SEPA 2.0 is in full swing – the migration to new format specifications is starting!

New format specifications of the German Banking Industry Committee (DK) have been in force since November 2021. The changes have not had too much impact on financial institutions and their customers so far. In November 2023, however, this will change abruptly!

The SEPA formats for credit transfers and direct debits are changing comprehensively and all payments processing service providers as well as their end customers must get ready and make preparations for those upcoming changes.
As SEPA 2.0 will de facto affect all components and all systems, dealing with the topic and all its dependencies at an early stage is of great importance for smooth processing and uninterrupted further processing of payments.

The EPC published implementation guidelines in June of this year, which, in addition to the corresponding specifications, provide further information about the anticipated changes. The use of structured address data is an essential topic of the upcoming adjustments. Whereas addresses could previously be submitted and processed unstructured by specifying the name and address, with SEPA 2.0 addresses must be specified in a structured manner. In future, there will be separate fields for the name, the street and house number, the postal code and the ISO country code. In addition to the use of structured address data, adjustments to individual fields, such as the batch booking flag, have far-reaching consequences. With the new default setting true of the batch booking flag, a batch booking will be executed in the future. Only if there is a corresponding agreement with the customer for single bookings, each transaction will be shown individually on the payer's (ordering party's) account statement if the value false is set. 

The upcoming changes will therefore not only have an impact on the payment file and payments systems themselves, but will also affect peripheral systems such as master data systems. Many banks that rely on converter solutions or older SEPA format versions now have the chance to take a holistic look at their systems and ensure smooth further processing of payments as part of a project. In this approach, it is advisable to make use of mapping tables, which make analyses, evaluations and implementation recommendations easier and more targeted. This way, separate rules and mechanisms can be established for each institution.

The TARGET2/T2S consolidation has already shown that the migration from the MT to the MX format should not be underestimated and that corresponding projects require more time than many institutions had thought. A postponement of the date by the ECB Governing Council suited many banks. However, postponement and new transition scenarios that go beyond the scenarios in the implementation guidelines should not be presumed for the migration to SEPA 2.0. Those who do not opt for an early start are accepting an enormous risk.

Author: Rebecca Stannull


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