Birth of the Single Euro Payments Area · 2011-04-19 · Birth of the Single Euro Payments Area...

Birth of the Single Euro Payments Area

Benefits for US Corporations

The information contained herein does not constitute and shall not be construed to constitute investment, tax or legal advice by Deutsche

Bank AG or any of its affiliates, including Deutsche Bank Trust Company Americas nor its affiliates (collectively "Deutsche Bank").

The first 6 weeks / next steps2222

3333 Corporate impact and preparations

1111 SEPA – the background

4444 How a bank can help you

SEPA · page 2


What is SEPA?

“SEPA will be the area where citizens,

companies and other economic actors will be

able to make and receive payments in Euros

within Europe, whether between or within

national boundaries, under the same basic

SEPA · page 3

national boundaries, under the same basic

conditions, rights and obligations, regardless of

their location”

(European Payments Council)

SEPA – Scope & New Payment Instruments

� Payment instruments and schemes

– Credit Transfers (28. January 2008)

– Direct Debits (2009)

– Card transactions

– Phase out of national mass payment schemes (by 201x)

– Orderer and beneficiary account located in the SEPA zone

SEPA · page 4

– Orderer and beneficiary account located in the SEPA zone

� Legal Framework (European Commission)

– European Payment Services Directive

– Implementation into national law by November 2009

� Market Infrastructure

– From 39 local systems to a small number of pan-European clearing houses (PE-

ACH’s)

The SEPA area

The European Union – Euro Countries (15)

Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, Netherlands, Portugal, Slovenia and Spain

The European Union – non - Euro Countries

Bulgaria, Czech Republic, Denmark, Estonia, Hungary, Latvia, Lithuania, Poland, Romania,

SEPA · page 5

Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Sweden, United Kingdom

The European Economic Area

Iceland, Liechtenstein, Norway

and additonally

Switzerland

…… but €-transactions only!

� New formats and standards

– Uniform ISO 20022 based SEPA xml format (mandatory for interbank use /

recommended for client/bank interface)

� New data elements

– IBAN and BIC to replace national bank code and account number

SEPA changes at a glance(SEPA Credit Transfer and SEPA Direct Debit)

SEPA · page 6

– IBAN and BIC to replace national bank code and account number

– End-to-end data flow for Corporate process improvements: orderer reference field, full

remittance information, uniform standards and codes for exception processes

� New processes

– Harmonized execution timelines

– Harmonized exception processes



1111 SEPA – some background


SEPA · page 7


The first 6 weeks

� 28. January 2008: first settlement day for SEPA credit transfers

� 4000 + banks representing ca. 95 % of payment volumes adhered to scheme

� Wide reachability throughout Europe was achieved

� Only minor operational issues were quickly resolved

� Volume ramp-up after week 1 – mainly intra-EU crossborder volumes

SEPA · page 8

� Volume ramp-up after week 1 – mainly intra-EU crossborder volumes

� Migration of local mass payments expected in the course of 2nd half 2009

when IBAN / BIC conversion tools are available to Corporates

EBA Step2 SCT SEPA Processingper 18 February 2008

Number of Transactions processed per day

SEPA · page 9

Source: EBA Clearing, 02/2008

Next steps

� Full sender capability for credit transfers by all banks (2008)

� Implementation of the Payment Services Directive by the end of 2009

� Bank individual developments of products and value added services around

B-t-C and B-t-B direct debits (2008/2009)

� Launch and mass take-up of SEPA direct debit in 2009 / 2010

� Additional services developed by European Payments Council – to be

SEPA · page 10

� Additional services developed by European Payments Council – to be

launched 2009 onwards

– On behalf of Payments

– Online Payments

– Electronic Mandate submission and validation

� Decision on end date for parallel use of legacy / SEPA schemes to be taken

2008 2010 201x20072006before 2006

Development of SEPA Analysis / technical Live-Testi Mass-Adaption and

Procedures and technical set-up

Timelines

SEPA · page 11

Development of SEPA

schemes and standards

Analysis / technical

development

Live-

Pilot

Testi

ng

Mass-Adaption and

-Migration

Development of basic

services and VAS

Products

SEPA-wide competition

Corporates are free to decide on timing of SEPA migration

BUT: potential end date of parallel use of legacy / SEPA schemes to be

respected





SEPA · page 12


Today: US Corporates with decentralized accounts & payment flows in Europe

Corporate client

Beneficiaries

SEPA · page 13

Payment orders Domestic PaymentsEU/EEA countries

Beneficiaries

Situation today:

Client sets up accounts in

each EU country to

initiate local payments in

order to save x-border

fees and have uniform

handling / execution

times

Beneficiaries

Beneficiaries

Beneficiaries

The future: single entry point into Europe with SEPA

Corporate client

SEPA · page 14

SEPA payments (Intra EU/EEA + domestic ACH)SEPA countries

With SEPA:

Client only needs one

account in EU to initiate

SEPA payments with

uniform standards and

pricing

Trends

Centralization

� Centralized Treasuries

� SSC / Payment factories

� In-house Banks

� Single ERP/TMS

Drivers Results

Strategic Opportunity - Current Corporate Market Trends

Costs

Reductions

SEPA · page 15

Standardization

Automation

� Seamless IT interfaces

� Dematerialization of paper

� Straight-Through-

Processing

� SWIFT for corporates

� XML formats

Reductions

Risks &

Control

SEPA impact

… and how SEPA helps

Trends

Centralization•Less accounts needed across Europe

•Simplified centralization of liquidity

SEPA · page 16

Automation

Standardization

•Easier reconciliation through end-to-end

data flow

•Utilization of new data elements

•Simplified system configuration as local

formats will be eliminated

•Harmonized Database

•One format for all of Europe (e .g. XML, CSV)

The Corporate SEPA Checklist – get prepared

Analyze operational and technical (system) impact of SEPA changes

(formats / data elements / processes) – assess implementation effort

Analyse set-up of accounts and Cash Management structures in

Europe – benefits of SEPA for your company

Decide on future structure of Cash Management structures;

assess quick-wins vs. medium term developments

SEPA · page 17

(formats / data elements / processes) – assess implementation effort

Collect IBAN and BIC from business partners and include own

IBAN/BIC on invoices

Choose a SEPA Bank with the most flexible solutions to help your

transition and provide value added services in new environment

Decide on SEPA migration timeline and approach




4444 How a Bank can help you

SEPA · page 18

4444 How a Bank can help you

Payment Services

DirectiveRequirements &

Timelines

Business rules,

standards & policies

The SEPA Initiative

1 2 3 4

Deutsche Bank’s SEPA Proposition – The 4 Pillars

SEPA · page 19

The E

uro

pean

Central Bank

The E

uro

pean

Paym

ents

Council

The E

uro

pean

Com

mis

sio

n

Consumers, Merchants, Corporates,

and Public Administrations

Form

at

Fle

xib

ility

Account

Fle

xib

ility

Imm

edia

te

Fin

ancia

l

Benefits

Realizing the Opportunity – Minimizing the Efforts

Tra

nsaction

Serv

ices

The E

uro

pean

Central Bank

The E

uro

pean

Paym

ents

Council

The E

uro

pean

Com

mis

sio

n

Payment Services Directive

Requirements &Timelines

Business rules,standards & policies

The SEPA Initiative

1 2 3

Form

at

Flexibility

Account

Flexibility

4

Immediate

Financial

Benefits

Transaction

Services

1. Immediate Financial Benefits to Corporates

� Elimination of the EUR 50,000 threshold

(EU pricing Regulation on X-Border

Flows) on accounts in the Euro-Zone

� All SEPA compliant non-urgent debits

and credits priced at local ACH levels –

irrespective of:

– Transaction amount

SEPA · page 20The E

uro

pean

Central Bank

The E

uro

pean

Paym

ents

Council

The E

uro

pean

Com

mis

sio

n

Consumers, Merchants, Corporates, and Public Administrations

Form

at

Flexibility

Account

Flexibility

Immediate

Financial

Benefits


Transaction

Services

– Transaction amount

– Format

– Access channel

Pricing Strategy providing tangible savings from Day 1

2. Format FlexibilityMinimizing Corporate IT Investments

� EDIFACT, IDOC and CSV can be used to

remit SEPA transactions:

– New format descriptions incl. SEPA data

elements

� Conversion services planned for key local

x-border formats

� XML Format Support:

The E

uro

pean

Central Bank

The E

uro

pean

Paym

ents

Council

The E

uro

pean

Com

mis

sio

n




The SEPA Initiative

1 2 3

Form

at

Flexibility

Account

Flexibility

4

Immediate

Financial

Benefits

Transaction

Services

SEPA · page 21

� XML Format Support:

– SEPA XML Format description available

– Global XML Format for Non-SEPA

transactions

• No obligation to invest in XML to benefit from SEPA

• “Become SEPA compliant without even noticing it”

• Minimizing the short term changes and investments for corporates

The E

uro

pean

Central Bank

The E

uro

pean

Paym

ents

Council

The E

uro

pean

Com

mis

sio

n


Form

at

Flexibility

Account

Flexibility

Immediate

Financial

Benefits


Transaction

Services

3. Account FlexibilityNo need for additional or centralized SEPA accounts

� Initiation of SEPA transactions from

accounts kept at all Deutsche Bank

branches in the Eurozone and the UK

� No need to open new accounts for SEPA

in addition to existing accounts for non-

SEPA transactions (e.g. Checks) – All

transactions processed from the same

The E

uro

pean

Central Bank

The E

uro

pean

Paym

ents

Council

The E

uro

pean

Com

mis

sio

n




The SEPA Initiative

1 2 3

Form

at

Flexibility

Account

Flexibility

4

Immediate

Financial

Benefits

Transaction

Services

SEPA · page 22

transactions processed from the same

accounts

� Major differentiator from other banking

offers

Minimizing Corporate Efforts and

Insulating from Change

The E

uro

pean

Central Bank

The E

uro

pean

Paym

ents

Council

The E

uro

pean

Com

mis

sio

n


Form

at

Flexibility

Account

Flexibility

Immediate

Financial

Benefits


Transaction

Services

4. Value-Added Transaction ServicesFlexibility to support the client migration

� Deutsche Bank will provide a range of

value-added services to insulate clients

and realize the benefits of SEPA:

� Population of missing receiver’s BIC

(clients only need to send IBAN – Deutsche

Bank will derive and populate the

corresponding BIC)

The E

uro

pean

Central Bank

The E

uro

pean

Paym

ents

Council

The E

uro

pean

Com

mis

sio

n




The SEPA Initiative

1 2 3

Form

at

Flexibility

Account

Flexibility

4

Immediate

Financial

Benefits

Transaction

Services

SEPA · page 23

Value-Added Transaction Processing

Solutions to Ease the Migration to SEPA

corresponding BIC)

� Population of sender specific data (sender

IBAN/ Originator ID / Creditor ID)

� Execution in Legacy format if beneficiary

bank is not “SEPA Reachable”

The E

uro

pean

Central Bank

The E

uro

pean

Paym

ents

Council

The E

uro

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Com

mis

sio

n


Form

at

Flexibility

Account

Flexibility

Immediate

Financial

Benefits


Transaction

Services

Comments and Questions

SEPA · page 24

The information contained herein does not constitute and shall not be construed to constitute investment, tax, or legal advice

by Deutsche Bank AG or any of its affiliates, including Deutsche Bank Trust Company Americas nor its affiliates (collectively

"Deutsche Bank"), nor shall this presentation or the content herein be construed as advice, an offer or a solicitation of any

nature whatsoever nor is this article or its contents intended to be relied upon by any person. Individuals should consult with

their legal advisor regarding their particular situation. Deutsche Bank is providing this article strictly for information purposes

and makes 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 the information contained herein nor does Deutsche Bank assume

any obligation to update any such information. The views and opinions expressed herein or in any referenced document do

not necessarily state or reflect those of Deutsche Bank or any of its employees, officers or affiliates. No part of this article

may be copied or reproduced in any way without the prior written consent of Deutsche Bank.

Birth of the Single Euro Payments Area · 2011-04-19 · Birth of the Single Euro Payments Area...

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