the french migration plan to sepa - sepa france

Comité National SEPA

The French migration plan to SEPA

Version 3 – 16 July 2012

The French migration plan to SEPA – Version 3 – 16 July 2012

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CONTENTS

Introduction ...................................................................................... 3

I. Migration to SEPA instruments : a regulatory requirement .......... 4

1. End-dates defined by Regulation (EU) No. 260/2012 ........................................................ 4

2. Scope of Regulation (UE) No. 260/2012 ........................................................................... 4

II. France’s migration to SEPA ............................................................ 6

1. French payment instruments migrating to SEPA .............................................................. 6

2. The terms of France’s migration to SEPA ........................................................................ 7

3. Monitoring migration to SEPA .......................................................................................... 9

III. Ancillary measures ........................................................................ 12

1. The SEPA communication plan ..................................................................................... 12

2. Possible activation of the national options under Regulation (UE) No. 260/2012 ........... 12

Appendices..................................................................................... 13

Appendix I : Organisation of the National SEPA Committee ........................................... 13

Appendix II : Provisional schedule of SEPA information sessions .................................. 15


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Introduction After the introduction of the cashless euro in 1999, followed by euro banknotes and coins in 2002, SEPA (Single Euro Payments Area) is the third stage of European monetary integration. SEPA aims at creating an integrated, competitive and innovative market for all euro-denominated retail payments. Its purpose is to set up a unified area in which everyone will be able to issue and receive payments in the same conditions, regardless of where they are located. To this end, the EPC (European Payments Council), which brings together the European banking communities and the main European banks, has defined the functional and technical characteristics of two new cashless means of payment, the SEPA Credit Transfer (SCT) and the SEPA Direct Debit (SDD), and has drawn up an interoperability framework for card payments. SCT and SDD have been available to French bank customers since 28 January 2008 and 1 November 2010 respectively. Migrating to SEPA requires strong coordination between all relevant stakeholders. The French migration is coordinated by the National SEPA Committee. Co-chaired by the Banque de France and the French Banking Federation, this Committee is a forum for sharing analyses and drawing up common positions. All relevant stakeholders are actively involved: national authorities, banks, administrations using payment instruments, companies, retailers and consumers. Given the slow uptake of the SCT and the SDD across Europe due to the implementation of a self regulatory migration, a European regulation adopted on 14 March 2012 (No. 260/2012) established an end-date for the migration to the SCT and the SDD, both for national and cross-border payments (1 February 2014). After that date, it will no longer be possible for payment service users to make transfers and direct debits using national legacy formats. This document is the third version of France’s migration plan to SEPA and replaces the second version published in October 2007. It presents the new regulatory requirements, specifies the terms of France’s migration to SEPA, presents the progress made in the migration and describes the support measures implemented by the National SEPA Committee. It shall be regularly updated to take account of new developments, including the determination of an alternative to interbank payment orders (“TIP”) and electronic payment orders (“Télérèglement”), the finalisation of the communication plan on SEPA and the possible activation by the Treasury of the national options set out in Regulation (EU) No. 260/2012.


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I- Migration to SEPA instruments: a regulatory requirement

1. End-dates defined by Regulation (EU) No. 260/2012

The second version of the national migration plan, published on 11 October 2007, brought forward the dates of end-2011 and end-2012 for completing the migration of credit transfers and direct debits respectively. These dates were nevertheless contingent on the attainment of a critical mass of use of SEPA payment instruments by end-2010 for SEPA credit transfers and end-2011 for SEPA direct debits. However, the National SEPA Committee noted at its meeting of 3 June 2010 that these critical masses, defined as 75% of transactions and 50% of payers, would not be reached by the dates previously set. Given the difficulties encountered in France but also in other European countries with the implementation of a “voluntary” migration, a European regulation was adopted on 14 March 2012 establishing a final and mandatory end-date for the migration to the SCT and SDD. Pursuant to European Regulation (EU) No. 260/2012 that came into force on 31 March 2012, SEPA Credit Transfers and SEPA Direct Debits will replace their national equivalents at the latest on 1 February 2014 for payment transactions carried out within the euro area whether they be domestic or cross-border. After this date, it will no longer be possible for payment service users to make transfers and/or direct debits in national format. The regulation offers Member States the possibility of introducing a transitional period until 1 February 2016 for the migration of “niche” products belonging to the category of credit transfers and/or direct debits with a cumulative market share, based on the official payment statistics published annually by the ECB, of less than 10 % of the total number of credit transfer or direct debit transactions respectively, in that Member State. In France, interbank payment orders (“TIP”) and electronic payment orders (“Télérèglement”) fall under this measure. Given that they are used only by certain national communities, cheques, promissory notes, bills of exchange and electronic money are not covered by SEPA. Although card payments are also excluded from the scope of Regulation (EU) No. 260/2012, they are being discussed at the European level: on 11 January 2012 the European Commission published a Green Paper on card, internet and mobile payments. 2. Scope of Regulation (EU) No. 260/2012 Given that Regulation (EU) No. 260/2012 is directly applicable within the French geographical areas that are part of the European Union (metropolitan France, Guadeloupe, Guyana, Martinique, Réunion, Saint-Martin) and in Saint-Barthélemy, it seems important to consider the measures that will have to be taken in order to ensure the continuity of financial relations with the other French territories (Mayotte, Saint Pierre and Miquelon, New Caledonia, French Polynesia and Wallis and Futuna) and with Monaco.1

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The geographical scope of Regulation (EU) No. 260/2012 is distinct from the SEPA area which covers the following French overseas territories: Guadeloupe, Martinique, French Guiana, Reunion, Mayotte, Saint-Pierre-and-Miquelon, Saint-Barthélemy and Saint-Martin.


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28 January 2008

Launch of SEPA Credit Transfer

1 November 2010

Launch in France of SEPA Direct

Debit

31 March 2012

Entry into force of Regulation (EU) No. 260/2012

1 February 2014

End of migration to the SEPA

Credit Transfer and SEPA Direct

Debit

1 February 2016

If activation of the national option of

Regulation (EU) No. 260/2012, end of themigration of

niche products

Fig.1.1. Milestones in the migration to SEPA


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II- France’s migration to SEPA

1. French payment instruments migrating to SEPA Credit transfers, direct debits, interbank payment orders (“TIP”) and electronic payment orders (“Télérèglement”) must comply with SEPA standards. In volume terms, these four payment instruments accounted for 37.5% of cashless transactions in France in 2010. Since 2007, the date at which the second version of the national migration report was published, the share of credit transfers and direct debits in cashless transactions has increased slightly. In volume terms, the share of these two payment instruments rose from 16.9% and 17.8% of cashless transactions in 2007 to 17.5% and 19.2% in 2010. Direct debits are the second most used payment instruments after payment cards (43.35%) and before cheques (18.31%). Conversely, interbank payment orders decreased over the period from 0.93% in 2007 to 0.67% in 2010. Electronic payment orders, despite remaining stable, accounted for very small transaction volumes: 0.067% in 2007 and 0.068% in 2010.

Fig.2.1. Share in volume terms of credit transfers, direct debits, interbank payment orders and electronic payment orders in French cashless payments

In value terms, credit transfers and direct debits represented 84% and 2.8% of cashless payments in 2007, compared with 85.3% and 3.1% in 2010. Interbank payment orders accounted for 0.2% of cashless payments in 2007 and 2010. Finally, the share of electronic payment orders was 1.1% in 2007 and 1.3% in 2010.

16,91% 16,97% 16,97% 17,52%

18,82% 19,02% 19,04%

19,99%

0,93% 0,82% 0,74% 0,67% 0,07% 0,08% 0,09% 0,11%

0,00%

5,00%

10,00%

15,00%

20,00%

2007 2008 2009 2010

Credit transfer

Direct Debit

Interbank Payment Order

Electronic Payment Order


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Fig.2.2. Share in value terms of credit transfers, direct debits, interbank payment orders and electronic payment orders in French cashless payments

2. The terms of France’s migration to SEPA

a. Credit transfers

SEPA Credit Transfers offer similar features to credit transfers currently available in France. They differ, however, on two main points: while national credit transfers rely on the account identifier “RIB”, SCTs use both the

BIC (Business Identifier Code) and IBAN (International Bank Account Number);

SCTs carry more information in the credit transfer order. The maximum length of the transaction’s remittance data is now 140 characters, compared to 31 characters in the case of national credit transfers. Transmitted to the payee in its entirety and without alteration, this remittance data facilitates accounting reconciliations.

Agreed upon remittance data (which may be structured) between payer and payee in the case of credit transfers resulting from interbank payment orders (“TIP”) paid in cash, commercial credit transfers (VCOM) and tax and duty transfers will continue to be transmitted in SCT payment orders. Similarly, an agreement has been reached with issuers of APL transfers (personal housing benefits) to enable private banks to carry out their tasks.

84,0% 83,2% 84,9% 85,3%

2,8% 3,1% 3,0% 3,1%

0,2% 0,2% 0,2% 0,2% 1,1% 1,3% 1,2% 1,3%

0,0%

10,0%

20,0%

30,0%

40,0%

50,0%

60,0%

70,0%

80,0%

90,0%

2007 2008 2009 2010

Credit transfer

Direct Debit

Interbank Payment Order

Electronic Payment Order


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Only credit transfers of foreign origin (VOE) will not be included in the SCT. This type of transfer between banks where funds are either coming from or transferred to a foreign correspondent is being migrated to large-value payment systems.

b. Direct debits

The SEPA Direct Debits differ quite markedly from national direct debits.

The main difference is the SDD’s mandate flow. Direct debits in France are currently

based on two mandates: the direct debit request which is the mandate given by the debtor to the creditor and the direct debit authorisation which is the mandate given by the debtor to his bank. Both documents are sent by the debtor to the creditor, who transmits the direct debit authorisation to the debtor’s bank. SDDs are based on a double mandate featured on a single document sent by the debtor exclusively to the creditor. This document is kept by the creditor and is only sent to the debtor’s bank upon request for verification purposes. As with national direct debits, the creditor is under the obligation of informing the debtor of the amount and date of the debit before sending the SDD collection to his bank. Where applicable, the debtor may ask his bank to reimburse a debit already made or contest a debit in the absence of a valid mandate.

As with the SCT, SDDs use BIC and IBAN as bank and account identifiers and the remittance data field may total up to 140 characters. It is transmitted to the payee in its entirety and without alteration.

Finally, SDD payment orders contain specific additional information that is not present in national direct debit payment orders: most notably, the unique mandate reference and the type of payment (one-off or recurrent).

In the future, the widespread use of SDDs should foster the development of new value added services. The EPC has already defined the technical characteristics for developing electronic mandate solutions. It has also designed the "SEPA e-Mandate," which is an optional service which each bank is free to implement or not. To date, no bank offers this service within the SEPA area. Other electronic mandate solutions are being developed.

c. Interbank payment orders (“TIP”) and electronic payment orders (“Télérèglement”)

As "niche" products, interbank payment orders and electronic payment orders are required to comply with SEPA standards by 1 February 2014. Pursuant to Article 16 of Regulation (EU) No. 260/2012, each Member State2 may decide to push back the deadline to 1 February 2016. The National SEPA Committee, together with the CCSF (Consultative Committee on the Financial Sector), reaffirmed at its plenary meeting on 10 June 2011 its commitment to maintaining interbank payment orders and electronic payment orders and its preference for postponing the migration. To this day, the analysis of the migration scenario to SEPA for interbank payment orders and electronic payment orders intended for private individuals has not allowed to identify an optimal alternative. The replacement of the electronic payment orders for companies by the SEPA Business-to-Business Direct Debit (SDD B2B) is currently being examined. If this solution

2 In France, it is the Treasury that has this responsibility.


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maintains the current level of service, including an interbank settlement period of 1 day, its implementation will require adjustments. While certain entities are legally required to pay by electronic payment orders, the SDD B2B scheme is optional: banks are free to adhere to it or not. The reachability of all French banks to the SDD B2B is thus a prerequisite for migrating electronic payment orders for companies to the SDD B2B. The National SEPA Committee will continue to work on all these issues.

National payment instruments

Migration to SEPA

Credit transfer SEPA Credit Transfer (SCT), 1 February 2014

Direct debit SEPA Direct Debit (SDD), 1 February 2014

Card payment SEPA Cards Framework (SCF)

Interbank payment order (“TIP”)

Electronic payment order (“Télérèglement”)

Migration by 1 February 2014 with a possibility of postponing to 1 February 2016

Bill of exchange

Promissory note

out of scope

Cheque out of scope

Electronic purse out of scope

Fig.2.3. Summary of migration terms of French payment instruments to SEPA

3. Monitoring migration to SEPA

The uptake on the demand side is closely monitored by the National SEPA Committee. The Secretariat of the National SEPA Committee draws up a quarterly dashboard of France’s migration. This document, recently redesigned for greater accuracy, presents monthly data of volumes exchanged in the French retail payment system CORE and quarterly data on migration to SEPA in Europe. It also includes the state of progress of public administrations’ migration. The Committee is also looking at ways of defining quarterly indicators on the percentage of SCTs and SDDs’ originators. Similarly, as decided at the National SEPA Committee meeting in December 2011, the implementation of monthly statistics on rejects/returns (R-transactions) and their main causes is currently underway. This progress report is completed by the findings of the harmonized SEPA survey conducted on a quarterly basis among a panel of members of the French Association of Corporate Treasurers (AFTE), the French Association of Financial Companies (ASF), the General Confederation of Small and Medium-sized Enterprises (CGPME) and the French Business Confederation (MEDEF) that represents over 300 French companies from all industries. This survey assesses the readiness of the private sphere and presents prospective data on the gradual implementation of SCTs and SDDs. Launched in late 2011, it is an improvement from the individual surveys that were conducted since 2008 by each professional association at varying frequencies and using different questionnaires.


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These tools provide detailed information on the increased use of the European payment instruments in France. The analysis of the results shows that France’s migration to the SCT is largely based on the

exemplary efforts made by the public sphere. The latter represents 70% of the transactions for the first three months of 2012. Other economic players, mainly small and medium-sized enterprises are as yet little aware of the SEPA deadlines. Of the 335 companies questioned in the framework of the harmonized SEPA survey in the first quarter 2012, only 89 of them had already issued a SCT.

France’s migration to the SDD has not yet started. Since its launch in November 2010, SDD transactions account for less than 1% of direct debits carried out through the French retail payment system CORE.


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Fig.2.4. Uptake of the SEPA Credit Transfer in France

Fig. 2.5. Uptake of the SEPA Direct Debit in France

0,0%

10,0%

20,0%

30,0%

40,0%

50,0%

60,0%

70,0%

80,0%

90,0%

100,0%

0,00

20,00

40,00

60,00

80,00

100,00

120,00

140,00

160,00

180,00

Jan-1

1

Feb-1

1

Marc

h-1

1

Apr-

11

May-

11

June-1

1

July

-11

Aug-1

1

Sep-1

1

Oct-

11

Nov-1

1

Dec-1

1

Jan-1

2

Feb-1

2

Marc

h-1

2

Apr-

12

May-

12

June-1

2

July

-12

Aug-1

2

Sep-1

2

Oct-

12

Nov-1

2

Dec-1

2

Jan-1

3

Feb-1

3

Marc

h-1

3

Apr-

13

May-

13

June-1

3

July

-13

Aug-1

3

Sep-1

3

Oct-

13

Nov-1

3

Dec-1

3

Jan-1

4

Feb-1

4

Number of transaction (in millions) Percentage of transactions

0,000%

10,000%

20,000%

30,000%

40,000%

50,000%

60,000%

70,000%

80,000%

90,000%

100,000%

0,000

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

Jan-1

1

Feb-1

1

Marc

h-1

1

Apr-

11

May-

11

June-1

1

July

-11

Aug-1

1

Sep-1

1

Oct-

11

Nov-1

1

Dec-1

1

Jan-1

2

Feb-1

2

Marc

h-1

2

Apr-

12

May-

12

June-1

2

July

-12

Aug-1

2

Sep-1

2

Oct-

12

Nov-1

2

Dec-1

2

Jan-1

3

Feb-1

3

Marc

h-1

3

Apr-

13

May-

13

June-1

3

July

-13

Aug-1

3

Sep-1

3

Oct-

13

Nov-1

3

Dec-1

3

Jan-1

4

Feb-1

4

Number of transactions (in millions) Percentage of transactions

26.6%

0.076%


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III- Ancillary measures

1. The SEPA communication plan At its plenary meeting on 13 December 2011, the National SEPA Committee decided to implement a SEPA communication plan focusing on specific regional initiatives targeted at SMEs. The objective of these expert-led information sessions on SEPA will be to both present the legal obligations imposed on businesses and provide practical advice on how to comply with them. They will be held throughout France in the second half of 2012, with the active participation of the Banque de France, the French Banking Federation and professional associations (AFTE, ASF, CGPME, MEDEF) and the support of chambers of commerce and the Order of Chartered Accountants (“Ordre des experts comptables”). The SEPA communication plan is scheduled to end with the organization of a high-level symposium in Paris, to enable both national and European public authorities to express their strong support of SEPA. In order to ensure that the messages are consistent, these information sessions will rely on a corpus of documentation specifically designed for this purpose. This documentation will notably be downloadable from the official website of the National SEPA Committee, a dynamic and enriched new version of which will be available starting July 2012. 2. Possible activation of the national options under Regulation No. 260/120 Regulation (EU) No. 260/2012 sets out four waivers enabling Member States to push back the end-date of 1 February 2014 to 1 February 2016 for the following: the provision by payment service providers (PSP) of conversion services of national BBAN

to IBAN to their clients that are consumers (Article 16.1); the migration of "niche" products with a cumulative market share of less than 10% of the

total number of credit transfer and direct debit transactions in a given Member State (Article 16.3);

the use of message formats other than ISO 20022 XML for the initiation or reception by non-consumer PSUs of individual payment orders that are bundled together for transmission (Article 16.5);

the non-communication of the counterparty’s BIC for national payment transactions (Article 16.6).

The National SEPA Committee will organise a general debate on whether to activate these national derogations and invite all parties involved to express their needs. The results of this consultation will contribute to the work of the Treasury, which is the only competent authority for deciding on the possible use of the derogations set out in Regulation (EU) No. 260/2012.


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Appendices

Appendix I: Organisation of the National SEPA Committee The National SEPA Committee is charged with preparing and implementing the national migration plan. It is co-chaired by: Denis Beau, Director General Operations, Banque de France

Jean Clamon, Chairman of the Steering Committee on Payment Instruments of the French

Banking Federation

The Committee’s secretariat is provided jointly by the Banque de France and the French Banking Federation. 1. Organisation The plenary session of the National SEPA Committee is the decision-making entity. It validates on a consensual basis the guidelines set out by the four working groups charged with examining how to implement the SEPA project in France. It meets twice a year. The National SEPA Committee relies on the following working groups to carry out its tasks: The working group on the range of payment instruments, tasked with determining which

French payment instruments will migrate to SEPA payment instruments and under what terms..

The working group on the transitional period, tasked with the planning of the transitional

period during which both national and SEPA payment instruments will coexist.

The working group on communication is charged with organising the various national communication initiatives on the SEPA project and ensuring that they are consistent with the strategies adopted at the European level.

The Legal Support Group provides legal analyses to the National SEPA Committee.

Comité National SEPA

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Banks, credit institutions and equivalent

Card schemes and payment infrastructures

Public administrations Customer representatives Representatives of public

bodies and qualified experts

Banque de France

BPCE

BNP Paribas

Caisse des dépôts et

consignations

Crédit Agricole

Crédit Mutuel - CIC

HSBC

La Banque Postale

Société Générale

IEDOM (French Overseas

Departments Note-Issuing

Bank)

OCBF (Office for Banking and

Financial Coordination)

Chairman of the CFONB

(French Committee for

Banking Organisation and

Normalisation)

ASF (French Association of

Financial Companies)

Monaco’s banking

association

GCB ("CB" bank card

consortium)

STET (Technological

Systems for Exchange

and Processing)

DGFiP (public finance

department)

DGME (government

modernisation department)

DGTPE (treasury and

economic policy

department)

DGCCRF (competition,

consumer protection and

fraud repression

department)

DGDDI (customs and

indirect taxes department)

DSS (social security

department)

Ministry of Justice

Principality of Monaco –

budget and treasury

department

5 members appointed by the

Conseil du commerce de France

5 representatives of consumer

associations: ADEIC, AFOC,

CLCV, Indecosa CGT, UFC Que

Choisir

AFTE (French Association of

Corporate Treasurers)

CGPME (General Confederation

of Small and Medium-sized

Enterprises)

MEDEF (French Business

Confederation)

A representative of the

Economic, Social and

Environmental Council

AMF (French Mayors’

Association)

Chairman of the CCSF

(Consultative Committee

on the Financial Sector)


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Appendix II: Provisional schedule of SEPA information sessions The table below shows the scheduled information sessions to be organized across France as part of the communication plan implemented by the National SEPA Committee in the second half of 2012. A final table will be published in the updated national migration plan in early 2013.

Region Venue and organiser Date

Pays de la Loire Nantes, AFTE 14 June 2012

Languedoc-Roussillon Nîmes, BDF 27 June 2012

Alsace Strasbourg, AFTE 6 September 2012

Centre Tours, BDF 18 September 2012

Provence-Alpes-Côte-D’azur Nice, AFTE/BDF 20 September 2012

Provence-Alpes-Côte-D’azur Monaco, AFTE/BDF 21 September 2012

Provence-Alpes-Côte-D’azur Marseille, BDF 11 October 2012

Aquitaine Bordeaux, FBF 2nd half 2012

Lorraine Nancy, FBF 2nd half 2012

Midi-Pyrénées Toulouse, AFTE 2nd half 2012

Nord-Pas-de-Calais Lille, FBF 2nd half 2012

Pays de la Loire Nantes, FBF 2nd half 2012

Picardie Amiens, FBF 2nd half 2012

Rhône-Alpes Grenoble, AFTE 2nd half 2012

Rhône-Alpes Lyon, FBF 2nd half 2012

About the National SEPA Committee Co-chaired by the Banque de France and the French Banking Federation, the National SEPA Committee coordinates the implementation of SEPA payment instruments in France. It brings together representatives of all stakeholders including banks, administrations, companies, retailers and consumers.

the french migration plan to sepa - sepa france

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