What is SEPA?
The Single Euro Payments Area (SEPA) is a project to harmonise the way we make and process retail payments in euro. The goal is to make payments in euro and across Europe as fast, safe and efficient as national payments are today. SEPA enables customers to make cashless euro payments to anyone located anywhere in the 33 countries of the area, for example by credit transfer, direct debit or card payments.
To achieve this, 3 main payment instruments have been reviewed and rules set for harmonization:
SEPA for cards
- SEPA credit transfer provides customers with a single means of transferring funds, regardless of whether it’s within a single country or involves a cross-border payment.
- SEPA direct debit makes it possible, for the first time, to charge directly an account in one European country for services provided by a company based in another country.
will enable consumers to use the same cards they use in their own country for purchases everywhere in Europe more conveniently. For merchants, accepting cards will become easier and more attractive.
What are the requirements for credit transfers and direct debits in euro?
Regulation No 260/2012 requires the use of certain common standards and technical requirements, such as the use of International Bank Account Numbers (IBAN), Business Identifier Codes (BIC) and the financial services messaging standard ISO 20022 XML for all credit transfers and direct debits in euro in the SEPA zone.
Technical requirements for SEPA credit transfers and direct debits for the payments industry
- The payment account identifier must be the IBAN.
- The standard for message format must be the ISO 20022 XML standard.
- Remittance reference information and all the other data elements provided must be passed in full and without alteration between PSPs in the payment chain.
- Once the required data is available in electronic form, payment transactions must allow for fully automated, electronic processing at all stages of the payment chain (end-to-end straight-through processing).
- Payment schemes must set no minimum threshold for the amount of the payment transaction in respect of credit transfers and direct debits but are not required to process payment transactions with zero amount.
- Payment schemes are not obliged to carry out credit transfers and direct debits exceeding the amount of €999 999 999.99.
As a merchant, what do I have to do to be ready?
In the merchant business process, several changes will occur:
- A mandate, containing the information below, has to be created by the merchant and signed by his customer.
- A creditor ID registered by the National Bank. This creditor ID has to be requested by the merchant from his bank.
- A unique mandate reference (UMR - MandateID) given by the merchant to every mandate he creates.
- Customers’ IBAN and BIC instead of the current Giro-account number.
- Clear indication of the transaction type, either one-off or recurring transactions. And in case of a recurring cycle indicate whether it’s the first, a recurring or the last
Those mandates are not compulsory but reduce the risk of chargeback from 13 month to 8 weeks.
- The merchant needs to send a pre-notification to his consumer before debiting his account. This notification can be sent by email or post and must mention the exact amount and date of the direct debit.
- The merchant must specify in his general terms and conditions a minimal time between the order/notification and the debit on the customer account. If such timing is not specified and agreed by the consumer, a 14 calendar day period is set by default.
- When a transaction is declined, the reason will be detailed in the transaction feedback.
Is Ogone ready for the SEPA launch?
Ogone will be ready in time and deliver a compliant Direct Debit payment method to process these transactions in the Netherlands. This will be launched on January 8th on the Ogone test platform and on January 22nd on the Ogone production platform.
This payment method will be fully compliant with the new SEPA regulations and will offer our merchants the different features of SEPA Direct Debits (SDD):
- Customers’ IBAN and BIC will be used on e-commerce payment pages but also for the other modes like eTerminal, DirectLink and Batch.
- The merchant can send in the new parameters separately for all modes : MandateID, Signature date of the mandate as well as the type of mandate. If the merchant is not able to provide these parameters yet, Ogone provides a work-around with default values.
And the merchant can decide himself when he makes the switch to the new SEPA way of working.
Ogone will also launch the necessary changes to enable Refunds of SDD and also Refunds of iDEAL transactions for merchants not using the Ogone Collect offer. These refunds are considered to be Credit Transfers and are therefore subject to the SEPA Credit Transfer (SCT) regulations. This implicates that the current ClieOp file will not be used anymore for SCT either and new file formats and the usage of IBAN and BIC has to be implemented as well.
What do you have to do as a merchant to be ready?
On an administrative point of view you need to contact your bank for the following topics:
- Apply for a CreditorID (if you want to process SDD transactions)
- Sign a contract to enable you to send SDD and/or SCT transactions to your bank in the new file formats
- Indicate you will use the Corporate Payment Service (CPS) of Equens with Ogone as service agency. Our certification is planned in December and immediately after we will communicate our registration number.
You can already start implementing the new technical specifications. They are available in the Ogone Back Office or by contacting our Support teams.