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The Single Euro Payments Area – What You Need To Know

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253 The Single Euro Payments Area What You Need To KnowThe Single Euro Payments Area (“SEPA”) is an EU initiative which will change electronic payment processing across Europe from 1 February 2014. SEPA will cover payments between 28 EU member countries plus Iceland, Liechtenstein, Monaco, Norway and Switzerland.

Main Changes

  • From 1 February 2014, all existing national payment schemes in the relevant countries will be replaced with SEPA schemes.

  • All the existing national direct debts and credit transfers “mandates” must be SEPA compliant by 1 February otherwise they will be rejected. These include electronic payments for salaries, suppliers or electronic receipts from customers within SEPA. You may need to work with your bank and service provider (i.e. software vender) to convert existing mandates to SEPA mandates.

  • National Sort Codes (“NSC”) and account numbers will be replaced by Bank Identifier Codes (“BIC”) and International Bank Account Numbers (“IBAN”) for all euro denominated electronic payments. These numbers can be found on your bank statements.

  • Only the customer will have the authority to instruct the bank to block a SEPA direct debit (“DD”) or payments being debited from their account.

  • The customer must notify the payee (supplier) directly if they wish to cancel the SEPA DD authority (mandate). At present, banks are responsible for the organisation of DD mandates and customers can inform the banks of its cancellation. It will be the DD originator (e.g. the seller) who will be responsible for maintaining the mandates which means additional work for some businesses. Banks will no longer maintain the information and perform the task and customers will have to work through their supplier.

  • When fully implemented, businesses and customers in Ireland will be able to make a payment to someone in SEPA countries exactly the same way as they would make a payment to someone in Ireland.

  • Next day payment will be guaranteed within SEPA members, subject to cut off time which varies from bank to bank. There will be additional information available for payments in the online banking service.

  • Customers will be able to set a limit for DDs and if the provider increases a charge beyond that limit, it will be stopped automatically.

  • The SEPA legislation introduces new refund rights for SEPA DD customers. A customer whose account has been debited will be entitled to a “no questions asked” refund for an authorised SEPA DD payment if the customer makes the refund request within eight weeks from the date the funds were debited from the account.

  • Consumers will be able to use their payment cards in any country within SEPA.

  • Bank will change existing account numbers to IBANs. They will also automatically convert any standing orders, scheduled payments and stored beneficiary information to IBAN, as a once off exercise. From this point forward, customers will need to set these up using the IBAN of the beneficiary.

Getting Ready Ahead Of The Deadline

As the start date is only five months away organisations that have not looked at the process will need to get started. A starting point is to talk to your banker. Where you have a significant number of customers or where you have DD arrangements in place it is important that a process is implemented for getting the relevant BIC & IBAN information.

A key area for many small companies will be in the area of payroll and the need to ensure that all the information has been gathered with plenty of time in advance of the deadline.

Remember it is a deadline, from 1 February 2014 existing direct debits will not work, although you will still be able to make payments by cheque. For further information and data conversion, please visit this website.

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