SEPA and SWITZERLAND: major step towards harmonised payment

February 24, 2016

SEPA and SWITZERLAND : another major step towards a harmonised payment landscape Switzerland has been less impacted by the SEPA migration than the Euro countries. The main reason is that all the schemes in domestic currency are not in scope of SEPA, which concerns only transactions in Euro. But the Swiss Payment Council has imposed the global usage of XML ISO 20022 by 2018. BNP Paribas, in continuity with its recognised SEPA leadership and expertise of the Swiss Cash Management market since 1872, clarifies the upcoming changes and what corporates need to do. The payments and collections landscape has drastically changed in the last 5 years. New regulations (SEPA, PSD) and technical innovations such as virtual account technology and the introduction of a single suite of message standards (ISO 20022 XML) have translated into more efficient process, cost reductions and a re-thinking of Cash Management for corporates doing business in Europe. Not without a cost: European utilities using direct debits as main collection method had to face quite a few headaches only to migrate the existing client database. In this respect, Switzerland has been a “happy island” within the SEPA area, with minor impacts on their internal processes and back-end systems. Nevertheless, in order to harmonise the payment landscape and bring further efficiencies to Swiss based businesses within the SEPA area, the Swiss National Bank has decided to plan changes in the domestic payment and collections market. What is in for Swiss businesses? Similarly to what is happening in other SEPA domestic markets (e.g. Italy is looking at how to further reduce the niche payment transactions like MAV, Ri.BA etc..), the Swiss national bank is aiming at reducing the number of payment and direct procedures and in particular has confirmed the adoption of ISO 20022 as the single suite of message to be adopted. Today Switzerland is supporting one domestic credit transfer file format -“DTA” and for direct debits the “LSV” format, though a clear timeline has been announced by the Swiss National Bank as when the both will be outdated and replaced by the ISO 20022 standard XML: image cash 3 BNP Paribas in Switzerland is already XML Compliant through-out our connectivity channels and we have played an advisory role to our clients supporting them to understand the impacts of these changes and to be ahead of them. Making the Transition The harmonisation of the payment landscape in Switzerland will impact mainly corporate’s internal systems, nevertheless to achieve the goal an accurate analysis and planning is required to avoid hiccups at the last mile. A smooth transition can be ensured through an internal assessment of systems and processes impacted (and obviously an estimate of resources / costs involved) followed by a detailed project plan assigning roles and responsibilities within the organisation. BNP has successfully led multiple SEPA migration projects and, capitalising this experience it is crucial to: – Identify all internal processes impacted by ISO XML 20022, including sales, operations, finance / accounting, HR, etc. – Verify the quality of customer and vendor master records: if IBAN is not already present, start planning how (and who) will need to collect it. This is also an occasion to clean up your systems. – Analyse the payments and collection process highlighting systems involved and type of transactions – Involve system vendors: having an active role in this migration, they need to be early booked to avoid bottlenecks before the end date – Select the right banking partner capable of providing expert advice and dedicated support. To reduce project lead-time and manage complexity, a SEPA ready bank, like BNP Paribas in Switzerland, can provide innovative solutions and value added services, transforming this change in opportunity. What are the benefits for Swiss businesses? Harmonisation of payment formats and of transaction types will enable Swiss business to increase automation and efficiency (by reducing also internal costs), making Switzerland the ideal location for more advanced payment models based on ISO XML 20022 language. International standardisation of payment formats is paving the way for more centralised processes and incentivises companies to set up payment and collection factories. We see every day more Large European companies exploiting SEPA and XML to look at Payments-on-behalf (POBO) and collections-on-behalf (COBO) as the goal of every ambitious payment and collection factory project, enabling consolidation of banking partners, high levels of transparency and maximum efficiency of financial processes. BNP Paribas in Switzerland is already aligned with the above deadlines and constantly on the market to stay abreast of trends and changes, supporting our clients understanding what to do, sharing our vast experience in the SEPA area with our clients. For further information please visit our website or contact your BNP Paribas Relationship Manager : Vincenzo Di Lena – Senior Cash Management Sales BNP Paribas Kamel El Fedil – Product Manager Switzerland BNP Paribas