SEPA – New standard for payments in EUR

euro
From 31 October 2016 you have to use a new format when sending payment files containing euro payments. This format is ISO 20022 XML.

What does this mean for my company?

Do you have many SEPA payments in your payment files?
Do you have a small number of SEPA payments in your payment files? Do you have no SEPA payments in your payment files?
Contact your ERP supplier as soon as possible to discuss a possible upgrade to ISO 20022 XML.
Use a third party supplier to convert the files to ISO 20022 XML or register your euro payments online in DNB’s internet banking application. You are not required to change the file format as of 31 October 2016, but be aware of possible changes in market practice that may affect you.

Answer and questions

What is SEPA?

SEPA stands for Single Euro Payments Area and includes the EU, Norway, Iceland, Liechtenstein, Switzerland, Monaco and San Marino. SEPA implies a common infrastructure, rules and formats for payments and cards.

What is a SEPA payment?

A SEPA payment is an ordinary payment to an account held with a bank in a SEPA country.

What kind of euro payments in a file leads to a requirement to use ISO 20022 XML?

You need to use ISO 20022 XML only when the file contains SEPA payments. This means that express payments and payments in EUR to a country outside SEPA do not lead to a legal requirement to change the file format.

This requirement does not apply to micro-enterprises as defined by the EU. A micro-enterprise is an enterprise which employs fewer than 10 persons and whose annual turnover and/or annual balance sheet total does not exceed EUR 2 million.

How can I make a test to ensure that the new files are correct?

Your ERP supplier can help you with the system set-up.

If you have developed your own system, please contact the customer service or your CM adviser in DNB to make an appointment for testing and transmission of the new files.

I do not send euro payments, but my ERP supplier insists that I should upgrade to ISO 20022 XML now. Is this something that I must do?

If your files do not contain SEPA payments you do not need to act now. Files will be accepted in the old format until further notice. However, you will have to upgrade to ISO 20022 XML at a later stage.

Can DNB convert my files to ISO 20022 XML so that I can avoid upgrading the system now?

No, DNB and most other Norwegian banks have chosen not to offer a conversion service as all file exchange in Norway will be upgraded to ISO 20022 XML within a few years. If you are legally required to send your files using  ISO 20022 XML, you can instead register your SEPA payments online in DNB’s internet banking application or use a third party supplier to convert your files.  Many customers have chosen to do so.

Which message types are affected by the legal requirement to convert to ISO 20022 XML from 31.10.2016?

The legal requirement includes outgoing payments only, i.e. the following ISO 20022 XML message types:
  • Pain.001 -  payment initiation
  • Pain.002 -  payment status report

There is no legal requirement to convert to ISO 20022 XML for incoming payments and statements (Camt messages).

Can ISO 20022 XML be used for payments in payments in NOK and other non-EUR currencies?

The legal requirement includes EUR only, but payment files containing all kind of payments in all available currencies can be sent using ISO 20022 XML.

What do I need to do if I want to implement ISO 20022 XML for payments and receipts?

This would require more planning than if you implement it for outgoing payments only. Please consult your ERP supplier and DNB for advice.

How long will DNB support formats like Telepay and Paymul?

DNB will support these format a few years more, but there will be no upgrades. Consequently, we recommend that you start planning the conversion to ISO 20022 XML now.

Has DNB a technical description of the ISO 20022 XML format?

We have prepared a user guide that explains the structure of the ISO 20022 XML messages. This includes several kinds of messages like payment initiations, status reports and debit advices.  DNB’s user guides are based upon the descriptions that have been prepared by BITS for the Norwegian banking community, but they also include some DNB specific  features.

A message guide describes in detail how to send and populate the messages.  As to the technical implementation, please contact your ERP supplier.

When shall I use the IBAN number and when do I need to include the BIC (SWIFT code)?

IBAN is compulsory when you make a payment to a SEPA country in the internet bank or by means of an ISO 20022 XML file. When sending files in the Telepay and Edifact formats you need to add a BIC (SWIFT code). When paying to a country using IBAN outside SEPA you always need to add a BIC.
 

Consequences per country

Norway

SEPA End Date applies for Norway from 31 October 2016.  The main consequence is that corporate customers will not be permitted to use Telepay or Edifact when sending files to the bank containing SEPA payments, but will have to use ISO 20022 XML instead.  If the customer’s ERP system is unable to create ISO 20022 XML files, they can convert the file to ISO 20022 XML using a third party provider or they can register the SEPA payments on-line using the bank’s internet banking application.

Sweden

SEPA End Date applies for Sweden from 31 October 2016.
  1. EUR payments will no longer be accepted in Swedish file format LB. More information on Bankgirot.se.
  2. Corporate customers will not be permitted to send files containing SEPA payments  using the SISU and UTLI format, but will have to use ISO 20022 XML instead.
If the customer’s ERP system is unable to create ISO 20022 XML files, they can convert the file to ISO 20022 XML using a third party provider or they can register the SEPA payments on-line using the bank’s internet banking application.

Denmark

SEPA End Date applies for Denmark from 31 October 2016.  The main consequence is that corporate customers will not be permitted to use any other format than ISO 20022 XML when the file contains SEPA payments. If the customer’s ERP system is unable to create ISO 20022 XML files, they can convert the file to ISO 20022 XML using a third party provider or they can register the SEPA payments on-line using the bank’s internet banking application.

United Kingdom

SEPA End Date applies for the United Kingdom from 31 October 2016.  All file exchange takes place via a third party supplier.  From 31 October 2016 SEPA payments will either have to be removed from the files (and registered on-line) or the third party supplier will have to convert the files to ISO 20022 XML.

Poland

SEPA End Date applies for Poland from 31 October 2016. From that date SEPA 20022 XML is mandatory for files containing SEPA payments.

Latvia, Lithuania and Estonia

Corporate customers in Latvia and Estonia already use ISO 20022 XML when sending files to the bank.  In Lithuania ISO 20022 XML will be mandatory for all files from 1 January 2016.  Individual payments can be registered on-line.

Who to contact?

If you want more information about the legal and practical consequences for your business, please do not hesitate to contact your CM adviser.