Transcript Folie 1 - Magyar Nemzeti Bank

The Single Euro Payments Area and
payment innovation
Johannes Priesemann
Head of
Payment Systems Policy Division
Magyar Nemzeti Bank, 19 November 2004
Two topics:
1. Retail payments: Single Euro Payments Area and payment
innovation
2. Large value payments: TARGET2
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1. Retail payments - 2 streams: integration and innovation
Single Euro Payments Area (SEPA) by 2010 fully
established and SEPA services as option for citizens
by 2008
In the euro area innovation shall be taken benefit of:
pan-European payment solutions should be leading in
terms of efficiency and safety
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1. SEPA: EC regulation
Message of EC Regulation 2560/2001
• All payments in euro are domestic payments: Single
Euro Payment Area (SEPA)
• Regulation covers all payments in euro also in
countries that have not adopted the euro as their
currency
• No price difference anymore between national
and cross-border payments for cards (since July
2002) and for STP credit transfers up to EUR
12,500 (since July 2003)
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1. Consequences of the EC regulation
“From Regulation to a real SEPA”
Transparency
&
Competition
Profit margin
Loss
Profit margin
Processing
costs
Processing
costs
Processing
costs
Efficiency gain
Profit margin
Processing
costs
Efficient
pan-European
infrastructure
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1. SEPA : Present state of payments integration
Z
Z
Euroarea
country:
Z
Y
Y
Y
X
X
€
Corporate customer
“National
payments ”
• 12 different files
• 12 formats (incl. BBAN)
Payment initiation
(national standard)
ACH X
€
Bank
€
“Cross-border
payments ”
• 1file
• 1 format (incl. IBAN)
Payment initiation
(no standard)
reconciliation
reconciliation
(national standard)
(no standard)
Flows of money & information:
PEACH
€
€
€
€
All euro area banks
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1. SEPA Objective
• Citizens should be able to make payments
throughout SEPA from a single bank account,
using a single set of payment instruments, as
easily and safely as in the national context
today.
• The Eurosystem’s vision for the SEPA is that all
euro area payments should become domestic,
and reach a level of safety and efficiency at least
at the level of the best performing national
payment systems today.
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1. SEPA for citizens and corporates
euro area customer
euro area bank
Payment initiation (ePI)
€
Automatic reconciliation
“in the euro area
all payments
are domestic ”
• 1 file
• 1 format (incl. IBAN)
• all payments
Flow of money & information
“Credeuro + PEDD”
€
PEACH
€ €
€
€
All euro area banks
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1. SEPA: Our expectations towards the banking
industry
Reconfirm the white paper of May 2002 and present
a convincing project plan with realistic milestones
Define pan-European schemes for credit transfers
(Cred/Prieuro), direct debits (PEDD) and cards agree
on and employ standards (IBAN)
Make national migration plans by mid-2005
Make pan-European instruments available also for
national use from 2008 (SEPA for citizen)
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1. SEPA: Our expectations towards the banking
industry
Complete SEPA by consolidating national
infrastructures into a few remaining
PEACHES by 2010 (SEPA for the
infrastructure)
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1. SEPA: Central Banks’ contribution
Assist national banking communities in making
national migration plans by mid-2005
Contribute to the local implementation of
SEPA objectives
Monitor progress of the national migration
to SEPA for the citizens 2008 and SEPA for
the infrastructure 2010
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1. SEPA: List of relevant publications
The Eurosystem has pushed for SEPA since 1999
Improving cross-border retail payment services in the euro area the Eurosystem’s view, September 1999
Improving cross-border retail payment services Progress report September 2000
Towards an integrated infrastructure for credit transfers in euro,
November 2001 (ECOFIN report)
Towards a Single Euro Payments Area 2nd Progress report, June 2003
and a 3rd Progress report expected to be published still in 2004
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1. Innovation leads to diversity of options
location & needs
Private
consumer
Sports,
hobby, leisure
Gastronomy
Shop
access devices /
initiation
Home
Working place
Transport & travel
PIN etc.
P a s s w o rd :
*******
****
3 D -S e c u re :
*****
U s e rn a m e :
Home
Interactive TV
Desktop
IDTV
Magnetic
card &
reader
Laptop
Mobile
Phone
Organizer
Other digital
devices
(flash, stick,
cam, player,
contactless chip console …)
Fixed analogue line
communication networks
RFID
Infrared
Radio Frequency (IrDA)
Bluetooth
Fixed high-speed line (xDSL)
ISDN
Mobile networks
(GSM, GPRS, UMTS)
WAP
Means of payment
(deposits, e-money,
others)
ATM
Kiosk
PKI
certificate
Smart card &
reader
Biometric
access
Wireless Local
Area Network
clearing
& settlement
World Wide Web
E-Mail
SMS, MMS
CLS
SWIFT
National Direct Debit
Credit card processing
Pre-funded
Debit card processing
Gross settlement
Invoice & debit
Pay later
Real time
Batch processing
Data &
digital goods
providers
Netting
PEDD
CREDEURO
National Credit Transfer
counterparts
National ACH
PE-ACH
Government
Service providers
Retailers,
merchants,
outlets
Other persons
Banks/
financial services
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1. Innovation raises questions of public interest
Cost-benefit / risk distribution?
Consumer protection?
Level playing field for all EU countries?
Merchant interests?
Addressing changes in transaction needs?
Safety?
Core Principles Compliance?
Availability?
Social exclusion?
Privacy?
Substitution effects?
Competition between different institution types?
Efficiency?
Lisbon Agenda?
Shadow economy?
Changing preferences / habits?
Redeemability?
Externalities?
Monetary order?
Trust in currency?
Terrorist financing?
Money Laundering?
Network effects?
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1. Observing payment innovation
Relative use of cashless payment instruments in EU-25,
according to total number of transactions (2002 figures)
Card-based e-money
Cheques
1%
15%
Direct debits
23%
Paper-based P2P, B2C, B2B;
Truncation & substitution
B2C, G2C… (trust/liability
requirements)
P2P, B2B,
new: integrated B2C
Credit transfers
30%
Credit/debit cards
31%
B2C (e-commerce, cash
substitution), new: P2P
Blue Books addendum incorporating 2002 figures (2004)
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1. ECB activities as innovation-related catalyst
i.e. improve and facilitate co-ordination,
provide analysis and information
• Articles, issues papers, events, newsletter “Payments and
Settlements News” (P+S-N)”
• Re-launch of the electronic Payment Systems Observatory
(ePSO, www.e-pso.info) in 2003
• Offering online databases, discussion forum
• Work to improve statistics (beyond Blue Book), first
results envisaged next year
• Facilitate the development and adoption of EU-wide
standards for the whole payment cycle
• Single Euro Payments Area (SEPA)
- observer at the e and m payments task forces (EPC)
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2. The reasons for building TARGET2
•
Users’ request for more harmonised service level
•
Cost recovery problem
•
Adaptability problem
•
EU enlargement
•
AMPLIFIES
Credibility of the Eurosystem
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2. Current status and future milestones
2003
2004
2005
2006
2007
Definition phase
General
functional
specifications
(GFS)
Detailed
functional
specifications
(DFS)
Development
phase
Testing phase
(technical implementation)
Customer
Customer
CustomerMigration
Migration
MigrationProcess
Process
Process
Tests with users:
- Credit institutions
- Market infrastructures
- Central banks
= country window (wave)
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2. TARGET2 features and functionalities (I)
What will remain?
• Direct business contacts between central banks and
their banks
• SWIFT-based messaging
• No upper or lower value limits
• Broad customer base
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2. TARGET2 features and functionalities (II)
What will be new?
• “Single platform” system
• More robust and resilient system
• Harmonised interfaces for the connection of the users to
TARGET2
• Same core service for all TARGET2 participants
• Single price structure
• Flexible liquidity management
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2. TARGET2 features and functionalities (III)
“Single platform” system
• all central banks will use the same technical platform
• Central Banks remain responsible for the accounts of
“their” banks and for the business relationship
• Cross-border transactions processed in same way as
domestic transactions
• Availability of “TARGET-wide” liquidity saving features
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2. Oversight of TARGET2
Oversight of TARGET2
• Project is being reviewed against the Core Principles
for systemically important payment systems (BIS
“CP”)
• Initial assessment of the design of TARGET2 project
against Core Principles is ongoing (CP III, IV,V,VI,VIII
and IX)
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2. Information on TARGET and TARGET2
•
•
•
•
•
•
•
•
•
•
TARGET brochure, October 2004
http://www.ecb.int/pub/pdf/other/target_brochure_update_2004en.pdf
Future developments in the TARGET system (ECB Monthly Bulletin
April 2004)
http://www.ecb.int/paym/pdf/target/future/mb-target2-future.pdf
TARGET2 brochure, October 2004
http://www.ecb.int/pub/pdf/other/target2_brochure_update_2004en.pdf
TARGET2 presentation – Sibos, October 2004
http://www.ecb.int/paym/html/sibos2004target2presentation.pdf
Article on TATGET2 – Sibos, October 2004
http://www.ecb.int/paym/pdf/target/future/sibos_article_en.pdf
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