Focus on the SEPA area - Rules and regulations for Payment services

Contributors:

• Jean-Yves Rossi (CANTON-Consulting)
• Jürgen Spaanderman (De Nederlandsche Bank / Dutch Central Bank)

Facts and figures about the SEPA Area

The Single Euro Payments Area (SEPA) is a payment-integration initiative of the European Union for simplification of bank transfers denominated in euro. As of July 2015, SEPA consists of the 28 member states of the European Union, the four member states of the European Free Trade Association (Iceland, Liechtenstein, Norway and Switzerland), Monaco and San Marino

• Population: 517 M (2011)
• 11 bn €GDP

List of the supervisory authorities

The three European Authorities for the supervision of financial activities:

• European Banking Authority
• European Securities and Markets Authority
• European Insurance and Occupational Pensions Authority

Banking Union, consisting on the Single Supervisory Mechanism and a Single Resolution Mechanism: http://ec.europa.eu/finance/general-policy/banking-union/index_en.htm

The national competent authorities in charge of banking supervision in the EU SSM participating countries: https://www.bankingsupervision.europa.eu/organisation/nationalsupervisors/html/index.en.html

Basic inventory of the main regulations in euro area / EU

• Banking and finance regulation (Payments Services Directive, E-money, Single Euro Payments Area): http://ec.europa.eu/finance/payments/framework/index_en.htm
• Anti-Money Laundering and Countering the Financing of Terrorism (AML and FATF): https://www.eba.europa.eu/regulation-and-policy/anti-money-laundering-and-e-money
• Oversight Framework (Eurosystem oversight of retail payment systems): https://www.ecb.europa.eu/home/search/html/index.en.html?q=retail+payment+systems
• Regulatory Technical Standards on strong customer authentication and secure communication under PSD2: https://www.eba.europa.eu/regulation-and-policy/payment-services-and-electronic-money/regulatory-technical-standards-on-strong-customer-authentication-and-secure-communication-under-psd2
• Prudential requirements: http://ec.europa.eu/finance/bank/regcapital/index_en.htm
• Oversight requirements (such as Principles for Financial Market Infrastructures (PFMIs); Oversight policy framework; Guidance on Cyber Security): https://www.ecb.europa.eu/paym/pol/html/index.en.html
• European Market Infrastructure Regulation (EMIR): http://ec.europa.eu/finance/financial-markets/derivatives/index_en.htm

Specific rules

The three pan-European payment instruments

They are:

• Credit transfers: SCT – SEPA Credit Transfer
• Direct debits: SDD – SEPA Direct Debit.
• Cards: SCF - SEPA Cards Framework

Messaging rules

ISO 20022 has been made mandatory for payment messaging with and between the PSPs, inside the EU by REGULATION (EU) No 260/2012 establishing technical and business requirements for credit transfers and direct debits in euro

The Regulatory Technical Standards

PSD2 empowers EBA the EBA to develop Regulatory Technical Standards. Amongst such RTS

• Regulatory Technical Standards on strong customer authentication and secure communication under PSD2: final draft
• RTS on framework for cooperation and exchange of information between competent authorities for passport notifications under PSD2 (EU 2015/2366): final draft

Critical questions to be considered

TBD

Practical consequences

For specs authors

TBD

For users

TBD

The EU - sub levels

32 countries in the SEPA area have local (national) regulations for local adaptation of the SEPA rules Below are the 28 State members of the EU