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From Format to Content: Taking standardisation to the next level?

by Bart Van Buggenhout, Senior Product Manager e-channels, International Cash Management Division,  KBC Global Services

The implementation of both the Single Euro Payments Area (SEPA) and the Payment Services Directive (PSD) has supplied the technical and regulatory foundations to level the European playing field for payments. We at KBC’s International Cash Management Division detect through our customer contacts that this outlook towards standardisation in payments is welcomed by international corporate customers, public administrations and financial institutions alike. Europe’s current payments landscape – a complex patchwork of local standards to be adhered to – limits re-use of cash management and payments infrastructure, necessitating costly investments and maintenance for all parties involved.

First step: format standardisation

One of the major potential benefits of the introduction of SEPA for corporate customers lies in a side-effect at the technical level: the European Payments Council (EPC) has decided to deploy the ISO 20022 (UNIFI) message standards for the exchange of information between parties in a SEPA transaction. (See Figure 1.)

The ISO 20022 message standards define how to structure eXtensible Mark-up Language (XML) files to exchange payment-related messages between customers and their banks. The EPC defined the SEPA Data Formats as a valid subset of the ISO 20022 message standards and highly recommends that corporate customers use these SEPA Data Formats to initiate SEPA payments at their banks. And all corporate customers using SEPA are doing this, or are they? This subject is often touched upon by KBC’s consultants in international cash management during customer visits.