The European Payment Council (EPC) is crucial in developing the SEPA payment schemes and promoting their adoption by banks and other payment service providers in the region. But what does this mean? We will explain it today.

SEPA, the Vision of a Unified Payments Area and the EPC

As you probably know, SEPA is the initiative from the European Union to standardise electronic payments inside the Eurozone, establishing common standards, formats, and rules. Although it has a tough implementation period every time a change is made, this harmony simplifies bank transactions for business and individuals, increases efficiency, reduces cost and enhances competition because it not only has a technical vision but also a business one.

With this in mind, the EPC’s mission is the execution of SEPA’s vision. This translates into unifying the systems for both domestic and cross-border transactions between its members in an efficient and cost-effective way with an especial focus on electronic payments. The EPC is the organisation driving such standards.

The success of the EPC’s initiatives relies on collaborative engagement of all the stakeholders from the banking industry: banks, payment service providers, companies, regulatory authorities and technology providers. To carry out its mission, the EPC operates within a governance framework that includes a board composed of representatives or their members, and different forums that allow the discussion on end-user perspectives and technical standards.This ensures that decision-making processes consider the diverse needs and viewpoints of all stakeholders.

Membership in the European Payments Council (EPC) is typically open to payment service providers (PSPs) that operate within the Single Euro Payments Area (SEPA) and are committed to furthering the objectives of the EPC. But also entities that have a business interest in the activities of the EPC can be members, entities like payment technology providers, consultancy firms, etc. It’s important to note that potential members typically express their interest, and membership is subject to approval by the EPC based on adherence to its principles and objectives.

The European Payment Council Rulebooks

The result of all the discussions held in the different forums are written in the rulebooks. These rulebooks are a comprehensive guide that define the standards and rules for the different SEPA payment schemes. They address all aspects of a payment within the SEPA framework: technical, operational, and business. For example, some of their content includes message formats, technical standards, participant roles, transaction types, timelines, compliance requirements, and even business rules.

The payment schemes

There are five payment rulebooks that define the four different type of SEPA schemes or types:

1. SEPA Credit Transfer (SCT) Rulebook for traditional/regular credit transfers
2. SEPA Instant Credit Transfer (SCT Inst) Rulebook for instant credit transfers
3. SEPA Direct Debit (SDD Core) Rulebook for direct debits
4. SEPA Direct Debit B2B (SDD B2B) Rulebook for direct debits sent between businesses.
5. SEPA One-Leg Out Instant Credit Transfer Rulebook (OCT Inst) of new creation, focused on international payments from/to outside SEPA.

As we have said, these five rulebooks define the messages that financial institutions need to perform the payments. They define the message format, the sequence of messages, but also when each message is allowed, the timeframe for sending or answering a message, the standardised error code in case of a problem.

Some examples that might help you to understand what we mean:

• SCT rulebook defines that the response to a transit sent to a closed account is the error AC04.
• In SCT Inst rulebook it is defined that a transaction should be executed in 10 seconds or less.
• Direct debits sent under the SDD rulebook can be refused until 8 weeks after their collection date when a mandate has been sent.
• SDD-B2B direct debits should be sent to the destination bank at least 2 banking days before their collection date.
• OCT Inst rulebook limits the transaction under this schema to 100.000 euros.

EPC’s rulebooks are dynamic documents that undergo regular updates to reflect changes in regulatory frameworks, technological advancements, and industry feedback. The oldest rulebooks, like SCT or SDD, already have more than 10 reviews, so if you need to check one of them, please, check the version number or publication date.

Also, along these rulebooks, the EPC creates some implementation guides to be sure financial institutions respond in a similar way to aspects that might not be clear, to help them with the migration between rulebook’s versions or even validation. Moreover, there are different guides, each focused on different actors and/or parts of the payment chain.

Other schemes

The EPC has created rulebooks for different payment schemes, like cards or cash, but their impact is much smaller. Cards are an industry that goes beyond its geographical limits and in terms of cash its work goes more in the direction of recommendations and best practices.

But there are areas related to payments but not the payments itself where the EPC is working. Areas focused on open banking like Payment Initiation Services, Account Information Services, which were defined and regulated in the PSD2 (Payment Service Directive 2) but which have suffered from a lack of regulation. The two more important rulebooks in this area are:

SEPA Payment Account Access (SPAA), focused on the exchange of payment accounts related data (account holder, balance, transactions, etc.) which simplifies the work of Account Information Service Providers ensuring harmonisation, interoperability and reachability.
SEPA Request To Pay (SRTP), which allows a payee to request the initiation of a payment from a payer, or, in other words, ask someone to pay you. This is the evolution of the work being done by Payment Initiation Service Providers and in our opinion it’s one of the most exciting things in the payments landscape for the near future.

However, these two rulebooks are quite new and it will take time to be fully usable..

Conclusion

SEPA has brought many headaches for companies and financial institutions. The transition was hard and full of pains but nobody will deny now that its impact in the Eurozone economy has been huge. But this impact couldn’t be made without the EPC, ensuring SEPA’s vision was executed properly.