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SEPA as a foundation for the future of payments

SEPA as a foundation for the future of payments. Mobey Forum Workshop Erkki Poutiainen 17 June 2010. The powerful vision of SEPA. From 27(32) payment islands …. … to this. Cashless payments in euro in the EU (EEA) should become as easy, efficient and reliable as domestic payments

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SEPA as a foundation for the future of payments

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  1. SEPA as a foundation for the future of payments Mobey Forum Workshop Erkki Poutiainen 17 June 2010

  2. The powerful vision of SEPA From 27(32) payment islands … … to this Cashless payments in euro in the EU (EEA) should become as easy, efficient and reliable as domestic payments “One account; one card; one terminal”

  3. A CUSTOMER Same payment service providing European wide reach of counterparties and use of cards as in a domestic service. … by using single set of payment instruments from a single bank account. …provided that the currency is euro The service level should not be lowered There are also other harmonization expectations … all with minimum investment A BANK Mandatory to offer SEPA services, if a bank offers any credit transfer or direct debit service in euro. Ensuring compliance seems to eat most of the capacity of banks for the few years to come There are a lot of business opportunities also Reaping the benefits would require timely migration throughout SEPA countries The ballgame is different between in and out countries … and now the PSD obligates also Payment institutions SEPA expectations

  4. Recent perspectives on SEPA • Respect of end-user requirements and priorities • Final open issues – SDD mandate migration • Non-transparent protectionism in some countries and banking groups • Transition of public administrations and large corporate into using SEPA instruments • End date! ? ? ? 100% ? 2008 2010 2014 2012

  5. We have reached the point of no return • 4000+ banks made investments to adhere to SCT, this year SDD • ECOFIN Resolution December 2009, EU Parliament re-launched Resolution March 2010 • European Central Bank Progress Report and statements • SEPA Governance (SEPA landing on the EU policy agenda) • EU Commission’s consultation and preparation for end-date regulation March, June, September 2010 • Public administration and large corporates showing the way. How to best exploit this fact of life?

  6. Current infrastructure is able to support large and small payments in a reliable way, but mostly in a domestic environment • Small and large payments, non-urgent - yes • How about cross-border? • Urgent? Real time? • E & M channel support?

  7. What can be built on the SEPA foundation? Stakeholder Forum support and acceptance! All future payment innovation to be built on SEPA infrastructure. Bonus: Applicable in the whole SEPA. Going for the ‘full monty’ in Finland! • SCT migration end-date 31.12.2010. • New products (SCT, later SDD, e-Invoicing & SCT) replacing totally all legacy euro products • New format (ISO20022 XML) for customer files • New connectivity method (Webservice) SEPA is an inspiration and opportunity- from single euro payment area … • to single european cash management area • to more harmonized trade area (e-procurement, e-payments, e-invoicing, VAT regulation and admin…) • to multi-country multi-currency clearing • to harmonized customer-to-bank connectivity (channels, protocols, formats)

  8. The infrastructure design effort has mostly been completed for the traditional instruments SEPA product offerings are still mostly on their way Cards area is still a special case Banks and other service providers have challenges to create open infrastructure layer to support e-&m channels Is SEPA infrastucture too rigid, too old-fashioned to bring benefits to consumers and corporates? Competivite products from payment service providers Collaborative infrastructure for e&m–channels Rules for basic instruments in a stable infrastructure Framework for clearing and settlement End-to-end standards ISO20022 Underlying need: move value €€€

  9. Archive 4. Archiving of e-invoice Integrated Consumer Invoicing and Payment Invoicing company Buyer/payer 0. commercial deal 2. Invoicing address (via netbank) • Alert on new invoice to mobile/e-mail 6. Accept to pay or view via mobile/netbank 1. Message to bank to start e-invoicing 7. Alternative: permanent order to pay invoices meeting pre-set criteria • Consumer: • equal convenience to direct debit • optionally better control available • - Invoices electronically stored • Merchant/invoice issuer • automated processes • no paper mailing • secure delivery • irrevocable payment, SEPA Credit tr. Bank Netbank 3. E-invoice file to bank 4. Payment

  10. Future of payments in SEPA • Despite all critics – SEPA migration will be very far in 2015! • All payments in single currency will be done either within D+1 or within one day (PSD). • SEPA infrastructure (schemes and clearing) are mature. • … and unforeseen payment innovations have seen light! • SEPA will bring substantial economic benefits to society, e.g. by enhancing the automation of payments throughout Europe.

  11. Questions?Thank you. Erkki Poutiainen Nordea

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