usage of structured remittance field used. for tax payments. SEPA DD The Federation of Finnish Financial Services is recommending that legacy DD s in Finland will be replaced by e-invoicing (for debtors using online bank services) and direct payments (for debtors without bank services)..new Mandates required to collect under SEPA in Finland. Default practice to auto block accounts for SEPA Direct Debits. 5 Sources: Traffic lights - European Central Bank national central banks, EBA Clearing, Citi assessment

6 Country Heat Map - SEPA France Germany Greece Q3 SCT uptake: 57% Q3 SDD uptake: 2.84% Niche Scheme: Titre Interbancaire de Paiement (TIP) / Telérèglement Vendor - Wide adoption Payroll - Wide adoption Tax most taxes paid by niche scheme Telérèglement SEPA DD Big Billers migration underway. Q3 SCT uptake: 14% Q3 SDD uptake: 0.68% Niche Scheme: None, ELV (exemption until 2016) Adoption increasing from low base. Vendor - adoption increasing Payroll - adoption increasing Tax Accepting SEPA. SEPA DD - COR1 Direct Debit scheme will be supported by banks in the market in November. Q3 SCT uptake: 81.3% Q3 SDD uptake: 60.7% Niche Scheme: Non-automatic credit (credit transfer product used on the platform of DIAS payment system). AOS 1. Greek characters AOS. 2. AOS to facilitate local mandate processes Vendor - Wide adoption Payroll - Wide adoption Tax via LCH DIAS which is SEPA compliant.. SEPA DD - High adoption Greece has delayed BIC phasing out for national transactions until Sources: Traffic lights - European Central Bank national central banks, EBA Clearing, Citi assessment

7 Country Heat Map - SEPA Ireland Italy Luxembourg Q3 SCT uptake: 15.3% Q3 SDD uptake: 6.7% Niche Scheme: None, Adoption increasing from low base. Ireland banks currently use EBA for settlement purposes. Vendor - Increasing usage Payroll - Increasing usage Tax Accepting SEPA but most tax collected via local DD. SEPA DD Major utility company moved to SDD in June. Ireland has delayed BIC phasing out for national transactions until Q3 SCT uptake: 22.9% Q2 SDD uptake: 0.03% Niche Scheme: RID finanziario., RID a importe fisso. AOS - SEPA Electronic Database Alignment (SEDA) for mandate management and AOS SCT Routing Adoption increasing. Vendor - Increasing usage. Payroll - Low but increasing. Tax Mostly non-sepa. Wire payments mostly used for tax payments. SEPA DD Low adoption to date. SEPA Electronic Data Alignment due to be delivered in the market late Q3 SCT uptake: 95.1% Q3 SDD uptake: 0.68% Niche Scheme: None, Vendor - Adoption almost complete. Payroll - Adoption almost complete. Tax Adoption almost complete. SEPA DD Low usage in the market. 7 Sources: Traffic lights - European Central Bank national central banks, EBA Clearing, Citi assessment

8 Country Heat Map - SEPA Netherlands Portugal Slovakia Q3 SCT uptake: 45.4% Q3 SDD uptake: 2.78% Niche Scheme: None Vendor - Growing steadily Payroll - Adoption increasing Tax Accepting SEPA. SEPA DD Significant increase in June SEPA DD transactions Q3 SCT uptake: 48% Q3 SDD uptake: 0.38% Niche Scheme: No formal announcement Adoption steadily increasing. Vendor - Increasing usage Payroll - Low but increasing. Tax SEPA CT not used. Most tax collected through legacy DD. SEPA DD Low adoption with no significant sign of recent increase. Portugal has delayed BIC phasing out for national transactions until Q3 SCT uptake: 100% Q3 SDD uptake: 0% Niche Scheme: None. Vendor - Increasing usage Payroll - Increasing usage Tax SEPA CT accepted -. Local tax authorities require payment symbols. SEPA DD Low uptake. Default practice to auto block accounts for SEPA Direct Debits. Banks are CORE reachable but some banks understood to be operating manual processes. Mass migration of existing DD collections to SDD in Feb 2014 when bank readiness completed. 8 Sources: Traffic lights - European Central Bank national central banks, EBA Clearing, Citi assessment

9 Country Heat Map - SEPA Spain Q2 SCT uptake: 51.5% Q2 SDD uptake: 0.12% Niche Scheme: 1. Los anticipo de credito (cuaderno 58). 2. Los recibos (cuaderno 32). Adoption high and increasing. Vendor - Increasing usage Payroll - Low but increasing. Tax Mostly non-sepa.. SEPA DD COR1 Direct Debit scheme will be supported by banks in the market. 9 Sources: Traffic lights - European Central Bank national central banks, EBA Clearing, Citi assessment

10 SEPA Credit Transfers Reject/Returns 60% 52% 50% 40% 30% 28% 20% 10% 0% 7% 3% 3% 2% 1% 1% 1% 1% 0% 0% 0% 0% 0% 0% The predominant reason for R messages in the SEPA Credit Transfer scheme is incorrect account or BIC details: Account identifier invalid (i.e. invalid IBAN or account number) Note this is being used by some banks to also indicate that the BIC is incorrect, even though there is a separate code for this specific purpose. Account closed It is highly advisable to ensure accuracy of payment data to avoid rejects and returns. 10 Sources: EBA Clearing

11 SEPA Direct Debits Reject/Returns 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 44% 26% 7% 6% 6% 5% 2% 2% 1% 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% The main reasons for reject and returns in SEPA DD are: Insufficient funds Not specified reason (by debtor bank) This code does not provide sufficient information to creditors to take remedial actions. Countries such as Austria, Belgium and Germany have data and/or consumer protection laws that restrict banks from providing certain reason codes concerning the financial or alive/deceased status of an account holder. In other markets, bank readiness and ability to differentiate and provide the correct reason code is having an impact. Further information: See guidance issued by EBA SEPA Migration Action Round Table (SMART) working group 11 Sources: EBA Clearing

12 Additional Information SEPA Direct Debit Country Guide Citi SEPA Countdown Series (practical guidance) Market Commentary and insights on reengineering with SEPA Regulatory information, niche schemes, case studies, further information 12 Sources: Citi

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