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What is SEPA?
The Single Euro Payments Area (SEPA) is a European-wide initiative to standardise the way we make and process electronic payments in Euro. SEPA enables customers to make payments (direct debits, credit transfers) to anyone located within the SEPA Zone. SEPA creates a fast, safe and efficient borderless payment system throughout the 34 SEPA countries.
What countries are in the SEPA zone?
There are 34 countries within the SEPA Zone, including the 28 EU member states and six other territories.
The 28 EU States:
Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovak Republic, Slovenia, Spain, Sweden and United Kingdom
Iceland, Liechtenstein, Monaco, Norway, Switzerland and San Marino
Where can I get further information on SEPA?
BIC & IBAN
What is a Bank Identifier Code (BIC)?
A Bank Identifier Code (BIC), also known as the SWIFT Address, is a unique identification code for a specific financial institution. BIC is no longer mandatory for SEPA payments.
AIB’s BIC is AIBKIE2D
BIC codes consist of either 8 or 11 alphanumeric characteristics and can be verified using the following website: www.swift.com/biconline
What is an International Bank Account Number (IBAN)?
What does an IBAN look like?
The IBAN is not a new account number and does not replace an account holder’s existing bank account details. Additional characters are added to form the verifiable and unique IBAN for each account that is already in place.
The following is an example of an IBAN for an Irish Bank Account:
IE Country Code for the Republic of Ireland
33 Two digit check number
AIBK First four digits of Bank Identifier Code (BIC)
931234 National Sort Code
87654321 Account Number
Where can I get my IBAN and BIC?
Details of your IBAN and AIB’s BIC are printed on your account statement. You can also refer to your account holding branch or Relationship Manager for this information. Your BIC and IBAN can also be found on most online banking services, such as AIB Internet Banking and iBusiness Banking (iBB).
Please refer to the intended receiver of your payments to obtain their respective IBAN details for outgoing payments.
Where will I get my customers’ BIC and IBAN?
You will be able to get your customers’ BIC and IBAN by:
1. Going directly to your customers
2. Using the BIC and IBAN conversion service provided by the Banking and Payments Federation Ireland (BPFI) for use by both individual consumers and businesses. This service will enable bank customers to convert their existing NSCs (national sort codes) and account numbers to the BIC and IBAN standard required for SEPA. For further information on how this BIC and IBAN conversion service works please visit the BPFI website www.bfpi.ie
Note: The BIC and IBAN conversion service is free of charge.
SEPA Credit Transfers
What is the SEPA Credit Transfer (SCT) Scheme?
The SCT scheme ensures customers can make electronic payments to any customer located anywhere in the SEPA zone using a single bank account (IBAN) and a uniform set of standards, rules and conditions. For example, an Irish customer with a holiday home in Spain can now pay all utility bills relating to the Spanish property from one domestic account in Ireland. Also, foreign nationals working in Ireland may have their salaries paid directly into their domestic account, eliminating the need to open many different bank accounts.
How long will it take for a SEPA credit transfer to reach the beneficiary (i.e. clearing cycle)?
How will the change from EMTS Credit Transfers to SEPA Credit Transfers impact my business?
SEPA requires file to be uploaded with a “Debit Date”, which is one business banking day prior to the day the beneficiaries receive funds. For example, if you require staff to be paid on the 28th, the Debit Date on the file must be the 27th and the file must be uploaded on or before the 27th. If you don’t, the staff won’t receive their salaries until the 29th.
What does my company need to do to be ready for SEPA Credit Transfers?
1. Engage with your software provider to upgrade your payment software to standard XML
2. Convert beneficiary account information (A/C No.& NSC) to BIC & IBAN using BFPI conversion service
3. Perform file testing at www.ipso.ie to ensure file integrity
4. Contact AIB to “switch on” SEPA payments service on iBB
5. Upload file to iBB with small values for internal accounts to complete testing
6. Ensure funding availability process for “payment date”.
SEPA Direct Debits
What is the SEPA Direct Debit (SDD) Scheme?
The SDD scheme is an interbank payment scheme defining a common set of rules and standard procedures for direct debits in Euro. The scheme ensures a common level of service within the participating countries. The file submission timeframes under the scheme rules is 1 business banking day for all SEPA Direct Debit payments. However AIB customers will be required to submit their payment files to iBB a minimum of one AIB business day earlier (i.e. 2 business banking days prior to the debit date).
This is required to allow for submission cut-off times and internal processing.
Financial institutions must also provide SEPA-wide access, meaning that Direct Debits can be made from any domestic account to any receiver within the participating countries. For example, an Irish customer with a holiday home in Spain may pay all utility bills relating to the Spanish property from one domestic account in Ireland.
The SDD scheme provides for both recurring and once-off payments in Euro, allowing a customer to make a once-off major purchase, such as a car, and pay by direct debit. IBAN must be used, and a comprehensive set of rules for rejected and returned payments is provided.
How long will it take to collect on a SEPA Direct Debit (i.e. clearing cycle)?
AIB’s clearing cycle for a SEPA Direct Debit (SDD) is 2 AIB business banking days prior to the collection date of a payment.
Files can be submitted a maximum of D-30 where D=Debit Date and -30 = 30 calendar days before the debit date. SDD files containing any FRST, RCUR, OOFF and/or FNAL sequence types must be submitted by the originator on D-2 at a minimum.
The D-2 timeframe is based on the TARGET calendar. Normal TARGET working days are Monday to Friday. There are 6 TARGET holiday days each year: New Year’s Day 1st January, Good Friday, Easter Monday, May Day 1st May, Christmas Day, Stephen’s Day. SEPA settlements are closed on these days, which will affect the execution timelines. These TARGET holidays will impact the file delivery and settlement cycles, even if it is a normal working day in Ireland.
On Irish holiday funds will not be credited to / debited from Customers accounts even if the day is a TARGET day.
Key Features of the SEPA Direct Debit scheme
- A new SEPA Creditor ID will be issued by AIB.
- You will need to submit payment files to iBB a minimum of two business banking days in advance for a first, once off, recurring or final payment collection.
- You will have responsibility for the creation of a unique mandate reference (UMR) for each new SEPA mandate, and mandate details will travel with every collection on the XML file.
- Mandates and mandate storage is the sole responsibility of the originator.
- The debtor must be pre-notified of the collection at least 14 calendar days before the actual collection takes place.
What are the new transaction codes for SEPA Direct Debits and when are they used?
FRST – Can be used for the first collection in a series of SEPA DDs and submitted at least 2 business banking days prior to the required collection date.
Note that, If the collection is rejected or returned post-settlement or pre-settlement, the collection can be re-submitted as a FRST or RCUR.
RCUR - Can be used for SEPA DD transactions, which form part of a series of collections and submitted at least two business banking days prior to the required collection date.
FNAL - To be used to signify the final SDD collection in a series and submitted at least two business banking days prior to the required collection date. A RCUR transaction code may also be used in this situation and will not reject. In this case, the mandate will remain valid for a further 36 months.
OOFF - To be used for once-off SDD collections and submitted at least two banking business days prior to the required collection date. A Unique Mandate Reference (UMR), which is used for an OOFF transaction, cannot be used for a second time.
Note that, if the collection is rejected or returned pre-settlement, it will be necessary to re-submit the collection as an OOFF with the same UMR. If the collection is rejected or returned post-settlement, the collection must be submitted as a new OOFF with a new UMR.
Benefits and Impact of SEPA
What are the fees for Payment Files?
The fee per transaction originated on a bulk Payment File is €0.07.
A minimum charge of €6.35 will also apply.
Charges are accrued monthly and charged to your nominated billing account on a quarterly basis. The billing quarters are Dec-Feb, March-May, June-August and Sept-Nov.
AIB will provide you with a detailed breakdown of the amount being charged to your account 10 business days before they are charged.
Once a file has successfully been validated and authorised by you, AIB will deem the file to have been processed and charge for each transaction originated in the file. This includes files that have been subsequently cancelled and files that have failed for funds*.
*If on your requested execution debit date your account has insufficient funds to process the file, your file will be rejected. The status of your file will update to “Failed for Funds”. This file can be re-authorised on the same day (debit date) once your account has been funded sufficiently to process your file.