The creation of the Single Euro Payments Area (SEPA) is an EU public authorities’ integration initiative in the area of electronic euro payments. The SEPA zone comprises 36 countries, including Switzerland and Liechtenstein.
The political SEPA vision aims to create a euro payments area in which cross-border payments are handled as efficiently as domestic payments within the individual countries.
The European Payments Council (EPC) is the coordination and decision-making body of the European banking industry in relation to payments. The EPC develops, among other things, the SEPA Credit Transfer (SCT) and SEPA Direct Debit (SDD) Schemes, which help to realize the integrated euro payments market.
Switzerland as Part of SEPA
The EPC made a major political decision by accepting Switzerland among the ranks of SEPA members in 2006.
Since January 2008, credit transfers, and since November 2009, direct debits are made in accordance with the standardized SEPA schemes compulsory for all participating countries. Thus, the participating Swiss financial institutions have to respect the level playing-field in the euro payments area for their euro payment processing. Beyond that, while they are bound to the EPC rulebooks, they are not subject to EU regulations and directives.
Each financial institution that wishes to participate in the SEPA schemes is required to sign an adherence agreement, thus committing to the EPC that it will follow the SEPA regulations unconditionally. Furthermore, the EPC requires a legal opinion of each participant that confirms that the institution can indeed meet the requirements of the SEPA schemes.
In assignment by the Swiss financial center, SIX Interbank Clearing as the National Adherence Support Organisation (NASO) of Switzerland is supporting the Swiss financial institutions with the administrative issues and facilitating the registration process.
SEPA Credit Transfer (SCT)
The foundation for the processing of SEPA credit transfers in the Single Euro Payments Area is the "SEPA Credit Transfer Scheme Rulebook". It defines the rules, practices and standards for transactions by the payer to the beneficiary.
Stipulated among the rules is that:
- the financial institutions participating in SEPA are reachable for SEPA-compliant credit transfers and are also able to execute the same;
- the credit transfer between the ordering party’s bank and the beneficiary’s bank is to be conducted in euro;
- the customer’s bank account will be maintained in the euro payments area, but must not necessarily be kept in euro;
- a maximum credit transfer duration is defined;
- there are to be no amount limits;
- the transactions are to be processed using standard formats (ISO 20022) and data content, including the provision of the IBAN and BIC;
- the processes of payments as well as rejections and returns are followed.
SCT for Swiss Financial Institutions
Financial institutions that participate in the euroSIC system are able to send and receive SEPA credit transfers with minimal technical or organizational efforts (payment type usage or signing of a supplemental agreement).
SEPA Direct Debit (SDD)
The rulebooks by the European Payments Council serve as basis for processing SEPA direct debits in the private and business customer sectors.
SDD was introduced throughout Europe in November 2009. Financial institutions in the EU are required to participate in the scheme. The national procedures – in Switzerland LSV+ and BDD from the banks and Debit Direct from the PostFinance – will remain in existence for the time being.
The main advantages of SDD
- Standard direct debits in 36 countries throughout Europe
- Internationally standardized processes, terms and formalities
- Separation of funds from the flow of information (prenotification, account is debited on the due date)
- Continuous mandate reference is also possible for refunds
The Two SDD Schemes
The basis for the processing of SEPA-conforming direct debits for the private customer sector (Business to Customer or B2C) is the "SEPA Core Direct Debit Scheme Rulebook". It defines the internationally applicable processes, terms and formalities (e.g. mandate administration, one-time and recurring debits) and among other things stipulates that:
- debtors must be granted the right to object;
- the prenotification of an upcoming debiting of the debtor by the creditor is required;
- clearly defined chargeback processes (R-transactions: returns, revocations, reversals, refunds, rejects) exist, and;
- the transactions are processed using standard formats (ISO 20022) and data content (IBAN and BIC).
The SEPA Business-to-Business Direct Debit scheme is used for business customers as creditors and debtors and essentially differs from the SEPA Core Direct Debit scheme in that:
- the debtor must be a bank or a business;
- the debtors need not be granted the right to object;
- no refund is possible once the debtor’s account has been debited, and;
- shorter terms can be used.
SEPA direct debits for financial institutions in Switzerland and Liechtenstein
Financial institutions in Switzerland and Liechtenstein are able to process SDD on schedule since November 2009. Participation in the SDD scheme requires, among other things, new contracts, new creditor identification numbers (Creditor Identifier) and new direct debit authorizations (mandates). Mandates are prerequisite to be able to conduct debiting of the debtor. The debtor thereby authorizes the creditor to directly debit his/her account at the financial institution provided.
Financial institutions wanting to participate in the SDD scheme can do so through the SECB Swiss Euro Clearing Bank.
The SECB is a direct participant in the EBA Clearing SDD Core and SDD B2B schemes and offers SECB customers the option of registering as indirect participants – as debtor bank and/or creditor bank.