From 1st February, less information is required from the customer when sending a SEPA payment from abroad into the UK1
With effect from 1st February 2016, Article 5(7) of the SEPA Regulation (EU) No 260/20122 comes into force, ensuring that Eurozone banks and Payment Service Providers (PSPs) are able to process Single Euro Payments Area (SEPA) payments3 using only a customer’s IBAN (International Bank Account Number). Previously customers were required to also provide the Business Identifier Code (BIC) of the PSP they were intending to pay, in order for their PSP to process the payment.
As the UK is not a Eurozone country, the Regulation will not apply to UK PSPs until 31st October 20164. However, UK customers, particularly businesses that tend to be the recipients of these payments, will benefit from today because it means they will be required to give less information to the payer overseas if they want to receive a SEPA payment from someone in a Eurozone country.
This change should also reduce the instances of payment errors, by encouraging more SEPA payments to be made electronically - through Straight Through Processing (STP) - minimising the need for manual intervention.
Payments UK, liaising with the Financial Conduct Authority (FCA) and the Bank of England, has led a two-year industry-wide project to successfully deliver a SEPA IBAN-Only (SEPAIO) directory, which SWIFT developed and built through its SWIFTRef reference data platform. The directory provides PSPs with a utility for deriving the BIC from the IBAN. This is to ensure the change is smooth and seamless for recipients of SEPA payments in the UK, and to make certain that all Eurozone PSPs (e.g. banks and large corporates initiating payments) have the necessary information to route a SEPA payment correctly to UK beneficiaries.
The directory can either be downloaded, integrated for access via an API (via login to swift.com) into the end user’s back office systems to support Straight Through Processing, or accessed using the individual lookup facility, which is free to use from swift.com. More information about the utility can be found on the SEPAIO welcome page: https://www.swiftrefdata.com/en/sepaio
Maurice Cleaves, Chief Executive of Payments UK said:
“Payments UK has worked across the industry, with a wide range of stakeholders, both nationally and in Europe, to build a clever tool to support the introduction of this new regulatory change that comes into effect today. Our directory, which includes data for over 95% of UK SEPA reachable BICs, goes truly above and beyond, boasting a technologically superior offering. By incorporating open API criteria into the software, we are demonstrating the emphasis we place on making payments efficient - streamlining and simplifying processes for the end user - and harnessing the latest technology to help us in that regard.”
If you are either an institution that receives SEPA payments in the UK, but is still to participate in the directory, or a data vendor that requires access to the UK SEPA IBAN-Only directory, please contact SEPAIO_Ops@paymentsUK.org.uk.
1The Directory includes data from the UK and Gibraltar.
2SEPA Regulation (EU) No 260/2012
3A SEPA payment is defined as a credit transfer or Direct Debit made in euro (€) in any of the 34 SEPA countries. UK recipients of SEPA payments are most commonly businesses that conduct cross-border trade or individuals typically with a property in Europe. It should be noted that this only applies to SEPA payments. Payments sent abroad in other currencies (e.g. dollars or sterling) or sent in euro but to a destination outside SEPA will still require the BIC.
4Article 16(8) of the SEPA Regulation (EU) No 260/2012 defers the deadline in the UK of “IBAN only” to 31st October 2016.