1. No category

Deutsche Bank
Global Transaction Banking
SEPA - What is going to happen after 1st Feb.
Feb
2014?
ASSET Clie
ent event – Chema Buey
Regional Produ
uct Management EMEA
Product & Tech
hnology Management
Bilbao, De
ec. 3rd, 2013
1
What you need to know about SEPA
2
Where is SEPA standing at the moment?
m
3
What is the next stage? / How is the market going to be reshaped?
Deutsche Bank
Global Transaction Banking
2
What is SEPA?
Source: PWC SEPA Readiness Thermomether
Deutsche Bank
Global Transaction Banking
3
Scope
— Instruments and schemes
— Credit Transfers (since January 200
08)
— Direct Debits (since November 200
09)
— Phase out of national EUR ACH scchemes (1
February 2014)
— Market Infrastructure
— From various local systems to pan--European
clearing
l i h
houses (PE
(PE-ACH’s)
ACH’ )
— Legal Framework (European
Commission)
— European Payment Services Directtive (PSD)
— Transposition into national law completed
ov 2012.
in most countries. Poland in No
— EU Regulation 924/2009 (formerly 2560/2001)
— EU Regulation 260/2012 (SEPA-Miigration end
date))
Deutsche Bank
Global Transaction Banking
…onlyy € Transactions!
4
SEPA Credit Transfer
Ch
Characteristics
t i ti
— F
Fullll amountt credited
dit d tto b
beneficia
fi iary – no deductions
d d ti
— Maximum clearing cycle from tra
ansaction initiation to credit on the
beneficiaryy account of 1 dayy
— Settlement-based national centra
al-bank reporting obligations on
payment service providers will be removed from 1 February 2016
— Until then threshold of EUR50,000
EUR50 000
— Germany has direct reporting (thresshold of EUR12,500)
— Spain to remove current CBR from 1st Jan 2014 .Portugal from 1st June 2013
— Not covered by SEPA
— Foreign-currency
g
y Payments
y
((EU alsso))
— Urgent Payments
Deutsche Bank
Global Transaction Banking
5
SEPA Direct Debit
Ch
Characteristics
t i ti
— Direct
Di t debit
d bit scheme
h
b
based
d on a signed
i
d mandate
d t
— Content is standardised
— Language of debtor country
— Creditor captures and maintains mandate data, and stores the
paper mandates (creditor manda
ate flow)
— Relevant mandate data are part of every SDD
— Harmonized collection and exception timelines and rules (so-called
R-transactions)
Deutsche Bank
Global Transaction Banking
6
SEPA Direct Debit
N
New
D
Data
t El
Elements
t (1)
— IBAN & BIC instead of legacy acccount number & national bank code
— Unique
U i
mandate
d t number
b
— To be issued by creditor
— Country
Country-specific
specific creditor ID
— Issuance to be defined per country
— Example Germany: via central bank
— Example Spain: Tax number ‘NIF’ (e.g
e g ESnnZZZA23456789)
— Example Portugal: via SIBS (e.g PT
TnnZZZ123456)
— Mandate date
— For new SEPA mandates: use actual date
— For existing mandates: use ficticiou
us date (e.g date of switching to SDD)
— Remittance Information (Paymen
nt Detail) field length: 140 characters
— Mark as B2B or Core SDD
— Mark as first or one-off direct debit, or as recurrent direct debit
Deutsche Bank
Global Transaction Banking
7
SEPA Direct Debit
C
Core
vs. B2B SDD
SDD: M
Main
i Dif
Diferences (1/2)
Usage
Core SDD
B2B SDD
With Consumers and
d Companies
With Companies only
8 weeks after debit
Refund Right
Mandate Check by Debtor
Bank
Participation of Banks
13 months after debiit (in case of missing
mandate)
No refund right after debit
Optional
Mandatory
EUR Countries: since 11/2010
Non-EUR Countries:: from 10/2016
Optional
— Status of micro
micro-enterprises
enterprises determiined by country
—
Definition: Enterprise which has less than 10
0 employees and annual turnover or balance sheet is
equal or less than 2 million Euro (2003/361/E
EC)
—
Treated as companies in BE, BG, DK, DE, EE,
E IE, EL, ES, FR, LV, LT, LU, NL, AT, RO, SI & FI
—
—
B2B SDD can also be used with these small companies
—
PL also plans to treat them as companies
U, MT, PT, SK, SE & UK
Are treated as consumers in CZ, IT, CY, HU
—
Deutsche Bank
Global Transaction Banking
B2B SDD cannott be
b used
d with
ith th
these small
s ll companies
i
8
SEPA Direct Debit
C
Core
vs. B2B SDD
SDD: M
Main
i Dif
Diferences (2
2/2)
— Pros of B2B SDD
— Fast finality
y of payments
p y
((within
n 2-3 days)
y ) -> Reduced collection risk
— Cons of B2B SDD
— Participation of debtor bank ? ->
> Non Mandatory.
— Acceptance by debtor ? -> Giving up the refund right
— New mandate required. -> Validity of existing mandates only for SDD Core
— Debtor needs to register the ma
andate data with the debtor bank –>
>
This process is out of the creditor’ss control but is key to avoid rejections.
— Effect on processes - > Especially if both SDD schemes are used
Deutsche Bank
Global Transaction Banking
9
SEPA Direct Debit
M d t Flow
Mandate
Fl
Optional check of SDD mandate by
Debtor Bank
Deutsche Bank
Global Transaction Banking
Mandatory check of SDD mandate by
Debtor Bank
10
SEPA Direct Debit
Ti li
Timelines
B2B Direct Debit
Core Direct Debit
D:
inter-
Due date = debtor
debtor’s
s debit date =
bank settlement date
D-14 CD: Customer pre-notification of amount
&
due date (unless other timeframe is
agreed)
D-5 BD*:
Submission of first & one-off SDD
D-2 BD*:
Submission of subsequent SDD
D:
Due date = debtor
debtor’s
s debit
date=inter-bank settlement
date
D-14 CD:
Customer pre-notification of
amount & due date (unless
other timeframe is agreed)
D-1 BD:
Submission of first, one-off
and subsequent SDD
D+2 BD:
Latest date for bank returns
D+5 BD**: Latest date for bank returns
D+8 W:
Maximum refund period for debtor for
authorized transactions
D+13 M:
Maximum refund period for debtor for
unauthorized transactions
D+36 M:
Mandate expires 36 months after last
SDD submission
No refund right for debtor
D+36 M:
after
CD = C
Calendar
l d Days
D
BD = Business Days
W = Weeks
M = Months
* D-1 in Austria (for dome
estic SDD only) from
April 2013, in Germany frrom November 2013
* *D+2
D+2 in Germany
Deutsche Bank
Global Transaction Banking
Mandate expires 36 months
last SDD submission
AOS developed in certain banking
communities (Austria, Germany
and Spain) in order to shorten
collection process ->
‘D-1 Core SDD’ available in SEPA
rule
l books
b k since
i
Nov
N 2012 (‘COR1’)
11
SEPA Direct Debit
M d t Sample
Mandate
S
l C
Core S
Scheme
h
Mandate Number
Authorization of the
debtor‘s bank in addition
to the creditor
Creditor ID
IBAN & BIC
Additional examples in “EPC Guidelines for
the Appearance of Mandates”, and
translations under “Links”:
http://www europeanpaymentscouncil eu/co
http://www.europeanpaymentscouncil.eu/co
ntent.cfm?page=core_sdd_mandate_trans
alations
Deutsche Bank
Global Transaction Banking
12
SEPA Direct Debit
Mi ti R
Migration
Rules
l ffor L
Legacy DD M
Mandate
d tes in
i S
Spain
i
‘NIF Sufijo’ in CSB19 - >Creditor
Identifier
‘Referencia’ B2 Register CSB19 (12
char) -> Unique Mandate Reference
(35 Char)
Deutsche Bank
Global Transaction Banking
13
Single Euro Payments Area (S
SEPA):
A political Project
— 1999
1999: IIntroduction
t d ti off the
th E
Euro
— 2000: EC Financial Services Acttion Plan
— Also known as “Lisbon Agenda”
g
— Comprising 42 measures to create a Single Financial Services Market
— 2002: Launch of SEPA initiative by the banking sector
— European
E
Payments
P
t Council
C
il (EPC)
— 2008: First step achieved: launch of the SEPA credit transfer
unch of the SEPA direct debit
— 2009: Second step achieved: lau
— 2014: Regulatory end date for SEPA migration
SEPA is now a rregulatory project!
Deutsche Bank
Global Transaction Banking
14
SEPA: A regulatory Requirement
— SEPA is
i now a regulatory
l t
projec
j ctt
— The end-date is just 2 months aw
way
— Not being compliant means not b
being able to make ACH payments or
direct-debit collections
ur preparations asap (SEPA “MUST”)
— The time to act is now: start you
— We can provide you with detaile
ed migration advice
— We can also help you unlock SE
EPA’s full potential (SEPA “COULD”)
Deutsche Bank
Global Transaction Banking
15
SEPA Migration End-Date Reg
gulation (1)
(R 260/2012)
(Reg
Requirement
Impact
In scope are e.g.
e g CTs and DDs in EUR where both
payer’s and payee’s Payment Service Provide
er (PSP,
e.g. banks) are located in the Union
N/A
Out of scope are e.g. HVP and Card paymentss
N/A
BIC
After 1 February 2014 (or 1 Feb2016 per Mem
mber State BICs are required until those dates
Spain: Feb, 2014 for domestic txn, Feb
option) for national payments and after 1 Febrruary
2016 for cross-border payments PSPs shall no
ot require 2016 for cross-border txn.
Payment Service Users (PSUs) to indicate the
e BIC
XML
PSUs that are businesses required to use XML for bulk
transmissions
We will continue to accept non-XML
Spain: Feb, 2016
End
date
A mutual migration end date for both CTs and DDs of 1
Feb2014 has been set
Deadline for SEPA migration
MIF
MIFs are not allowed for domestic DDs from 1Feb2017, Opportunity for arbitrage / consolidation
and for cross-border DDs from 1Nov2012
Portugal: MIF for domestic SDD
removed also from 11.2012
France: 50% reduction from 11.2012
MIF may be allowed for R-transactions under certain
conditions (e.g.
(e g strictly cost based)
Deutsche Bank
Global Transaction Banking
TBD
16
SEPA Migration End-Date Reg
gulation (2)
(R 260/2012)
(Reg
Mandate
Non
EUR
Niche
CBR
Requirement
Impact
Existing mandates will remain valid
No need to obtain new mandates
for Core SDD
Payers cannot mandate from payees to have an
a account
in a certain country as long as the account is located
within
ithi the
th EU
Facilitates centralization
Payees cannot mandate from payers to have an
a account
in a certain country as long as the account is located
within the EU
Customers must potentially be
allowed to pay via cross-border
DD
PSPs in non-EUR EU states must be reachable for SCT
and Core SDD by 31Oct2016, or within 1 yearr of joining
the EUR (if the joining takes place prior to 31O
Oct2015)
N/A
http://epc.cbnet.info/content/adher
ence_database
Member states can allow PSPs a waiver for niiche CTs
Determination per country needed
and DDs (less than 10% market share per ECB stats) until on what falls into the Niche
category. Spain: CSB58, CSB32
1Feb2016
Amendmend of Reg 924/2009: higher charges for xbxb
payments >EUR 50k not permitted
Facilitates centralization
Amendmend of Reg 924/2009: payment-base
ed CentralBank-Reporting
p
g obligations
g
to be abandoned from
f
1Feb2016
Facilitates centralization
Spain:
p
1st Jan 2014 / Portugal:
g
1st Sep 2013
Deutsche Bank
Global Transaction Banking
17
Analyse what needs to be don
ne
S
SEPA
“MUST”
“
S ”
C
Corporate
t preparation
ti
1. Analyzing
— Use our “Ultimate Guide to SEPA
Migration” and our “Practical Guide
to Successful SEPA Migration”
(vendor guide).
2. Budgeting
3 Implementing
3.
End of project
Target: Autumn 2013
—
http://www.gtb.db.com/
—
Also available on itunes (search for
“Th ultimate
“The
lti t Guide
G id to
t SEPA
Migration”)
Start your analys
sis immediately!
Deutsche Bank
Global Transaction Banking
18
Corporate SEPA-Migration App
proaches
Multinational
Corporates
Strategic SEPA Pro
ojects
 Centralisation / efficiency improvements
 Often complex infrastructures
i
 Multi-year proje
ects
Tactical SEP
PA Projects
Corporates
with limited
European activities



Solutions
s for specific problems in individual countries or processes
Cost reductions
Realising
g “Quick-Wins”
Regulatory SEPA Projects
Purely domestic Corporates
Deutsche Bank
Global Transaction Banking

Waiting for availability of SEPA modules from
systems
providers and standardised SEPA solutions from
banks

Step-by-step implementation
19
Summary
—
—
—
—
The clock is ticking!
SEPA is now a Regulatory pro
oject !
The end-date is onlyy 2 months away
a y
Not being compliant means not being
b
able
to make ACH payments or directt-debit
collections
— The time to act is now: start you
ur
preparations right away (SEPA “MUST”)
“
— We can provide you with detaile
ed
migration advice
— We can also help you unlock SE
EPA’s
EPA
s full
potential (SEPA “COULD”)
Deutsche Bank
Global Transaction Banking
20
1
What you need to know about SEPA
2
Where is SEPA standing at the moment?
m
3
What is the next stage? / How is the market going to be reshaped?
Deutsche Bank
Global Transaction Banking
21
Global Transaction Banking – SEP
PA Migration
Where are we?
Regulators put a lot of emphasis on the successful comp
pletion of the SEPA migration project by Feb 1st, 2014
and we have no signals that suggest a flexibility in the miigration end date
SCT Actuals
jun 13 jul 13 ago
13
sep oct 13 nov dic 13 ene feb 14 mar abr 14
13
13
14
14
Forecast SCT
Actuals SCT
SDD Actuals
jun 13 jul 13 ago
13
sep oct 13 nov dic 13 ene feb 14 mar abr 14
13
13
14
14
Forecast SDD
Actuals SDD
Clients - Evolution of the SEPA migration from a gradu
ual ramp-up towards a big bang like approach.
Since we started to work with our top clients on the forecasting beginning 2013 we see a trend in delays of the
ramp up. Some of this can be explained by expected new value added features that clients wait for and some is
due to delays in the clients projects. We have cases where
e clients are ready but simply do not switch over for
unclear reasons.
Given year end processes and limited reaction time to issu
ues we get increasingly concerned about this shift in the
migration and usage timelines.
Deutsche Bank
Global Transaction Banking
22
SEPA Migration - Where are we reallyy?
Estadísticas SNCE
En lo relativo a las transferencias SEPA, la proporción
con respecto al total de transferencias del SNCE
(indicador SEPA) se situó en el mes de septiembre en el
e
55,3%, frente al 39,6% registrado en septiembre de 2012.
1) Fuente:
El indicador SEPA para adeudos, se sitúa en
el mes de septiembre en el 0,24%,
básicamente porque una entidad supera el
8% de migración.
Iberpay.
Deutsche Bank
Global Transaction Banking
23
SEPA Migration - Where are we reallyy?
Euroepan Central Bank Statistics
According to the euro area SCT indicator, the use of SCTs (see
Chart 1) accounted for 56.26% of the total credit transfer volume
which originated in the euro area in September 2013. In the first
three quarters of 2013, the pace of migration accelerated. The
national SCT indicators continue to demonstrate a relatively large
variation
i ti iin th
the llevell off migration
i ti across countries
t i accelerated.
l t d
Deutsche Bank
Global Transaction Banking
No significant progress towards migration to the SDD scheme
has been made since the first SEPA migration report. Based
on the Eurosystem’s euro area SDD indicator, only 6.84% of
direct debits were executed under the SDD scheme in
European infrastructures in September 2013. Belgium and
A t i are a little
Austria
littl more advanced
d
d with
ith ratios
ti around
d 20%
20%.
24
Global Transaction Banking SEPA
A Migration
Where are we really?
Global Transaction Banking Client Migration – Heat Map
Complete
Migration in Progress
On Hold
GTB hass chosen to contact all its cash management clients1 concerning
PA readiness.
their SEP

5% of the clients are SEPA-ready, whilst 77% are currently under
Today 15
migration
n. Whilst majority of them trust that they will meet the SEPA
migration
n end-date Feb 1st, 2014 we still see a number of clients with a
medium-high risk of not being SEPA ready. Individual names are
indentifie
ed and work around solutions are under discussion.
Unknown
3%
5%

15%
e distinguish between SEPA-readiness
SEPA readiness (=
( SEPA project is
Note: We
ed) and SEPA-compliance (= client is able to process SEPA
complete
payabless & receivables but has not fully completed its SEPA project)
77%
Project risk
(%)
Target
g
migration
date
1) We
No risk
k
Low risk
Medium risk
High risk
Jan 2014
%
16,95%
19,44%
3,79%
0,80%
Dec 2013
23,43%
%
15,75%
3,79%
0,40%
Nov 2013
6,78%
%
8,74%
0,40%
0,00%
have excluded Global Transaction Banking clients who conduct less than 100 payments a month with DB.
Deutsche Bank
Global Transaction Banking
25
1
What you need to know about SEPA
2
Where is SEPA standing at the moment?
m
3
What is the next stage? / How is the market going to be reshaped?
Deutsche Bank
Global Transaction Banking
26
SEPA as a catalyst for payme
ent efficiency
K SEPA benefits
Key
b
fit
 Rationalize banking relationship
ps and simply account structures
 Overall reduction of bank fees
 Payment Centralization (Payme
ent Factories and ‘payments on
behalf of’ model)
 Collection Centralization (Collecction Factories and ‘collections
on behalf of’ model)
 Standardization of payment form
mats and bank communication
interfaces (ISO 20022 XML)
Deutsche Bank
Global Transaction Banking
27
SEPA has not „flattend“ Euro
oland
Th one Euro
The
E
accountt story
t
is
i nott going
i to
t fly
fly by
b F
Feb.
b 1st, 2014
Austria
Lithuania
Belgium
Luxembourg
Bulgaria
Malta
Czech Republic
Netherlands
Denmark
Norway
Estonia
Poland
Finland
Portugal
France & Monaco
Romania
Germany
Greece
Slovakia
Hungary
Slovenia
Iceland
Spain
Ireland
Sweden
Italy
Latvia
Switzerland
Liechtenstein
United Kingdom
Legend:
Deutsche Bank
Global Transaction Banking
A local EUR account is not re
equired.
/
Depending on client requirem
ments a local Euro account might be required.
28
SEPA has changed the rule
es of the game …
… and
d th
the players
l
start
t t to
t understand
d t d
Separating forces
… and how we respond
SEPA has transformed the highly mature payment
markets into a early market, which is in flux.
We take influential action and ask for your support
—
Market forces at work
—
—
—
MNCs and LCs have a shared interest in a flat
SEPA
SMEs and local players want SEPA to be as close
to the legacy schemes as possible
—
—
Global players want to SEPA to be hub and spoke
like the FI business
b siness to rationalise infrastructure
infrastr ct re
and win with scale strategies
Local players and domestic champions want to
protect existing wallets and chose differentiation
strategies / form blocking coalitions to built market
entry barriers
—
—
for true SEPA solutions and
to built market pressure on separating forces
drive SEPA 2.0 vision
Competitors
p
—
Competitors
—
—
—
—
—
Clients
—
Clients  Partner with industry champions
leverage market leading position to built peer
pressure
develop am attractive growth story for the industry
Clearing and Settlement mechanisms
—
B ilt best
Built
b t in
i class
l
solutions
l ti
with
ith EBA that
th t
outperform domestic schemes
Clearing and Settlement mechanisms
—
—
—
EBA driver for standardisation
Private schemes, differentiate and co-operate
Public schemes,, want to be part
p of the game
g
but
lack a strategy
Deutsche Bank
Global Transaction Banking
29
SEPA has changed the rule
es of the game …
… some reall examples
l off ‘‘national
ti
l SEPA com
mpetition’
titi ’
Separating forces
… and how we respond
SEPA has transformed the highly mature payment
markets into a early market, which is in flux.
We take influential action and ask for your support
—
—
SDD COR1:
—
—
—
—
—
—
—
—
Spain: New flat file (‘Folleto 72’) has been issued
for the Spanish market outside the XML SEPA
schemes. This service is only available via local
CSM preventing
ti other
th CSM’s
CSM’ to
t participate.
ti i t
France: CAI (acmt.022) has been adopted as
standard for the market following ISO rules.
However today it is only 100% accessible via local
CSM and only partially via EBA 2.
—
—
for true SEPA solutions and
to built market pressure on separating forces
drive SEPA 2.0 vision
Competitors
—
Debtor Account changes:
—
—
SDD COR1 are available as of today in 3 markets:
Austria, Germany and Spain.
However in Austria and Spain Banks not linked to
the local CSM may not be accessible for COR1.
This clearly creates a market inefficiency
inefficiency.
Clients  Partner with industry champions
leverage market leading position to built peer
pressure
develop am attractive growth story for the industry
Clearing and Settlement mechanisms
—
Built best in class solutions with EBA that
outperform domestic schemes
 What
are your views?
Mandate management:
—
—
Italy: new SEDA service (similar to current EAD
service for RID) launches in Italy. Accessible via
EBA2 but limited to Italian market.
g Local CSM p
plans to launch a specific
p
ePortugal:
mandate service for Portuguese market.
Deutsche Bank
Global Transaction Banking
30
SEPA 2.0: the evolution tow
wards a more
efficient
ffi i t market
k t
 We expect that those initial market ano
omalies will start to converge into
more standardized global solutions on
nce the mass migration is over.
 The SEPA market will become far morre efficient once the remaining open
points are closed.
e standard core products:
 New services will emerge on top of the
 SEPA FSC (Financial Supply Chaain): Eg. SDD Financing
 SDD automated representation
 M-payments
 ………
Deutsche Bank
Global Transaction Banking
31
Deutsche Bank
Global Transaction Banking
32
Disclaimer
Di l i
Disclaimer
The information contained herein is strictly for informational purposes only and does
not constitute and shall not be construed to
o constitute any contractual or noncontractual obligation or liability of Deutsche Bank AG or any of its affiliates,
affiliates including
Deutsche Bank Trust Company Americas (ccollectively "Deutsche Bank"), nor shall this
presentation or the content herein be consttrued as advice, an offer or a solicitation of
anyy nature whatsoever nor is this presentat
p
tion or its contents intended to be relied
upon by any person. Deutsche Bank makess no representation as to the accuracy,
completeness, or timeliness of such information. Deutsche Bank shall not be held liable
for the authentication of or compliance with
h the information contained herein nor does
D t h B
Deutsche
Bank
k assume any obligation
bli ti tto update
d t any such
h iinformation.
f
ti
N
No partt off this
thi
presentation may be copied or reproduced in any way without the prior written consent
of Deutsche Bank. Copyright © 2012 Deutssche Bank AG. All Rights Reserved.
Deutsche Bank
Global Transaction Banking
33