www.europeanpaymentscouncil.eu
Roadmap for the
Single Euro Payments Area
Objectives, status and progress
Gerard Hartsink
Chair - European Payments Council
The Future of Cards and Payments
London, 2 July 2008
The Future of Cards and Payments, London, 2 July 2008

Agenda
Expectations ECB and EC
EPC Commitment and deliverables
EPC Cooperation model
Conclusions
The Future of Cards and Payments, London, 2 July 2008 2

Governing Council ECB (Eurosystem)
Fifth progress report, July 2007
• Vision: “An euro area in which all payments are domestic, where the current
differentiation between national and cross-border payments no longer exists”
• Expected deliverables for the Euro area (EU15):
• credit transfer available to customers from 28 Jan. 2008 at the latest
• direct debit available for customers at the latest from Nov. 2009, earlier start
encouraged
• cards: elimination of all technical and contractual provisions, business practices and
standards from Jan. 2008
• encouragement to deliver a debit card scheme
• encouragement to deliver e-payments, m-payments and e-invoicing
• 2008: implementation
• NCB’s will facilitate implementation process
• public administrations should be first movers
The Future of Cards and Payments, London, 2 July 2008 3

Joint Statement 4 May 2006
COMMISSION OF THE EUROPEAN OMMUNITIES
“ The European Commission and the European Central Bank share a common vision
for the Single Euro Payments Area and the process leading to its realisation. Both
institutions are co-operating closely in this process and encourage the European banking
industry and the other relevant stakeholders to create the technical conditions for the
realisation of SEPA by the end of 2010”
“The commission and the ECB stress that it is important that all relevant stakeholders, in
particular the public sector, contribute to achieving SEPA. By showing political
support and by becoming early adopters of the SEPA products the public sector can
play a vital role for the success of the SEPA”
The Future of Cards and Payments, London, 2 July 2008 4

E-Invoicing Benefits to Market
COMMISSION OF THE EUROPEAN OMMUNITIES
The benefits in “SEPA Big Time” Scenario
Demand Side Supply Side Market
Net Benefit
(EUR Billion) (EUR billion) (EUR billion)
Payments
+175 -52 +123
effect
E-invoicing
+226 +12 +238
effect
Total +401 -40 +361
The Future of Cards and Payments, London, 2 July 2008 5

Agenda
Expectations ECB and EC
EPC Commitment and deliverables
EPC Cooperation model
Conclusions
The Future of Cards and Payments, London, 2 July 2008 6

EPC Declaration 17th March 2005
• We will deliver the two new Pan-Euro Payment Schemes for electronic credit transfer
and for direct debits. We will also design a Cards Framework to define a single market
for cards. The scheme rulebooks and the cards framework definition will be delivered by
end 2005, and the services will be operational by January 2008.
• We know from feedback from our community in the eurozone that by the beginning of
2008 the vast majority of banks will offer these new Pan-Euro services to their
customers.
• We are also convinced that a critical mass of transactions will naturally migrate to
these payment instruments by 2010 such that SEPA will be irreversible through the
operation of market forces and network effects.
• SEPA will be delivered by the banking industry in close conjunction with all
stakeholder communities (consumers, SMEs, merchants, corporates and government
bodies) and supportive public authorities.
• The community of European banks is strongly committed to this ambitious programme of
action, based on self-regulation and a full recognition of the role of market forces and
competition.
The Future of Cards and Payments, London, 2 July 2008 7

Competitive and cooperative space
in SEPA (two side market)
Competitive Cooperative Space Competitive
Space Space
Priority Payments
Public Public
Administrations Administrations
Credit Transfer
Corporates Corporates
SME’s Direct Debit SME’s
Bank A Bank B
Merchants Merchants
Card POS Transaction
Consumers Consumers
Card ATM Transaction
Cooperative space for Business Rules
Cooperative space for Standards
The Future of Cards and Payments, London, 2 July 2008 8

EPC Design Deliverables
Primary Deliverables*
• Credit Transfer
• Direct Debit
• Cards
Complimentary Deliverables*
• Cash
• E-payments channel for web retailers
• M-payments channel
Cooperative space for Value added services (out of scope of EPC Governance)
• EBA Association: Priority Payment Protocol
• EBA Association: e-invoicing
*EPC Roadmap December 2004 and EPC Declaration 17 March 2005
The Future of Cards and Payments, London, 2 July 2008 9

SEPA Credit Transfer &
SEPA Direct Debit
• SEPA Credit Transfer Scheme Rulebook and Implementation Guidelines (version 2.3)
• SEPA Direct Debit Scheme Rulebook and Implementation Guidelines (version 2.3)
• SEPA B2B Direct Debit Scheme Rulebook (Version 1.0)
• Also approved:
Governance : Scheme management organisation (approved June 2007)
Adherence : Reachability of all scheme participants (approved December 2006)
: Open letter on adherence agreement (May 2007)
Standards : UNIFI (ISO 20022) XML Standards (approved July 2006)
: Principles for requirements IBAN 13606/BIC database (March 2007)
C&S : CSM/PEACH Framework (approved July 2006)
Technology : SEPA Data model, Version 2.2 (approved December 2006)
: SEPA Testing Framework (approved March 2007)
AOS : principles for Additional Optional Services (approved March 2007)
• New Rulebook versions with additional features are in the pipeline
The Future of Cards and Payments, London, 2 July 2008 10

SEPA Credit Transfer &
SEPA Direct Debit
• Scheme Management: (Approved June 2007)
• Structuring administration and compliance process
• Scheme Management Committee
• Independent and bank related members
• Structuring development and evolution process
• Banks and payments institutions
• Stakeholders Forum for Customers
• Start the Register of Participants
• Adherence agreements
• So far over 4300 SEPA Credit transfer participants
• Mono-country and multi-country banks
• So far 15 CSM disclosures and a SWIFT disclosure
The Future of Cards and Payments, London, 2 July 2008 11

E-payments and M-payments
• Work in progress
• E-Payment Channel : Way forward (Approved December 2007)
• A real time on line solution for initiating a SEPA payment, including a
payment guarantee, for web retailers
• Framework with rules and standards for SEPA core payment services
• Not mandatory but optional for all banks
• M-Payment Channel: Way forward (Approved December 2007)
• Use of a mobile to initiate a payment
• Framework with requirements, standards and best practices for security
• Exploration cooperation models with partners such as GSMA, EMVCo
• Not mandatory but optional for all banks
The Future of Cards and Payments, London, 2 July 2008 12

SEPA Implementation Model
• National implementation organisation and implementation and migration plans
• www.sepa.eu
• Consistency (and dependency) of plans
• Impact for multi country customers
• Impact for multi country banks
• Request of Business Europe for common end date: 2012
• Commitment all stakeholders
• National Central Bank
• Banks
• Public Administrations
• Customer Associations
• Communication support
• www.europeanpaymentscouncil.eu
• Making SEPA a Reality
• Common start date
• SEPA Credit Transfers from 28 January 2008
• SEPA Direct Debit (at the latest from November 2009)
• SEPA B2B Direct Debit (at the latest from November 2009)
The Future of Cards and Payments, London, 2 July 2008 13

Public Sector Overview EUR15
(in EUR billion)
The Future of Cards and Payments, London, 2 July 2008 14

Public Administrations: Some Observations
• National Level
• Not in all 15 Euro countries PA’s demonstrate their commitment to SEPA
• Not in all 15 Euro countries PA’s budgets are available for the SEPA programme
• Only some concrete implementation plans of PA’s are available so far
• Tenders of PA’s for payment services lack requirements for the SEPA standards
• Investments in new public procurement processes and their e-invoicing solutions
seem to ignore SEPA
• European Level
• So far no representative of PA’s in EPC Customer Stakeholder Forum
• No clear guidance when IBAN and BIC should be used by PA’s
• No clear guidance if SEPA standards should be used by PA’s for payments tenders
• No clear guidance if the SEPA standards should be used for public procurement
• “No end date seems to imply no start date for PA’s”
The Future of Cards and Payments, London, 2 July 2008 15

Agenda
Expectations ECB and EC
EPC Commitment and deliverables
EPC Cooperation model
Conclusions
The Future of Cards and Payments, London, 2 July 2008 16

Cooperation model with
SEPA stakeholders
Consumer
Bodies European European
European
Central Payments
EU Level Commission
Bank Council
Merchants
• Design
• Monitoring Public Implementation
Design Schemes and
Admins Plans
Legal Frameworks
Monitoring SEPA
Framework Support for national
Corporate design and
implementation
Associations implementation
SEPA Implementation Coordinating Bodies
Stakeholders (Communication, national implementation and migration planning)
Consumer National
National National
Bodies Banking
Governments Central Banks
Associations
Merchants
National Level
• Communication
• Implementation Public Banks
Admins
Corporate
Associations
Public
Consumers Merchants Corporates
Admins
The Future of Cards and Payments, London, 2 July 2008 17

EPC Governance Framework
SEPA Design Model
• The EPC Plenary has 69 members with the major players of the payments industry
and with a fair representation of the smaller players (represented by banks or
associations)
• Proper representation of banks of 15 Euro countries and 12 + 3 non-euro
countries
• Inclusion of non-bank stakeholders for the design process in the Customer
Stakeholders Forum and in the Stakeholders Forum for Cards Standardisation
The Future of Cards and Payments, London, 2 July 2008 18

EPC structure
Customer
Scheme Management
Plenary * Stakeholders
Committee *
Forum
Audit
Secretariat
Coordination Committee **
NGC
SEPA
Programme
Standards Payment Cards Cash Legal Target2
Management
SG Schemes WG WG SG WG
Forum
WG
Stakeholders
Forum
* Decision making body for Cards
** Process decision making body Standardisation
The Future of Cards and Payments, London, 2 July 2008 19

Agenda
Expectations ECB and EC
EPC Commitment and deliverables
EPC Cooperation model
Conclusions
The Future of Cards and Payments, London, 2 July 2008 20

Conclusions
• SEPA is created via co-regulation
for legislation by the public Authorities
for business rules and standards by market participants
• SEPA core services and SEPA value added services will create benefits for customers
and may create benefits for banks provided that they are prepared to migrate the
domestic instruments to SEPA instruments.
• The National SEPA Committees in the 15 Euro countries are accountable for the
migration process.
The Future of Cards and Payments, London, 2 July 2008 21