SEPA • What is SEPA? The Single Euro Payments Area (SEPA), a European banking industry initiative, is the area where consumers and companies can make and receive payments in euro, within Europe, whether within or across national boundaries under the same basic conditions, rights and obligations, regardless of their location. The current geographical scope of SEPA covers the 27 EU member states* plus Iceland, Liechtenstein, Norway, Switzerland and Monaco. The accounts of the debtor (payer) making a SEPA payment and of the creditor (payee) receiving this payment must be located in one of these 32 SEPA countries. The accounts may be in euro or in another currency. IBAN (International Bank Account Number) and BIC (Bank Identifier Code) are the only permissible account and bank identifiers for SEPA transactions. • SEPA Direct Debit SEPA Direct Debit is a new payment instrument that allows consumers and companies to make cross-border direct debit payments throughout the SEPA countries. This means that it is no longer necessary for debtors and creditors to hold accounts in various countries. SEPA Direct Debit can also be used for domestic direct debit payments and will eventually replace the current domestic direct debit scheme, DOM 2000. To use the SEPA Direct Debit payment instrument, the debtor and the creditor must each hold an account with a credit institution located within SEPA and offering SEPA Direct Debit payment schemes. Advantages for debtors • Simple means of paying bills throughout 32 SEPA countries • No-questions-asked, fast and simple refund procedure (if requested within 8 weeks after the due date) Advantages for creditors • Collection of domestic and cross-border direct debits across 32 countries • Payment completion within a pre-determined time cycle • Straightforward reconciliation of payments received • SEPA Direct Debit schemes There are two SEPA Direct Debit schemes: the Core scheme and the Business to Business (B2B) scheme. The Core scheme can be used by any type of debtor (consumers and companies), whereas the B2B scheme has been designed solely for business customers to make payments by direct debit as part of their business transactions. The B2B scheme cannot be used by consumers. Both schemes allow a creditor to collect funds from a debtor’s account provided that a specific SEPA Direct Debit mandate has been granted by the debtor to the creditor. The mandate authorises the creditor to collect a payment and allows the debtor bank to pay those collections. [*Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxemburg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, United Kingdom.] WWW.ING.LU Contrary to the DOM 2000 scheme: • single (one-off) direct debit collections are accepted • the Core scheme defines a refund right for the debtor, no questions asked (see details below) • in the Core scheme the debtor bank does not receive a copy of the mandate and therefore does not carry out any controls on the mandate prior to executing the direct debit payment instruction received from the creditor bank 1. Characteristics of SEPA Core Direct Debit scheme: • Refund right for the debtor. • The debtor can request a refund for an authorised transaction (signed mandate) during an eight week period after the due date without having to give a reason for the refund. • For unauthorised transactions, or transactions that have been incorrectly executed, this right to a refund extends to 13 months after the due date. • This right to a refund does not relieve the debtor of its responsibility to resolve any issues in respect of the disputed collection with the creditor in accordance with the terms and conditions with the creditor. • Pre-notification required from the Creditor. • The creditor must notify the debtor at the least 14 calendar days before collecting the payment, for example by sending an invoice. The pre-notification must include the date and the amount of the collection and must be sent only once in case of recurrent direct debit collections. • Debtors are entitled to instruct their banks not to accept any direct debit collections on their accounts. 2. Characteristics of SEPA B2B Direct Debit scheme • The characteristics that differ between the B2B scheme and the Core scheme are: -Debtor banks must hold a copy of the mandate and must ensure that the collection is authorised by checking the collection against the mandate information. -The debtor is not entitled to obtain a refund of an authorised transaction. -Timelines are shorter for presenting direct debits and for the return period. • Launch date The introduction of the SEPA Direct Debit schemes requires a uniform EU wide legal framework as defined in the EU Payment Services Directive (PSD). The SEPA Direct Debit schemes will gradually be offered by banks in SEPA countries as of 2 November 2009. All banks offering a domestic debit direct scheme must be in a position to offer the SEPA Core scheme to debtors by November 2010. Initially ING Luxembourg will only offer this service to its debtor clients, and thus will be able to process SDD collections received from SEPA banks as of: • 2 novembre 2009 ➤ SEPA CORE Direct Debit scheme • WWW.ING.LU