UK Payments Council Selects SWIFT as SEPA IBAN Only Vendor 1

The news yesterday (10-Feb-15) that the UK Payments Council has selected SWIFT as the vendor for the UK’s SEPA IBAN only central infrastructure platform has been widely reported. Full details of the announcement can be found at the SWIFT press release. The intention of this post is to understand what the press release really means for you…

What is the SEPA Regulation ‘IBAN-Only’ Requirement?

The SEPA Regulation ([EU] 260/2012) states that the BIC (Business Identifier Code) is not required, but must state the IBAN (International Bank Account Number) when submitting a:

  • ‘Domestic ‘/ national SEPA Credit Transfer or SEPA Direct Debit transaction as of 1st February, 2014. Individual states have the ability to extend this to 1st February 2016
  • The above rule is applicable for ‘cross border’ SEPA transactions as of 1st February, 2016 within the euro-Zone, and as of 31st October 2016 outside the euro zone

Why is the UK impacted by the IBAN-Only Requirement, and when will it apply to the UK?

The UK is one of the SEPA countries impacted by the SEPA Regulation, since the UK is outside of the euro-zone the IBAN only rule will be applicable from 31st October, 2016.

Why did the UK Payments Council need to select a IBAN Only vendor?

Currently the UK does not have a central financial data source to enable SEPA specific routing, this is currently managed using the BIC value. But the deadline for IBAN only is fast approaching so there will no longer be a need for customers to indicate the BIC in the SEPA Credit Transfer or SEPA Direct Debit transaction requests – hence the link up with SWIFT

Why is a SEPA IBAN Only Vendor Required at all?

In short a list of national bank identifiers used in national IBAN’s is needed, this enables financial institutions to derive the BIC from the sent IBAN information

What is the UK Payments Council proposal?

The UK Payments Council has planned for the preparation of an automated, central and public platform for the collection and maintenance of UK specific SEPA routing data. Using this platform financial institutions will be able to maintain and share the SEPA routing data for their organisation. This will ensure that financial institutions in SEPA countries will have, via the central platform, the ability to route euro payments to the appropriate financial institution in the UK

What is the SWIFT proposition?

SWIFT are planning to leverage and build on their existing worldwide reference data utility, SWIFTRef. SWIFTRef is currently used by over 5500 financial institutions and over 500 corporates globally

Will the above affect Corporates?

No, this impacts the delivery of the SEPA transaction from one financial institution to another UK based financial institution. BUT, corporates must know when the IBAN-only rules come into effect, and must ensure that they pass the correct IBAN values to their banks.

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One comment on “UK Payments Council Selects SWIFT as SEPA IBAN Only Vendor

  1. Pingback: "Heads Up" - 'IBAN Only' rule from Feb 1st 2016 - Payroll Outsourcing Services in Ireland | Jefferson Payroll

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