SEPA regulation to come into effect in February
The Single Euro Payments Area (SEPA) regulation will come into effect in just three months’ time and the local business community needs to organize itself properly to ensure a smooth transition.
Local businesses must upgrade their payroll and payments software to be complaint with the new regime by February 1, as banks will need to receive proper SEPA compliant file formats for payments to be processed.
This was announced by Herman Ciappara, Head, Payments and Banking Department at Central Bank of Malta, during his presentation entitled ‘SEPA – Its effects on business payments’ during a recent seminar organised by the Malta Association of Credit Management, MACM and the Chamber of Advocates, Malta.
Mr Ciappara added that “The SEPA migration will affect banks, payment service providers and also payment service users such as corporates, small and medium-sized-enterprises, public administrations and government agencies. Experience has shown that all preparations and actual implementation of the SEPA migration process requires considerable effort and time. Naturally, the preparations that are needed will vary from one organisation to another as these depend on the complexity of the payment processes that are in place at the respective organisation.”
Mr Ciappara’s presentation formed part of a series of information sessions which the Malta Bankers’ Association (MBA) in collaboration with the Central Bank of Malta have embarked on to inform the local business community about the important steps which need to be undertaken by businesses to conform with the SEPA regime. Together with the business information sessions, the MBA and Central Bank of Malta will also be issuing a series of communication messages in the media to ensure that businesses and the general public are aware of the changes which the SEPA project will bring about.
Speaking about the changes for the public Mr Ciappara went to explain that “One such change in the SEPA project is the adoption of the International Bank Account Number (IBAN), a 31 alphanumeric international standard for accurately identifying individual bank accounts, even across national borders. Until now, bank customers have normally used the 11 to 13-digit account number known as the Basic Bank Account Number (the BBAN). The BBAN will now be replaced by the IBAN, which is made up of the BBAN and other alphanumeric characters which serve to identify the particular bank and branch in the country where the account is held.“
The IBAN will now be assuming a greater relevance when carrying out payment transactions. The reason is that following the creation of a single euro currency, the EU has undertaken a project to create a Single Euro Payments Area (SEPA) in order to standardize and harmonize electronic payments in euro within the SEPA area. This means that all credit transfers and direct debit payments in euro within this area will have common features, terms and conditions. There will no longer be any distinction between domestic payments effected within the same member state and cross-border payments made by a payer in one member state to a beneficiary in another member state. This is where the IBAN comes in, because it is mandatory that all SEPA payments quote the IBAN, and not the BBAN, of the beneficiary of a credit transfer, or the payer of a direct debit.
In Malta, the IBAN consists of 31 alphanumeric characters, and is printed on all bank account statements (in addition to the BBAN). It is readily available to all current and savings account holders when required. Moreover, most banks also provide facilities through their electronic channels (websites / internet banking / ATMs) whereby customers can access their IBAN. In case of any difficulty, account holders should contact their respective banks.