Making and receiving euro payments in the UK will be even easier from 1st February 2016
From 1st Feb 2016, making a cross border payment will be easier and more efficient as banks will require less information from consumers and businesses – customers will just need their IBAN (International Bank Account Number). Currently customers are required to give their BIC (Bank Identifier Code) to help the bank identify an account when making SEPA transactions.
This move, which was driven by the European Parliament through Article 5(7) of the SEPA regulation EC No 924/2009, will bring the UK in-line with the Eurozone countries that use this internationally recognised standard format. It will also increase efficiency and reduce the instances of payment errors, as more payments can be made without the need for manual intervention through the use of Straight Through Processing (STP).
Although customers will soon no longer be required to supply their BIC, some banks may still need it to correctly route the payment on behalf of their customers. In order to ensure that the UK complies with the European legislation in this area, Payments UK, the trade association for the payments industry, has led the project to develop the SEPA IBAN Only directory, with SWIFT and in liaison with the Bank of England and the Financial Conduct Authority.
What’s an IBAN and how can I recognise it?
Your IBAN can often be found on your bank statements, and you will need it if you want to receive or make euro or international payments. There should not be any spaces in between any of the letters or numbers in the IBAN.
An IBAN consists of a:
- Country code – to identify the country the money is going to
- Check number – this is a 2 digit number calculated by the bank issuing the IBAN and is used to validate the IBAN
- Bank code – to identify the bank
- Sort code and account number – to identify the customer the money is going to
Who should I speak to if I don’t have an IBAN?
IBANs were issued in the UK from April 2001 onwards, to customers who require them. If you have not been given your full GB IBAN and wish to carry out transactions in Euros (€) across Europe, please contact your bank directly.
What is SEPA?
The Single European Payment Area (SEPA) is a payment-integration initiative, intended to simplify bank transfers denominated in euros.
SEPA was launched with the Credit Transfer Scheme on 28 January 2008, and offered two key benefits: euro credit transfers had to be made within a maximum of three days; and secondly, without any deductions from the principal amount. In November 2009, the SEPA Direct Debits Core Scheme was created for both domestic and cross-border collections in euros throughout SEPA.
Why will payments be more efficient with SEPA IBAN only?
With the implementation of the IBAN-Only ruling, customers will now only need to supply their bank with a payment instruction and the destination IBAN.
The onus will now fall on the Payment Service Provider (PSP) to ensure that the payment is routed correctly, resulting in a reduction in the number of rejected payments.
Additionally, the new SEPAIO platform will also provide advance notification if the IBAN being entered is not SEPA reachable.
How will the changes affect us in the UK?
Customers and businesses receiving euro payments in the UK, will benefit from a more streamlined and efficient process.
The Regulation has a greater impact on euro zone countries, because SEPA IBAN-Only applies to their domestic payments too, and has done since February 2014.
What is the UK doing to roll out SEPA IBAN ONLY?
The Bank of England and the FCA appointed Payments UK to be responsible for implementing a nation-wide SEPA IBAN Only solution. They selected the SEPAIO Directory (developed by SWIFT) as the most suitable, efficient way for this to be achieved.
Further information about the rollout of the UK’s SEPAIO solution will be announced in due course, and published on the Payments UK website.
What’s Payments UK’s involvement?
As the trade association for the payments industry, Payments UK is responsible for delivering collaborative change and has a role and remit to represent the growing payments industry. As such, Payments UK was appointed by the Bank of England and the FCA to implement the nation-wide SEPA IBAN Only solution.
Payments UK is also the UK’s National Adherence Support Organisation (NASO). This means we help UK-based payment service providers with their applications to join the European Payments Council’s SEPA Credit Transfer Scheme and the SEPA Direct Debit Schemes. Any institution that meets the appropriate criteria outlined in the SEPA Scheme rulebooks can apply to become a SEPA Scheme participant.
Where can I get more info?
The European Commission’s website provides further information regarding the SEPA IBAN-Only Regulation. It also provides external links to each of the SEPA countries’ websites, where they carry information relating to SEPA IBAN-Only.
For specific bank information, please contact the bank holding the account that is sending/receiving the payment.
For advice and a review of your banking payment methods in view of the February 2016 changes contact IMS