Frequently asked questions about SEPA

SEPA is the abbreviation for the Single Euro Payments Area.

It is an initiative to establish a truly integrated European payments landscape where euro payments are subject to a uniform set of standards, rules and conditions and can circulate easily, quickly, securely and efficiently in national markets today.

There are many benefits from SEPA, including:

• Lower charges across the payments landscape in Europe
• Higher automation levels and improved exception handling
• Opportunity to review account structures and possibly streamline them
• Stepping stone to improved liquidity management
• Potential to use one platform for all euro payments
• Usage of one single file in a common format to receive and send payments
• Increased payment narrative and description fields

SEPA brings the following changes:

• Changes are expected to be made to the mandate handling for Direct Debits when this instrument is introduced
• International Bank Account Numbers and Bank Identifier Codes will be used exclusively as beneficiary identifiers
• A dedicated field for ordering customers' reference will be introduced (optional)
• A consistent clearing format will be adopted
• By meeting early cut-off times, same-day value may be achieved for any transaction amount

While banks need to develop these new products and functionalities, the existing payment products must be supported. Banks will need to comply with related requirements defined by new European legislation and self-regulatory documents of the European Payments Council.

SEPA is live within the 17 countries that currently make up the euro area: Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, Monaco, the Netherlands, Portugal, Slovenia, Slovakia and Spain.

However, there will be opportunities for banks outside the euro area to implement SEPA as well. Ultimately, the payments landscape in the SEPA-32 is expected to become standardised, consistent and harmonised.

SEPA covers euro transactions only.

SEPA will bring benefits to:

• Consumers: approximately 500 million
• Corporates: over 25 million
• Banks: approximately 9,000

• Cash machines
• Point-of-sale terminals
• ERP systems

Since January 2008, SEPA Credit Transfers have been operating alongside existing processes, and the SEPA Direct Debit scheme was introduced in November 2009. Over time, banks' clients are expected to migrate to the new instruments. After a transition period, the old schemes and instruments are expected to cease. Each country within the SEPA zone has published a national migration plan outlining the timescales for change.

Following the successful launch of the SEPA Credit Transfer (approximately 4,500 banks, representing roughly 95 per cent of payment volumes in Europe, are already processing billions of euros via SEPA everyday), banks are now concentrating on SEPA Direct Debit following the launch of the scheme in November 2009.

The SEPA Cards Framework is still being developed and will be implemented progressively. The related legal framework (ie Payment Services Directive) has been agreed upon by the European Parliament, and countries were due to enact this into national law on 1 November 2009.

During the period of migration, which opened on 28 January 2008, banks handle the current domestic methods of payment as well as the new pan-European payment methods. At the end of this transitional period (not yet defined but probably between 2013 and 2016), all domestic methods of payment must have migrated to the corresponding payment method in the SEPA zone.

During the migration period, which started on 28 January 2008, companies are not obliged to issue SEPA orders. However, they may be paid by SCT or SDD if their commercial partners use SEPA payment instruments. They must have migrated before the dates set out for each country for different payment methods.

Yes. All businesses, regardless of their sizes, both domestic and cross border, are able to take advantage of the SEPA schemes.

Every businesses, both domestic and cross-border, will benefit from SEPA.

For smaller businesses such as SMEs, SEPA means faster settlement and simplified processing, which will improve cash flow and reduce costs. It will enable them to receive or make euro payments anywhere within SEPA on the same basis.

For large merchants and corporates, SEPA means that common standards enable the construction of one standard platform for payments in the whole SEPA zone, resulting in major savings.

For governments and public administrations, SEPA means common schemes and standards that will enable the delivery of improved services to citizens at home and abroad. It will also facilitate the delivery of transaction-related e-government services.

1. What is the Payment Services Directive?
The Payment Services Directive (PSD) is a piece of European Union (EU) legislation designed to harmonise the laws relating to payment services across Europe.

It applies across the European Economic Area (EEA), which comprises the 27 EU member states as well as Iceland, Liechtenstein and Norway.

2. Which payments does the PSD apply to?
The PSD applies to payments within the EEA in euro and other EEA currencies, including sterling.

It applies to most types of payments, including electronic money transfers, cash deposits, cash withdrawals, direct debits, standing orders and credit and debit card transactions. It applies to payments, whether or not they are made from an account and whether or not they are made to another account.

The PSD does not apply to paper-based payments such as cheques and banker's drafts.

3. Does the PSD apply only to payments that are made and received within this country or does it also apply to cross-border payments?
The PSD applies to both domestic and cross-border payments, whether or not they are made from an account; the person sending the payment and the person receiving the payment must both be within the EEA.

4. What accounts does the PSD apply to?
The PSD applies to payment accounts. These are accounts into which and from which customers can make regular payments, such as current accounts and easy access savings accounts.

5. Does the PSD apply to any other products or services?
Yes, the PSD also applies to the use of cards (eg credit and debit cards) and other payment services (eg telephone and internet banking) that enable customers to make payments to which the PSD applies.

6. Which institutions need to comply with the PSD?
All institutions that provide payment services (eg payment service providers) need to comply with the PSD. This includes banks and building societies as well as other institutions (eg money remitters that do not hold deposit accounts).

7. How will I know which HSBC accounts, cards and services are affected by the PSD?
For accounts affected by the PSD, we have already updated your terms and conditions, informing you about the changes we have made and which applied from 1 November 2009.

If you apply for an HSBC account, card or service, please feel free to ask us whether the PSD applies to it.

1. In which countries does the PSD apply?
The PSD applies across the European Economic Area (EEA), the member states of which are as follows:
Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, The Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and United Kingdom.

Guernsey, the Isle of Man, Jersey, Monaco and Switzerland are outside the EEA, thus the PSD will not apply in these countries.

2. Will the terms and conditions for HSBC's business accounts and payment services change?
We have updated our terms and conditions to reflect the PSD requirements as implemented under the local laws and/or regulations, and we wrote to tell you what the changes are. If in doubt, please speak to your main contact at HSBC.

3. Does the PSD treat small businesses differently from larger ones?
Whether there is a difference depends on how each EEA member state implements the PSD.

In implementing the PSD, EEA member states can decide whether microenterprises (with an annual turnover of below EUR2 million and less than 10 employees) obtain all the PSD benefits.

The Czech Republic, Ireland, Malta and the UK have decided that microenterprises (including small charities with an annual income of less than GBP1 million in the UK) will obtain all the PSD benefits. Larger businesses in such countries may not receive all of the PSD benefits.

All other EEA member states have decided to treat all businesses and charities the same so that they may not receive all of the PSD benefits, even if they are a small business.

4. How will I know if HSBC has categorised my business/charity as a microenterprise, a small charity or a corporate business?
We have written to all our existing business customers to inform them how we have categorised them since 1 November 2009. New customers are informed when they open their business account.

5. What are the benefits for business customers?
The benefits include certainty and consistency of execution time, availability of funds and value date across the EEA. It also includes increased clarity on rates and charges, and harmonised protection across the EEA if payments have not been properly authorised or executed correctly.

1. In which countries does the PSD apply?
The PSD applies across the European Economic Area (EEA). The member states within the EEA are as follows:
Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, The Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and United Kingdom.

Guernsey, the Isle of Man, Jersey, Monaco and Switzerland are outside the EEA so the PSD will not apply in these countries.

2. Will the terms and conditions for HSBC's business accounts and payment services change?
We have updated our terms and conditions to reflect the PSD requirements as implemented under the local laws and/or regulations, and we have informed you what the changes are. If in doubt, please contact your main HSBC contact.

3. Does the PSD treat small businesses differently from larger ones?
Whether there is a difference depends on how each EEA member state implements the PSD.

In all EEA member states, larger businesses may not receive all of the PSD benefits.

In implementing the PSD, EEA member states can decide whether microenterprises (with an annual turnover of below EUR2 million and less than 10 employees) obtain all the PSD benefits.

The Czech Republic, Ireland, Malta and the UK decided that microenterprises (including small charities with an annual income of less than GBP1 million in the UK) should obtain all the PSD benefits.

All other EEA member states have decided that all businesses and charities should be treated the same so that they may not receive all of the PSD benefits, even if they are a small business.

4. How will I know if HSBC has categorised my business/charity as a microenterprise, a small charity or a corporate business?
We have written to all our existing business customers to inform them how we have categorised them since 1 November 2009. New customers are informed when they open their business account.

5. What are the benefits for business customers?
Benefits include certainty and consistency of execution time, availability of funds and value date across the EEA. It also includes increased clarity on rates and charges, and harmonised protection across the EEA if payments have not been properly authorised or executed correctly.

1. Within HSBCnet, what changes will I see as a result of the PSD?
The PSD defines the information which banks and financial institutions have to provide to customers when making or receiving a payment. Principally, we have made alterations to the balance and transaction reporting functions in HSBCnet to provide this additional information. An example of this is the provision of 'click-through' debit advices, which have been available for 35 days since 1 November 2009. Additionally, if you receive Faster Payment media files, we now provide you with a new file with extended information. If you receive these files today, it means that you have already been contacted regarding this.

2. Within HSBCnet, how will my payments change as a result of the PSD?
It has now become mandatory for you to use Bank Identifier Codes and International Bank Account Numbers in the EU when making a payment. Failure to do so will result in you being charged a higher fee for making the payment as this payment will need to be repaired. Additionally, for intra-EU payments, you will no longer be able to select the OUR or BEN options for charges since all charges must be SHA. Our priority payment screens within HSBCnet have been updated to reflect this.

3. Will I need to alter my back-office treasury system to support these changes?
We have tried to make the changes as unobtrusive as possible to minimise any further changes you will need to make. However, if you receive the Faster Payments media file via HSBCnet and wish the extended narrative file instead, you may need to make alterations to your TMS. We will write to you to offer this new file. If you wish to continue receiving the existing FPS file, you do not need to make any changes to your TMS.

4. Who should sign the notice of variation form that HSBC has sent me?
We would expect the signatories on the notice of variation to be of the same status as those who signed the original agreement. However, to ensure that the people who sign on behalf of the customer have authority from the customer to sign the notice of variation, we require two directors to sign the notice for limited companies.