French Migration report 2008

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					National S E P A Committee




           French Migration report
                   2008
This is the English translation of the French migration report 2008
adopted by the French National SEPA Committee on 25th November
2008. The French language text prevails.
                                                                                         French Migration Report 2008




                                         SUMMARY
Introduction ....................................................................................... 5

1. Background.................................................................................... 7
   1.1. The SEPA Credit Transfer (SCT) and the SEPA Direct Debit (SDD).................... 7
   1.2. Card payments....................................................................................................... 7
   1.3. Transposition of the Payment Services Directive into French law......................... 9

2. Work of the National SEPA Committee in 2008......................... 11
   2.1. Details on the future range of payment instruments............................................. 11
   2.2. Management of the transitional phase................................................................. 13
   2.3. Support measures................................................................................................ 14
   2.4. Communication initiatives..................................................................................... 15

3. Organisation and monitoring of the migration process........... 21
   3.1. Quantitative monitoring of the migration to the SEPA credit transfer................... 21
   3.2. Launch of the CORE payment system................................................................. 25
   3.3. Migration of "CB" cards........................................................................................ 25
   3.4. Other card payment schemes ............................................................................... 26
   3.5. Preparation of the launch of the SEPA direct debit.............................................. 27

4. Challenges, outlook and vision of the various stakeholders... 29
   4.1. The challenge of successfully completing the migration..................................... 29
   4.2. Views and expectations of users: businesses, retailers and consumers.............. 30
   4.3. Summary of the migration to SEPA instruments in France.................................. 31

Appendix: The National SEPA Committee’s reporting tool……... 32




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                                                                  French Migration Report 2008



      Introduction

      The objective of the SEPA (Single Euro Payments Area) project is to provide a
      fully-integrated system for retail payments within Europe, following on from the
      introduction of euro coins and notes. It aims to provide users with a single range of
      payment instruments (credit transfers, direct debits, card payments) that will
      enable them to make cashless payments in euros on the same conditions in
      Europe. The SEPA area includes all members of the European Union plus Iceland,
      Liechtenstein, Norway and Switzerland. The Principality of Monaco and some
      overseas territories (Saint-Pierre-et-Miquelon and Mayotte), which are not
      members of the European Union but are part of the euro-zone, are also meant to
      join the SEPA area.
      In 2002, the European banking community founded the European Payments
      Council (EPC) to define the rules governing the functioning of the new European
      payment instruments that will in due course replace the corresponding national
      instruments. To ensure optimum efficiency, national communities are responsible
      for managing the migration towards SEPA instruments and monitoring their take-
      up in each country.
      In France, Banque de France and the Fédération Bancaire Française (French
      Banking Federation) set up the National SEPA Committee in 2006. The
      Committee's members represent the various stakeholders: public administrations,
      businesses, retailers, consumers and banks as well as MPs and representatives of
      the Economic, Social and Environmental Council, the French mayors' association
      and the media. The French migration plan was adopted on 27th October 2006
      based on the various National SEPA Committee's working groups work. It lays out
      the terms for the migration to SEPA instruments in France. A second, updated and
      more detailed version of this plan was published on 11th October 2007. The
      migration plan is based on the aim of providing an improved or at least similar level
      of service than the current one in France.
      A new stage in the SEPA project began in January 2008 with the start of the
      migration phase. SEPA card payments started in January 2008, and the SEPA
      credit transfer was successfully launched on 28th January 2008 by over 4,000
      European banks (including 240 French banks). Since then, SEPA credit transfers
      have been processed with no major incident on 15 European interbank payment
      systems, including the STET-CORE system in France, and take-up is gradually
      increasing.
      This document is the first edition of the migration report to be published annually
      by the National SEPA Committee. It bears witness to the launch of the migration to
      SEPA instruments in France and explains on-going and forthcoming action by the
      different stakeholders to enable the harmonised migration from national payment
      instruments to SEPA instruments in line with the migration plan. As such, this
      report provides an assessment of the first year of the SEPA migration and details
      the steps taken in terms of the organisation and monitoring of the migration
      process.
      The publication of this first migration report comes in a particular context, owing to
      both the economic and financial crisis and uncertainties surrounding the financial
      model to be applied to the SEPA direct debit. These uncertainties stem from the
      positions recently expressed by the European authorities (European Central Bank




National SEPA Committee                                                                     5
Migration Report 2008



      and the European Commission's Directorate-General for Competition and
      Directorate-General Internal Market and Services) on multilateral interchange fees
      paid between banks. The reconsideration of these fees, which are applied in some
      countries as in France, makes it necessary to review in-depth the financial model
      on which the processing of interbank payment services is based. This may have
      an impact on users' fees which may in turn change their habits. It is therefore
      important that the European authorities resolve this issue as soon as possible to
      enable the launch of the SEPA direct debit.




6                                                                  National SEPA Committee
                                                                        French Migration Report 2008



      1. Background

      The migration work carried out in France in connection with SEPA takes into
      account the broader context of changes made at European level, both in terms of
      the definition of the new SEPA instruments and the harmonisation of the European
      legal framework.

      1.1. The SEPA Credit Transfer (SCT) and the SEPA Direct Debit (SDD)

      The EPC recently validated several updates to the SEPA credit transfer and SEPA
      direct debit Rulebooks:
      – version 3.2 of the SEPA Credit Transfer Rulebook (SCT), which will replace the
        current version 2.3 as of February 1st 20091;
     –   version 3.1 of the SEPA direct debit Rulebook (SDD), which is now the basis for
         the launch of the SDD, replacing version 2.32;
     –   version 1.1 of the SEPA direct debit B2B Rulebook3 (SEPA direct debits
         Business to Business).
      The main goal of these new versions is to ensure that the rules applicable to the
      SEPA credit transfer and the SEPA direct debit are consistent with the Payment
      Services Directive. On this occasion, the rules governing the SEPA direct debit
      have been modified to extend the duration after which direct debit mandates are
      lapsed from 18 to 36 months after the last transaction, as per the request
      submitted to the EPC by French banks and the French Association of Financial
      Companies (ASF) and that expressed by the French Treasury and the French
      Association of Corporate Treasurers (AFTE) to the European Commission.
      In parallel, the EPC continues to examine the possibility of an optional electronic
      mandate service (e-mandate) for the SEPA direct debit.


      1.2. Card Payments

      Standardisation work is progressing and a document describing the core
      requirements for the card-to-terminal, terminal-to-acquirer and acquirer-to-issuer
      interfaces, and including principles for certification should be released end 2008.
      This work is based on a document submitted to a very large consultation among
      banks and all stakeholders involved.




1
  The Inter-bank Implementation Guidelines v3.2 and the Customer to Bank Implementation Guidelines
V3.2 accompany this SCT Rulebook 3.2.
2
  The Inter-Bank Implementation Guidelines v3.1 accompany this SDD Rulebook 3.1.
3
  The Inter-Bank Implementation Guidelines v3.1 accompany this SDD Rulebook 3.1.




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         The EPC has also published a document clarifying key aspects of the SEPA Cards
         Framework (SCF), in the form of questions and answers4. This document explains
         the scope of the SCF and the consequences of its application. In a joint press
         release, the European Central Bank and the European Commission welcomed the
         clarifications provided by the EPC on the SCF. From a practical perspective, the
         authorities noted the need to maintain national schemes for an interim period.
         National card schemes are invited to extend their reach beyond national borders
         by setting up agreements with foreign banks and their clients.
         However, the fact that no clarification was made as regards the financial model for
         card payment schemes is regrettable. The European Commission's decision on
         the MasterCard case on 19th December 2007 raises questions over the future of
         interchange fees, but provides no clear indication as to what is legally permitted.
         As a consequence, it is difficult for stakeholders to commit investments to extend
         existing networks or develop new systems.
         Several initiatives have been set up in response to the wishes repeatedly
         expressed by the European authorities encouraging the creation of pan-European
         card payment schemes and thereby enhancing competition:
         Monnet

         The French and German banking communities share a common interest in
         examining the feasibility of setting up a new card payment scheme in Europe so as
         to develop card payments and generate new economies of scale. If the Monnet
         project comes to an attractive solution for two communities that have such
         heterogeneous card payment models, its extension to other countries could easily
         be envisaged.
         EAPS (Euro Alliance of Payment Schemes)

         The EAPS project aims to enhance national systems by linking up existing card
         networks. It aims to achieve cost reductions by pooling resources, taking
         advantage of the harmonisation of standards and limiting technical risks. Each
         community would ultimately decide whether or not to maintain its national network.
         Payfair

         This project is run by representatives of major merchants, based on the principle of
         developing a multi-branded debit card scheme.




 4
     Questions and Answers clarifying key aspects of the SEPA Cards Framework (June 2008):
     http://www.europeanpaymentscouncil.eu/documents/EPC075-SCF%20QAs%20Version10%20Final.pdf




8                                                                                National SEPA Committee
                                                                  French Migration Report 2008



      1.3. Transposition of the Payment Services Directive into French law

      The Payment Services Directive, which will facilitate the implementation of SEPA
      instruments by harmonising the legal framework applicable to payments made in
      Europe, was adopted by the European Parliament and the European Council on
      13th November 2007, and must be transposed into national law by 1st November
      2009.
      The transposition of the Directive into French law is being managed by the
      Treasury and Economic Policy Division of the Ministry for the Economy, Industry
      and Employment, assisted by Banque de France. The transposition process is
      based on dialogue with all stakeholders. Besides the meetings that took place, a
      public consultation was organised between 3rd September and 31st October 2008
      to gather comments on the guidelines favoured at this stage in the process.
      Meanwhile, the French authorities participated in discussions initiated by the
      European Commission with member states to produce a common interpretation of
      the provisions of the Directive.
      In France, within the framework of the "law for the modernisation of the economy",
      the government has been authorized to transpose into French law the provisions
      of the Directive that are part of the legislative domain by decree. This decree is
      due to be published before 4th August 2009. In order to meet this deadline, and to
      bring it forward if possible, efforts are being made to enable the Conseil d'Etat to
      examine the text as soon as possible. Work on regulatory issues is being carried
      out at the same time to ensure that the full legal framework is transposed into
      French law by mid-2009.
      No transposition guidances are yet final, but the choices put forward aim to strike a
      balance between the need to offer consumers a legal framework that provides at
      least as much protection as the existing framework, the wish to maintain stability
      and efficiency in the French payment system and the objective of enabling French
      actors to benefit from the opening of the market and the development of
      competition provided by the Directive.




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                                                                            French Migration Report 2008



      2. Work of the National SEPA Committee in 2008

      2.1. Details on the future range of payment instruments

      The migration plan adopted by the National SEPA Committee in October 2007
      confirmed that the new European payment instruments offer an improved or at
      least similar level of service compared to the one provided by the equivalent
      domestic instruments (payment cards, direct debits, "ordinary" credit transfers) and
      that they could therefore replace the domestic schemes. Cheques, "specific" credit
      transfers and e-money fall outside the scope of the SEPA project. In their current
      state, SEPA payment instruments do not cover all the functionalities offered by
      French interbank payment orders (TIP), electronic payment orders (télérèglement)
      or trade finance instruments (bills of exchange and promissory notes). It was
      therefore decided that these payment instruments would be maintained in France.
      The chart below, extracted from the migration plan published in October 2007,
      summarises the National Committee's vision of the impact of the introduction of
      the European payment instruments on existing payment instruments.



       Existing payment instruments                     SEPA project
       "Ordinary" credit transfer                        Replaced
       Direct debit (ordinary and express)               Replaced
       CB bank cards                                     Replaced
       Three-party cards                                 As decided by issuer
       Télérèglement                                     Initially maintained(1)
       TIP                                               Maintained(2)
       Bill of Exchange                                  Maintained(2)
       Promissory note
       "Specific" credit transfer                        Unaffected
       Cheque                                            Unaffected
       E-money                                           Unaffected

      (1) An additional study will be carried out based on the SEPA B2B direct debit once the EPC has
      decided on its final specifications.
      (2) Medium term, a consultation may be carried out with other stakeholder communities to define a
      strategy that would preserve the functionalities offered by these instruments within a European
      framework

                                National SEPA Committee – October 2007




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         In 2008, the National Committee closely monitored the work carried out by the
         EPC and other parties to find a solution that enhances the initial European offer
         and could replace télérèglement, TIP and trade finance instruments.
         Several points should be noted regarding the range of SEPA instruments to be
         used in France.
         First, the National Committee welcomes the EPC's positive response to the French
         request to extend the duration of direct debit mandates from 18 to 36 months after
         the last debit is made. This decision by the EPC will facilitate the adoption of the
         SEPA direct debit by several categories of creditors who issue direct debits.
         As regards the possibility for a debtor's bank to create an electronic SEPA direct
         debit mandate5, National Committee members believe that some creditors could
         find this service – which remains optional – interesting. However, discussions have
         raised a number of concerns, notably as regards the legal validity of payment
         agreements received electronically, security matters, changes in the liability of the
         various parties to the transaction in relation to the core model, and in particular the
         co-existence of two mandate processes (paper mandates and e-mandates). The
         optional nature of the e-mandate service would cause creditors the inconvenience
         of having to handling dual processes if they want to reach all their debtors. The
         decision to be taken by the EPC in December 2008 on the rules applicable to this
         service will be decisive for the choice made by creditors, who emphasise that
         priority should be given to ensuring the successful launch of the SEPA direct debit
         in its current version before new functionalities are added.
         The EPC has also approved rules for the business-to-business (B2B) direct debit
         for inter-company transactions. This version, which is also optional, offers shorter
         processing cycles (one day instead of two for the SEPA core direct debit) and
         more limited recourse for claims as the transactions are assumed to be secured
         upstream.
         The National Committee closely examined these new functionalities to see
         whether it may be possible to replace the télérèglement with the SEPA B2B direct
         debit scheme. It concluded that while this instrument could be of interest to some
         categories of creditors and debtors which currently use télérèglement services, in
         particular the tax authorities and social security institutions for transactions with
         businesses, the SEPA B2B direct debit does not cover all the functionalities or
         usage of télérèglement services. The télérèglement scheme is widely used and
         promoted by the tax authorities among individuals for the payment of income
         taxes. Yet the rules laid out for the SEPA B2B direct debit strictly limit its use to
         professionals; moreover, these rules are not compatible with the Payment
         Services Directive applicable to payments made by consumers, notably as regards
         the rights to a refund. Without prejudging individual stakeholders' decisions
         whether or not to implement the SEPA B2B direct debit, it seems that this scheme
         cannot fully replace the télérèglement, which will therefore be maintained in
         France along with the TIP and trade finance instruments.




5
    e-mandate.




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                                                                  French Migration Report 2008



      Another possibility raised in the migration plan regarding the possible replacement
      of these payment instruments was to launch a consultation with other national
      communities. The National Committee therefore monitored with interest the work
      carried out by corporate treasurers at the initiative of the AFTE, and within the
      framework of the European Association of Corporate Treasurers (EACT), to
      examine the functionalities not covered by SEPA instruments in other countries,
      and, where possible, to propose either new products or amendments to SEPA
      instruments. The various stakeholder communities (businesses, public
      administrations, banks and consumers) were invited to participate to this project,
      which aims to preclude a situation in which each national community develops its
      own different, non-interoperable services to meet similar requirements. Work could
      begin at a European level after each national community prepares a description of
      the functionalities of its national payment instruments that are not covered by
      SEPA instruments. This has been done by the National Committee in France.
      Comparison of the national descriptions should identify common functionalities
      and produce possible solutions to enable these functions to be included within the
      European payment instruments.
      French users emphasised their need to continue to use the "check domiciliation"
      and "correct domiciliation" request functions that are currently available for French
      credit transfers and direct debits. The National Committee is pleased to note that
      an initiative to establish an international standard for these services has been
      launched within the framework of ISO 20022. In 2009, this standard should define
      new message formats that are consistent with those used for the SEPA credit
      transfer and the SEPA direct debit, which should enable this service to be
      maintained for SEPA payments at the national level and even extended to
      European level.


      2.2. Management of the transitional phase

      Reporting tool

      The secretariat of the National SEPA Committee is drawing up a scoreboard on
      the deployment of the SEPA project in France. This scoreboard, which could be
      published on a quarterly basis, groups together information collected from the
      different stakeholder communities, which organize themselves to collect the
      information.
      The National SEPA Committee scoreboard must meet several criteria: it must
      provide a view of the progress made, show any corrective action that may be
      required to mitigate identified risks, serve as a basis for the communication on the
      project at a national and European level, and be in a format that can be merged
      with European monitoring tools at the appropriate time.
      The reporting tool comprises three parts:
      – a summary for the period covered;
      – detailed information on the implementation of SEPA instruments;
      – detailed information on the take-up of SEPA instruments, including qualitative
        and quantitative indicators.




National SEPA Committee                                                                    13
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      Details on how the reporting tool is drawn up and how the transaction number and
      originator indicators are calculated are included in appendix to this migration
      report.


      Migration timetable

      – The SEPA credit transfer has been offered by banks since 28th January 2008.
        In accordance with the national migration plan, the National SEPA Committee
        may decide to discontinue the use of national instruments one year after a
        critical mass is achieved, defined as 75% of transactions and 50% of
        originators. At present, the critical mass is expected to be reached by the end of
        2010, meaning national credit transfers could be discontinued as of the end of
        2011.
      – The SEPA direct debit should be offered by banks in early 2010, subject to the
        removal of the uncertainties mentioned in the introduction. In accordance with
        the national migration plan, the National SEPA Committee may decide to
        discontinue the use of national instruments one year after a critical mass is
        achieved, defined as 75% of transactions and 50% of originators. At present,
        the critical mass is expected to be reached by the end of 2011, meaning
        national direct debits could be discontinued as of the end of 2012.
      – For card payments, since 1st January 2008 banks have distributed, issued and
        acquired interbank payment cards in compliance with the SEPA Cards
        Framework (SCF). After the end of 2010, all general-purpose payment cards in
        circulation issued by banks will be compliant with the principles laid out in the
        SCF.


      The need for an end date for national transactions

      As indicated in the migration plan, all stakeholder communities agree on the need
      to have an end date for the national payment instruments to be replaced by SEPA
      instruments. This date must be consistent with the migration timetables of the
      originators, in particular those who are planning to carry out the migration of credit
      transfers and direct debits simultaneously. An end date sends out a clear signal
      ensuring each stakeholder is aware of the importance of rapidly completing the
      necessary changes to enable the use of SEPA payment instruments. The legal
      and practical implications of implementing this decision remain to be confirmed (in
      particular the determination of the competent authority).


      2.3. Support measures

      The transition from RIB to IBAN

      The banking community has issued rules governing the transition from the French
      RIB account number format to the IBAN (international bank account number) and
      obtaining the BIC (bank identifier code). It is now up to users (businesses, public
      administrations) to update their databases.




14                                                                    National SEPA Committee
                                                                       French Migration Report 2008



         Regarding the possible outsourcing of this work, the National Committee decided
         that this data conversion process, which is essential to the success of the
         migration to SEPA, could be considered as a transformation of electronic data,
         and therefore wished to obtain prior approval from the CNIL (French data
         protection agency). Accordingly, a letter was sent to the CNIL on 31st January
         2008.
         The indications provided by the CNIL allow to consider that:
         – the conversion from the RIB format into BIC+ IBAN can be freely carried out by
           users who hold databases of banking details without informing account holders
           insofar as this conversion is purely technical and is carried out using RIB bank
           details freely provided by accountholders and as it in no way alters the
           relationship between the two parties;
         – in the event the conversion is outsourced to a third party, this service remains
           the responsibility of the originator and must be covered by a contract specifying
           the obligation to protect the security and confidentiality of data received and
           processed. The service provider is strictly forbidden from retaining any data
           relative to the account holders who appear in the database of banking details;
         – in the event the service provider carrying out the conversion is located in a
           country outside the European Community whose legislation does not provide
           sufficient data protection6, a request to authorise the outsourcing of this service
           must be submitted to the CNIL in advance. The persons concerned must also
           be informed of the outsourcing of this service.
         The contract between the service provider and the originator must clearly stipulate
         the responsibility of each party in the event of an error in the new banking details.

         2.4. Communication initiatives

         Communication has become essential since SEPA entered its migration phase,
         not only to inform all players but also to secure the support of users of the new
         payment instruments now available. This support is crucial to the project's
         success. Convincing users of the advantages of SEPA instruments, their
         simplicity, reliability and security will enable the critical mass of transactions to be
         achieved as provided for in the migration timetable, and will reduce the costs
         arising from the use of two systems in parallel over a long period. The National
         SEPA Committee welcomes the communication initiatives taken by all parties and
         encourages them to continue and step up their actions.




6
    See article 68 of French law of 6th January 1978.




National SEPA Committee                                                                         15
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      The SEPA communication guidelines were defined in the migration plan
      published in October 2007. They aim to:
      – show that the various stakeholders responsible for this complex project have its
        organisation well under control;
      – familiarise users with the SEPA instruments and encourage their adoption;
      – make sure that each phase of the project is clearly presented, notably so that
        banks and businesses understand the work that will be required;
      – support SMEs and consumers throughout the switchover, even though the
        migration to SEPA will not significantly change consumer payment practices.
      The communication plan adopted in March 2007 to ensure consistency in the
      statements and comments made by each stakeholder scheduled a three-stage
      approach to target specific audiences at different stages in the SEPA project:
      – 2007: raising awareness among stakeholders of the work needed to implement
        the project;
      – 2008-2009: wider dissemination of information, notably among professionals
        (banks, administrations, large businesses, etc.) with a view to encouraging the
        use of the new payment instruments;
      – from 2010 until the end of the transitional period: stepping up communication
        initiatives, extended to the general public and individuals.
      The communication plan also serves as a tool for coordinating and quarterly
      monitoring the action taken and planned by the various stakeholders: National
      SEPA Committee, banks, businesses, employers' organisations, public
      administrations, etc.


      The National SEPA Committee

      The National SEPA Committee primarily provides information and coordinates the
      communication actions taken by the different stakeholders. The National SEPA
      Committee has directly taken the following communication initiatives:
      – the National SEPA Committee website (www.sepafrance.fr) changes to reflect
        the new phase in the project. An improved page layout aims to emphasise the
        latest news. Interviews and reports provide practical information from
        professionals on the benefits and challenges of SEPA. The website has been
        enhanced and its content updated, evolving from an institutional logic to a user-
        friendly approach focused on information and communication;
      – the National Committee plans to draw up a leaflet aimed at the general public
        entitled "10 questions on SEPA", which will be published on its website. The
        leaflet will be in a Q&A format and will address the most frequently asked
        questions.




16                                                                 National SEPA Committee
                                                                   French Migration Report 2008



      Banque de France

      Banque de France has taken a number of communication initiatives centred on the
      SEPA project:
      – two information brochures have been published, one aimed at professionals
        and one for the general public. They concisely present the main features of the
        payment instruments, the timetable for their introduction and the improvements
        that SEPA will bring;
      – Banque de France branches across France have organised conferences on
        SEPA for banks, businesses, public administrations and academics. In 2007
        and 2008, Banque de France organised or participated in over a hundred
        events, often in partnership with local Chambers of Commerce and Industry;
      – a survey carried out in August 2008 revealed that awareness of the project was
        fairly mixed depending on stakeholders and their location. For most
        respondents, SEPA was not yet considered a high-priority project;
      – Banque de France has set up SEPA training schemes at its training institutes. It
        also contributes to articles and interviews in the media.


      The Fédération Bancaire Française (French Banking Federation) and the
      banks

      – the FBF organised a number of SEPA information meetings and was a major
        contributor to "Revue Banque" magazine's special edition on SEPA in
        September 2008;
      – the FBF offers its members a dedicated SEPA website hosted on its own
        website;
      – the FBF also prepares a summary of the SEPA project each quarter, aimed at
        informing its members on progress made. This summary is published on the
        FBF's members-only Extranet website;
      – also, in coordination with the National SEPA Committee, the FBF is planning to
        publish two mini-guides in 2009: one on the Payment Services Directive and
        one on the SEPA Direct Debit7.
      Similarly, the banks are organising their own central and regional campaigns via
      their websites, by issuing leaflets and by providing internal training and information
      to clients. They are holding a number of information meetings for their business
      customers, both in France and abroad, at which they distribute both general
      information and commercial brochures.


      Other members of the National Committee

      – In 2008, the CFONB (French Banking Organisation and Standardisation
        Committee) has published nine documents informing its members of technical

      7
       The publication of the SEPA direct debit mini-guide will only be possible when the
      European authorities provide answers and the banks resume their work on the SEPA direct
      debit.




National SEPA Committee                                                                     17
French Migration Report 2008



         developments and standardisation issues relating to SEPA. These documents
         present the changes made to the Rulebooks, European regulations and
         standardisation work being carried out (BIC-IBAN, ETEBAC, etc.).
      – Within the framework of the Working Group on the Transitional Period, its
        chairman presented the SEPA project at a meeting with representatives of the
        Ordre des Experts Comptables (Order of Accountants) on 14th October 2008.
      – The AFTE (French Association of Corporate Treasurers) organised SEPA
        discussion groups (November 2007), followed in 2008 by a breakfast meeting
        for corporate treasurers, four "Tréso-mardi" half-day meetings focused on SEPA
        instruments, banking communication protocols and the Payment Services
        Directive, and meetings in regions across France. The AFTE survey of October
        2008, which will be repeated each quarter, showed that the transition to SEPA
        was often part of a global change to information systems and that some
        companies could choose to complete the changeover at the same time as
        introducing payments factories, i.e. centralised platforms grouping together all
        their payment flows.
      – In February 2008, the MEDEF (French Business Confederation) organised a
        major conference on SEPA, attended by around 250 participants. An
        information pack was prepared prior to the conference and videos of speakers
        and a brochure were published on the MEDEF website. A MEDEF breakfast
        meeting was held in October 2008, focusing more specifically on legal matters.
      – The CGPME (General Confederation of Small and Medium-sized Enterprises) is
        involved in communication on SEPA via information meetings and the
        publication of explanatory documents, in particular with the support of the
        National Committee's Communication Working Group. It raised the SEPA
        project during news updates in its internal meetings. A CGPME information
        brochure was published. However, the CGPME-MEDEF survey of July-August
        2008 showed that 60% of companies interviewed have so far not heard of
        SEPA and that the others have only a limited vision of the project. Moreover,
        their understanding of the project is not always correct, and a number of
        business leaders wrongly believe that the new payment instruments only apply
        to cross-border transactions.
        It is therefore important to step up communication on the fact that national
        payment schemes will be replaced by SEPA payment instruments. It is
        essential that SMEs plan for these developments, allocate the necessary
        resources, identify where they can find accurate information on the changes
        related to the migration towards SEPA payment instruments and estimate the
        costs involved.
      – The CCSF (Consultative Committee on the Financial Sector), which brings
        together representatives of consumers, financial companies and the public
        authorities, meets several times a year to discuss SEPA developments. In
        connection with the French presidency of the European Union, the CCSF
        organised a meeting in Nice on 11th September 2008 for other EU countries
        and representatives from the European Commission and the European
        Parliament. This meeting discussed reinforcing consultation with consumers
        and finance professionals at a European level on subjects such as the SEPA.
      – Public administrations: after sending a circular to all ministerial departments
        announcing its creation in April 2008, the Interministerial Committee for




18                                                                 National SEPA Committee
                                                                  French Migration Report 2008



         European Payment Instruments (CIMPE) held its first plenary session on 30th
         September 2008, bringing together representatives from all ministries.
         Representatives of the major social security institutions were also invited to two
         specific steering committee meetings in May and October. Besides its internal
         communication within public administrations, the CIMPE secretariat also spoke
         about SEPA for the Consultative Committee on the Financial Sector and at
         various conferences.
      At the request of French banks, the EPC revived the Communication Action
      Group. This working group focused on the EPC's communication on the SEPA
      project and published and posted online information on different aspects of the
      SEPA project (credit transfers, direct debits, the SEPA project as a whole and the
      stages to come) for a wide audience (media, businesses, general public).
      Lastly, the European Commission set up a European Forum of National SEPA
      Coordination Committees, which aims to meet twice a year to enable dialogue
      between national communities and an exchange of best practices.




National SEPA Committee                                                                    19
                                                                French Migration Report 2008



      3. Organisation and monitoring of the migration
      process
      3.1. Quantitative monitoring of the migration to the SEPA credit transfer

      The SEPA credit transfer was successfully launched in all euro-zone countries. In
      the vast majority of countries within SEPA, over 90% of the potential volume of
      SEPA credit transfers is covered by the services offered by banks, which have
      largely adhered to the scheme. In addition, the retail payment infrastructures were
      ready in all countries.
      The rate of migration of the various users (in particular administrations and
      companies) varies between countries, and take-up is gradual. SEPA credit
      transfers accounted for 1.5% of total credit transfers exchanged on the euro area
      retail payment systems in September 2008.
      As of 7th November 2008, 4,381 European banks (excluding branches) had
      adhered to the SEPA credit transfer scheme. In France, most banks offering
      payment services to their customers had adhered (244 banks as of 7th November
      2008).
      The National SEPA Committee defined a method for monitoring the critical mass of
      transactions to measure take-up of the new SEPA instruments on a quarterly basis.
      This method is described in the appendix, including the indicator of the number of
      originators, which will be monitored as of the start of next year. The National
      Committee's indicators on the number of transactions (number of ordinary credit
      transfers made) for the third quarter of 2008 are shown below.




National SEPA Committee                                                                  21
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 National SEPA Committee Indicator on the Number of Transactions
 The National Committee will be able to announce that the number of transactions has
 reached a critical mass when the number of ordinary credit transfers made each quarter
 falls below 25% of the volume of credit transfers processed in 2007 (volume adjusted for
 the long-term growth trend in the annual number of credit transfers: 2.28%).
 In the chart below, critical mass will be reached when the continuous line falls below the
 dotted line.

                                                  Volume of ordinary credit transfers (in millions of credit transfers)
     Year             2007                 2008                        2009                     2010                            2011

 Annual volume 1,873
                                Q1   Q2   Q3   Q4   Q1   Q2   Q3   Q4   Q1                     Q2      Q3       Q4     Q1     Q2     Q3      Q4
 Quarter                       2008 2008 2008 2008 2009 2009 2009 2009 2010                                           2011
                                                                                              2010    2010     2010          2011   2011    2011
 Quarterly
                      468.2 473.7 476.2 457.4
 volume
 Adjusted 25%
 threshold                     117.0 117.0 117.0 117.0 119.7 119.7 119.7 119.7 122.4 122.4 122.4 122.4 125.2 125.2 125.2 125.2




                                      Quarterly volume of ordinary credit transfers                             Quarterly volume of
                                                                                                                ordinary credit transfers
                                                (in millions)                                                   Adjusted 25% threshold
     500
     450
     400
     350
     300
     250
     200
     150
     100
      50
       0
                Q1      Q2       Q3       Q4       Q1    Q2     Q3       Q4      Q1    Q2      Q3       Q4        Q1     Q2      Q3     Q4
               2008     2008     2008     2008    2009   2009   2009     2009   2010   2010    2010     2010     2011    2011    2011   2011


           Source: Banque de France


                                                 National SEPA Committee – October 2008




 Analysis
 Since the migration period runs until 2010-2011, take-up is gradual. It is therefore
 normal that volumes are still low. Banks are ready, but users (businesses,
 administrations) have major work to complete. Several large companies have
 begun their changeover to the SEPA credit transfer. At present, this changeover
 only applies to part of their transactions, but this demonstrates their commitment to
 the project. The operational conclusions they draw from their first SEPA credit
 transfers will facilitate the subsequent changeover of all their transactions.




22                                                                                                                      National SEPA Committee
                                                                          French Migration Report 2008



    Migration progress made by the different stakeholders8

    • Banking community:

          Investments (IT, documentation/contracts, training, etc.) relating to the roll-out of
          the SEPA credit transfer were completed by 28th January 2008.
          The first SEPA credit transfers issued electronically by large companies were
          processed end-to-end with no significant incidents being recorded.
          Some institutions have begun to offer SEPA credit transfers via their remote
          banking channels (internet). To do this, some converted bank account details from
          the French RIB format into IBAN+BIC and/or offered clients the possibility of
          entering account details in the IBAN+BIC format.

    • Businesses (in particular large corporations):

          The MEDEF noted that companies were insufficiently committed to SEPA, despite
          the communication efforts made by the various stakeholders and professional
          organisations (AFTE, CGPME, FBF, ASF, etc.).
          In the current environment, the MEDEF fears that companies may postpone their
          implementation of SEPA. However, SEPA will have a major impact on businesses
          and requires significant changes to their systems and organisation. Companies
          must become involved rapidly so they can benefit from the opportunities provided
          by a harmonised European payment system and optimise the investments
          required. The MEDEF will pursue its efforts to raise awareness among business
          leaders, to ensure that SEPA becomes a reality for French businesses.
          The very slow roll-out is confirmed by the AFTE's quarterly surveys. Two surveys
          have been carried out to date, in July and October 2008. The results show that
          only 6% of respondent companies have issued SEPA credit transfers. For just over
          two-thirds of these companies, SEPA transactions accounted for less than 10% of
          their total credit transfer volume.

          Among the 94% remaining companies which have not yet issued SEPA credit
          transfers:
          - one-third is considering doing so by the second quarter of 2009,
          - half think they will do so after 2009.

          75% of respondent companies think that SEPA credit transfers will only exceed
          half of their total credit transfers after 2009.
          The AFTE thought it important to identify the number of company IT applications
          that issue credit transfers. 75% of respondent companies have between 1 and 3
          applications, while 16% have between 4 and 10 applications that issue credit
          transfers.



8
    This section was produced using information provided by members of the National SEPA Committee.




National SEPA Committee                                                                               23
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        To date, 95% of the IT applications of respondent companies do not issue SEPA
        credit transfers.
        Companies confirmed their intention to include the SEPA project within the overall
        review of their information systems or at the same time as introducing "payments
        factories".

        Several large originators and businesses began their changeover to SEPA credit
        transfers at the end of the second quarter of 2008. This changeover only
        accounted for part of their transactions, reflecting a gradual migration strategy
        application by application. For example, one major creditor completed the
        migration of all its payments to suppliers and third parties to SEPA, but not the
        payment of salaries or client-related credit transfers, which will be migrated at a
        later date.

        The ASF (Association of specialized finance companies) reports lack of
        homogeneity in SEPA communication by bank advisers as well as the slow roll-out
        of the scheme. A survey carried out in July 2008 showed that among 68
        respondents, none had issued any SEPA credit transfers, though 13.2% planned
        to do so by the end of 2008.
        On more technical aspects, the CGPME notes that SMEs have raised questions
        about accounting and the availability of various IT applications, as well as the
        costs involved in their adaptation. In this respect, the willingness of SMEs to
        introduce SEPA instruments will largely depend on whether any additional costs
        are incurred. It is therefore essential that SEPA instruments generate no additional
        costs in relation to existing payment instruments.
 • Government administrations and local authorities:
     Public administrations in the broadest sense – government, local authorities, public
     institutions and social security bodies – are highly impacted by the new SEPA
     standards: each year they issue around 45% of all credit transfers made in our
     domestic payment area. The migration of their transactions will also set an example
     for other players. Administrations have been represented on the National SEPA
     Committee since its creation in 2006 and participate in the Committee's various
     working groups.
     In accordance with the guidelines set by ministers in the ECOFIN council, in 2007
     the French authorities began to examine the introduction of the new payment
     instruments by government departments and social security bodies, based on a
     cost/efficiency analysis.
     The migration to SEPA of public authorities is closely linked with the on-going reform
     of the French government's finance information system arising from the new
     accounting framework applicable to public finances introduced by the French organic
     law concerning finance laws (LOLF).
     Two ad hoc SEPA monitoring structures were set up in 2008, one by the DGFiP
     (Public Finances General Directorate) to assess the adaptation of the applications
     connected to Banque de France, and another by the Social Security department,
     which resulted in the changeover to SEPA being included in agreements on the
     objectives and management of social security organisations and in their information
     system guidelines.




24                                                                   National SEPA Committee
                                                                French Migration Report 2008



    Moreover, given the many different situations in the public sector and the need for a
    unit to coordinate the project, the Interministerial Committee for European Payment
    Instruments was set up at the request of the Prime Minister. This committee is made
    up of representatives appointed by each ministry and is responsible for raising
    awareness among administrations, local authorities and social security bodies of the
    changes arising from the SEPA project, monitoring progress in work to update
    information systems and liaising with the National SEPA Committee.
    Administrations have been able to receive SEPA credit transfers since 28th January
    2008, via processes that will be fully automated by the end of the year.
    For issuing credit transfers, the DGFiP's principal applications connected to Banque
    de France should be SEPA-compliant by the end of 2009, and according to the
    guidelines followed to date, social security bodies should integrate SEPA in 2010, in
    line with the timetable set by the National SEPA Committee.


    3.2. Launch of the CORE payment system

    With a view to the introduction of SEPA payment instruments, the French banking
    community invested in a new payment and clearing system – CORE – developed by
    STET. This system, which was launched at the same time as the SEPA credit
    transfer, processes the new European payments and took over French domestic
    payments as of June 2008, processing an average of nearly 50 million transactions
    each day.
    The CORE system is available directly or indirectly for all banks. All payment
    instruments are processed using the technical formats required by the applicable
    interbank standards.
    The system was rolled out without incident and provides a very satisfactory level of
    service. The volumes submitted by French banks increased rapidly over several
    weeks, according to the agreed plan.
    This new-generation system uses optimised processes and powerful technology. Its
    architecture provides maximum efficiency and services adapted to client
    requirements.
    The CORE system processes payments in real time, continuously, and centrally.
    Clearing calculations are made using banks' chosen options and the resulting net
    positions are settled in central bank money via the TARGET2 platform.
    This centralised infrastructure enables banks to enjoy productivity gains and optimise
    interbank liquidity, notably via the multilateral clearing process. In a full year of
    operation, the system will process over 12 billion payments, including 5 billion card
    payments. The forthcoming introduction of a "financial protection mechanism"
    consisting of a mutual guarantee fund and additional individual guarantees will
    reinforce security within the payment system, and thereby enhance the
    attractiveness of France as a financial centre.
    The technical flexibility of the CORE system and the economies of scale generated
    also mean STET can optimise the migration to SEPA for banks that are present in
    several markets.




National SEPA Committee                                                                  25
French Migration Report 2008



         3.3. Migration of "CB" cards

         The Groupement des Cartes Bancaires "CB"9 has taken several steps to comply
         with the SEPA interoperability framework for card payments.
         At a technical level, the interoperability framework requires that cards must comply
         with the international EMV microchip card standard, which provides clients with a
         high-quality secure payment solution. The migration of cards and terminals under
         the CB scheme has been almost complete since last year. This migration is also
         progressing rapidly in the rest of Europe. EMV microchip cards should be in general
         use throughout Europe by 2010. The EPC is carrying out additional work to extend
         the level of standardisation across the different stages in the processing of card
         payments. The implementation of these new standards will be a major challenge for
         the various stakeholders involved in card payments in the years ahead.
         As required by the interoperability framework, the Groupement des Cartes
         Bancaires "CB" has revised its structure in particular to separate the CB
         management system and operations management. As such, it has created two
         subsidiaries: PayCert, which carries out certification activities and Elitt, which
         provides security evaluation activities. The new structure will be fully operational by
         end-2008, and these subsidiaries will promote their expertise throughout Europe.
         Moreover, the consortium has been actively working to modify its governance in
         recent years. This should soon result in the introduction of new terms for joining the
         consortium and changes to the composition of its management bodies, as well as
         closer cooperation with merchants. The most recent changes include the
         authorisation of co-branding: 2008 saw the launch of a number of CB cards co-
         branded with non-banking brands.


         3.4. Other card payment schemes

         The ECB will soon publish a communication on the SEPA compliance criteria for
         three party card payment schemes, which could encourage such schemes to join
         SEPA.
         We also note the agreement between Carte Bleue and Visa Europe to merge their
         card activities in France with a view to the implementation of SEPA, in order to
         develop their card activities by pooling expertise.




9
    The Groupement des Cartes Bancaires « CB » is legally set up as an Economic Interest Group




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      3.5. Preparation of the launch of the SEPA direct debit

      In a joint decision on 4th September 2008, the European Central Bank and the
      European Commission (Directorate General for Competition and Internal Market
      and Services Directorate General) announced a future ban on multilateral
      interchange fees for direct debits. French banks reacted strongly to this decision,
      which places a question mark over the financial model applicable to direct debits,
      and consider it is essential that:

      1. The European authorities establish clear specifications for the project that will
         guarantee its long-term stability, that they take overall responsibility for its
         implementation and provide the organisational and legal resources needed to
         ensure its success.
      2. The authorities provide real guidance for the project, with the appropriate powers
         delegated to a single decision-making entity.
      3. They issue guarantees via a clear benchmark text on the financial model(s) that
         market players are authorised to use over the longer term for services provided
         in connection with the project - including multilateral interchange fees. This text
         should be preceded by an impact study on the proposed models, carried out in
         partnership with the sectors concerned.
      4. The project's timeframe and the terms applicable to its roll-out must enable the
         migration to be well-prepared. The timeframe must be realistic and adapted to
         the industrial constraints of the stakeholders and the required change in client
         behaviour.
      5. The European authorities, who are responsible for SEPA, must delegate its
         management to the executive body, the EPC. The project must be carried out
         with open, responsible and fair governance, in a form that represents the
         industry of each national community.
      In the meantime, the French banks have ceased to support any EPC action that
      assumes the issues pending have been resolved and have decided to suspend
      their investments relative to the SDD. They are, however, continuing to participate
      in planned technical work that does not require prior approval by the authorities.
      They immediately informed all members of the National SEPA Committee of their
      decision.
      Other voices have spoken out across Europe, including the European Savings
      Bank Group (ESBG), the European Association of Cooperative Banks, the German
      Savings Banks Association and the Portuguese banking community, criticising the
      questions raised about the future of the financial model on which the SDD structure
      approved by the EPC is based.
      The EPC is due to announce a decision on the launch of the SDD in December.
      French banks are waiting for answers to the questions they publicly raised before
      resuming their work and naming an official launch date.
      Consumers' organisations who are members of the National SEPA Committee have
      also expressed serious concerns as to the impact on French consumers of the
      position taken by the European authorities, which bans multilateral interchange fees
      for the SEPA direct debit after a transitional period.




National SEPA Committee                                                                    27
French Migration Report 2008



      Given the impact of this decision on direct debit users, it will at the very least be
      necessary to carry out serious impact studies on the expected cost of the SEPA
      direct debit and its appeal for consumers, in view of the success of existing direct
      debit schemes.
      Businesses have said that although they consider it normal and justified to pay a
      service provider a fair price, they remain opposed to the principle of interbank fees,
      which limit the scope for negotiation and result in one party to a transaction paying
      fees to the other party's bank.
      They believe that the evolution towards SEPA direct debits – which they support
      along with all initiatives that further European integration – will give rise to additional
      expenses, risks and responsibilities for businesses in connection with the
      management of direct debit mandates, and that a complete review of the financial
      terms applicable to this scheme is therefore necessary.




28                                                                      National SEPA Committee
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      4. Challenges, outlook and vision of the various
         stakeholders

      4.1. The challenge of successfully completing the migration

      SEPA credit transfers have been available from banks since 28th January 2008.
      The success of the migration now depends on take-up by users, which was
      relatively limited during the first three quarters of 2008. This is not, however, cause
      for concern: from the outset, the National Committee decided on a gradual migration
      in order to enable all players to complete the necessary work at their own pace. It is
      nonetheless important that all players are fully aware that SEPA instruments will
      replace existing domestic instruments, and that they will therefore have to adapt to
      the new instruments, regardless of whether or not their activities extend beyond
      their national borders. To achieve this, communication must be intensified so as to
      improve user awareness of the project and its implications.
      The changes involved are fairly limited for individuals. They are more significant for
      large users of payment instruments - both businesses and administrations. These
      players will have to change their organisation and update their information systems
      in order to manage new data (notably the beneficiary's IBAN and BIC) and the new
      format of credit transfer orders. In this respect, the publication of conversion guides
      for account details and guides for SEPA-compliant credit transfer orders and the
      adoption by the French banking community of new bank-client communication
      protocols are major steps forward. The fact that some large corporations have
      already converted some of their payment applications to the SEPA credit transfer
      and that others have announced plans to begin to use SEPA credit transfers in the
      coming months is also welcome.
      If the implementation of SEPA is to be a real success, it is important that the range
      of SEPA payment instruments covers the vast majority of transactions. The launch
      of the SEPA direct debit is a major component of this. In this respect, a number of
      businesses have expressed their wish to roll out the SEPA credit transfer and the
      SEPA direct debit at the same time. This makes it even more necessary and urgent
      to remove the obstacles that are currently preventing the launch of the SEPA direct
      debit.
      We also reiterate that the means of payment currently in use in France are not
      limited to the three instruments that will be replaced by SEPA instruments. The
      domestic instruments that will not be replaced, such as the télérèglement, the TIP
      and trade finance instruments meet real demand and are widely appreciated by
      their users; it is not possible to envisage their abolition. Indeed, the National
      Committee believes that these instruments could also be migrated once European
      instruments offering similar functionalities are created. The National Committee will
      therefore closely examine initiatives that may produce a replacement target, in
      particular the work carried out by corporate treasurers.




National SEPA Committee                                                                    29
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 4.2. Views and expectations of users: businesses, retailers and consumers

 The MEDEF emphasises the need for a nationwide communication drive among
 business leaders, similar to that organised for the conference of 14th November 2007 to
 inform business leaders and secure their support for the transition to SEPA.
 The AFTE hopes that business partners (banks, software publishers, integrators) will
 show a greater commitment towards a rapid transition to SEPA instruments.
 The CGPME also notes that despite the major involvement of nationwide financial
 institutions, some SMEs expect more support from their banking advisers on the
 migration to SEPA. They see their banker as their main partner in this initiative and that it
 is important that their company's direct contact is fully aware of the changes. The
 CGPME therefore hopes that all players involved in this reform will step up their
 communication towards companies at all levels.
 Consumer groups repeat that the considerable changes arising from the SEPA project
 and the introduction of the new legal framework resulting from the Payment Services
 Directive will require greater communication efforts vis-à-vis consumers.




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                                                                              French Migration Report 2008



4.3. Summary of the migration to SEPA instruments in France

       The table below shows the choices and timetable for the migration to SEPA for
       French payment instruments. This table confirms and extends the guidance given
       in the migration plan published in October 2007.


 Current payment                          SEPA project                           Migration timetable *
 instruments
 "Ordinary" credit transfer               Replaced                               2008 to 2011

 Direct debit (ordinary and               Replaced                               Initially scheduled from 2010
 express)                                                                        to 2012 (to be reviewed)
 CB bank cards                            Change – implementation of             2008 to 2010
                                          SEPA interoperability
                                          principles

 Three-party cards                        As decided by issuer
 Télérèglement                            Maintained pending a more
                                          appropriate European
                                          solution(1)
 TIP                                      Maintained pending a more
                                          appropriate European
                                          solution(1)
 Bill of exchange                         Maintained pending a more
 Promissory note                          appropriate European
                                          solution(1)
 "Specific" credit transfer               Unaffected
 Cheque                                   Unaffected
 E-money                                  Unaffected
       * The migration phase starts when the European payment instruments become available and ends
       with the discontinuation of the equivalent national payment instruments.
       (1) A consultation may be carried out with other stakeholder communities to define a strategy that
       would preserve the functionalities offered by these instruments within a European framework.

                                  National SEPA Committee – October 2008




National SEPA Committee                                                                                     31
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Appendix: The National SEPA Committee's reporting tool


1. Principles of the National SEPA Committee's reporting tool

1.1. General principles

The National SEPA Committee's reporting tool must meet several criteria, it must:

– provide a view of progress made in the SEPA project;
– show any corrective action required to mitigate identified risks;
– serve as the basis for communication on the project at a national and European level,
  and be compatible with European monitoring tools at the appropriate time.
The project's success requires the support of the various stakeholder communities, with
each community responsible for providing the information required for the reporting tool
using its own resources.


1.2. Roles and responsibilities of the different stakeholders
Each stakeholder community within the National SEPA Committee must appoint a body
responsible for reporting information to the secretariat of the National SEPA Committee.
The secretariat of the National SEPA Committee:
– contacts each community to request its contribution;
– produces the national reporting tool using the contributions received;
– circulates the national reporting tool among members of the National SEPA
  Committee.

1.3. Frequency and date of first publication of the National Committee's reporting
tool
At its meeting on 27th March 2007 the National Committee decided to publish the
scoreboard on a quarterly basis. However, some communities (SMEs, retailers, etc.)
initially prefer to survey their members on a half-yearly or annual basis, and will provide
quarterly data once volumes reach significant levels.


1.4. Publication of the National Committee's scoreboard
Since the National Committee's reporting tool may be used for communication on the
SEPA project, it must contain no confidential information, notably as regards competition
or transaction security.
The Working Group on Communication (GT5) will verify this prior to the tool's publication.




32                                                                    National SEPA Committee
                                                                        French Migration Report 2008



1.5. Structure of the National SEPA Committee's reporting tool
The reporting tool is threefold, it comprises:
– a summary for the period covered;
– detailed information on the implementation of SEPA instruments;
– detailed information on the take-up of SEPA instruments.

Its structure may evolve in line with the requirements of the National SEPA Committee or
the monitoring tools adopted at European level.


2. Volume indicators

2.1. Functions of the reporting tool indicators
The National Committee's reporting tool indicators have two functions:
– to monitor take-up among each community;
– to establish the end date at which each national instrument replaced by a SEPA
  payment instrument will be discontinued. The National Committee will base its
  decision on the indications given by the reporting tool as to when critical mass is
  achieved in terms of use of the SEPA instruments, defined as being 75% of
  transactions and 50% of originators.

2.2. Transaction number indicator
At its meeting of 19th March 2008, the National Committee approved the principle of
using the decrease in the number of ordinary credit transfers exchanged via the SIT then
CORE infrastructures to prepare this indicator.
This information is available on the Banque de France website at the following address:
http://www.banque-france.fr/fr/sys_mone_fin/stats/page6.htm
A critical mass of transactions will be achieved once the number of ordinary credit
transfers falls below 25% of the volume of credit transfers carried out in 2007 (reference
year), adjusted for the annual growth trend observed over a five-year period.
In the event it seems to some stakeholders that the figures obtained reflect a significant
number of credit transfer orders that were transmitted in the non-SEPA format and
transformed into the SEPA format by banks, thereby radically altering the figures, the
National SEPA Committee's Working Group on the Transitional Period (GT4) reserves the
right to conduct additional investigations to ensure the Committee's communication and
use of the data collected are representative of the true situation.


3. Indicator of the percentage of originators

The work carried out by the Working Group on the Transitional Period (GT4) shows that it
is difficult to attribute a single definition to an originator, and that it is therefore difficult to
establish a reliable single percentage figure.




National SEPA Committee                                                                           33
French Migration Report 2008



However, it seems there are two major groups of originators, which cannot be
amalgamated:
– individuals and professionals, who initiate their credit transfer orders either in bank
  branches or using remote banking services (via the internet). The banks are
  responsible for the migration of these two channels to SEPA, and they alone can
  provide the indicators required for the reporting tool;
– businesses and administrations, which initiate their orders electronically and will
  decide when to complete their migration to SEPA according to their own constraints.
  Each community will report its own figures for this indicator. These figures will all
  appear in the reporting tool, which will show the situation by type of originator
  (administrations, businesses, etc.).
Each stakeholder community within the National SEPA Committee will report the number
of originators according to the methods described below.


3.1. Indicators of the percentage of originators from the banking community
Data collection method: a panel of 10 banks representing the French banking community
has been set up. Each quarter from the end of 2008, each bank will provide confidential
indicators to the Banque de France, which will allocate a weighting to each response
according to the institution's market share.
The banking community will provide three indicators:
– credit transfer orders initiated at bank branches: this indicator measures the
  availability of SEPA credit transfers at bank branches, as a percentage;
– credit transfer orders initiated online: this indicator measures the availability of
  SEPA credit transfers via remote banking channels (the internet), as a percentage;
– SEPA credit transfer orders initiated electronically: this indicator measures the
  proportion of electronic originators who initiate SEPA credit transfer orders, as a
  percentage.
SEPA credit transfers must account for 50% of orders initiated by each of these three
groups (in branches, online and electronically) for a critical mass of originators nationwide
to be reached.

3.2. Indicators of the percentage of originators from the non-banking community
(electronic order transmission)
Non-banking community stakeholders have defined the notion of originators for their
community:
– public administrations and the AFTE suggest using the number of applications that
  generate credit transfers, since not all applications within an administration or a
  company will make the transition at the same time;
– the other communities will report the percentage of companies having completed the
  migration to SEPA.




34                                                                    National SEPA Committee
                                                                French Migration Report 2008



3.3. It is not possible to establish a single national indicator for originators
It is not possible to draw up a single national indicator of the number of originators by
aggregating the indicators from the various stakeholder communities.
These indicators are not interchangeable:
– some measure the number of applications, while others show the number of
  companies having made the transition;
– some apply to individuals, others to businesses or public administrations;
– some originators will appear in the reporting figures of several communities, for
  example a retail business that is a member of the AFTE and the MEDEF or the
  CGPME will appear in several surveys.


3.4. Determining the 50% threshold using different originator indicators
In the absence of a single indicator, the following terms have been agreed upon:


To assess when the critical mass of 50% of originators is reached, the National
SEPA Committee will essentially use the indicators provided by the banking
community and will use the indicators provided by the other communities to
confirm its opinion.




National SEPA Committee                                                                  35
French Migration Report 2008



4. Data collection

Contribution of stakeholders to the reporting tool
        Stakeholder           Body responsible for           Qualitative     Quantitative
                                data collection             contribution     contribution
                                                            F: frequency     F: frequency
                                       Public administrations

           Legislator          DGTPE (treasury and           F: Quarterly         N/A
                                  economic policy
                                    department)

       Central and local          Interministerial           F: Quarterly     F: Quarterly
        administrations             committee

     Social security bodies       Interministerial           F: Quarterly     F: Quarterly
                                    committee


                                        Banking community

            Banks                  FBF/CFONB                 F: Quarterly     F: Quarterly


                                              Businesses

          Companies                  MEDEF                  F: Half-yearly   F: Half-yearly


     Financial companies               ASF                  F: Half-yearly   F: Half-yearly


     Corporate treasurers             AFTE                   F: Quarterly     F: Quarterly


            SMEs                     CGPME                   F: Annually      F: Annually


                                                Retailers

 Conseil du commerce de         CDCF (council for           F: Half-yearly   F: Half-yearly
          France                French commerce)


       Fédération des            FCD (federation of         F: Half-yearly   F: Half-yearly
        entreprises du            commercial and
      commerce et de la       distribution companies)
         distribution
         E-commerce                  Mercatel               F: Half-yearly   F: Half-yearly


                                    Consumer representatives

      Consumer groups         Association members of         F: Annually          N/A
                              the National Committee




36                                                                             National SEPA Committee
                                                                             French Migration Report 2008




                         National SEPA Committee Reporting Tool
             Description of the indicator of the percentage of SEPA originators
          Name of indicator: Availability of SEPA credit transfers in bank branches
                             Contributors: Banking community



1. Description of indicator
This indicator measures the percentage availability of the SEPA credit transfer in bank branches.

2. Data collection
        Body responsible for data collection: Banque de France
        Population s u r v e y e d : panel o f 10 banking groups, representative of the French banking
        community.
        Question asked: do your bank branches offer SEPA credit transfers?
        Possible responses: Yes/No/Partially (with percentage).
        Continuity of the population surveyed: the same panel w i l l b e s u r v e y e d e a c h t i m e .
        Frequency: quarterly as of early 2009 (situation at 31/12/2008).
        Method for calculating the percentage for the community as a whole: the ratio will be
        calculated by the Banque de France using the responses received, with:
            numerator: sum of each percentage received (with YES = 1, NO = 0, Partially =
            percentage given), weighted by the bank's market share in terms of credit transfer
            orders presented on paper forms;
            denominator: sum of the market share of the banks surveyed in terms of credit transfer
            orders presented on paper forms.

3. Additional comments
        Validity of the indicator for the community concerned: the 10 banking groups are largely
        representative of banks for individuals, professionals and micro-enterprises.
        Continuity over time of the data collected: the indicator will be reliable over time as the 10
        banking groups selected have committed to providing this indicator on a quarterly basis.
        However, given that there will be no regression in the offer available in their branches, the
        banks may no longer be surveyed once they reply YES.
        Other details: banking groups can use the "partially" response if not all banks within
        their group offer SEPA credit transfers in their branches.
        Confidentiality of individual replies: responses are transmitted confidentially to the Banque
        de France, which only publishes data via the global indicator, and in no way discloses
        individual responses provided by banking groups.




National SEPA Committee                                                                                  37
French Migration Report 2008




                          National SEPA Committee Reporting Tool
              Description of the indicator of the percentage of SEPA originators
     Name of indicator: Availability of SEPA credit transfers via remote banking channels
                              Contributors: Banking community



1. Description of indicator
This indicator measures the percentage of banks offering the SEPA credit transfer via their remote
banking services (the internet).

2. Data collection
        Body responsible for data collection: Banque de France
        Population s u r v e y e d : panel o f 10 banking groups, representative of the French banking
        community.
        Question asked: does your bank offer SEPA credit transfers via the internet?
        Possible responses: Yes/No/Partially (with percentage).
        Continuity of the population surveyed: the same panel w i l l b e s u r v e y e d e a c h t i m e .
        Frequency: quarterly as of early 2009 (situation at 31/12/2008)
        Method for calculating the percentage for the community as a whole: the ratio will be
        calculated by the Banque de France using the responses received, with:
            numerator: sum of each percentage received (with YES = 1, NO = 0, Partially =
            percentage given), weighted by the bank's market share in terms of users of remote
            banking services as per the information collected each year by the Banque de France;
            denominator: sum of the market share of the banks surveyed in terms of users of
            remote banking services.

3. Additional comments
        Validity of the indicator for the community concerned: the 10 banking groups are largely
        representative of banks offering remote banking services for individuals, professionals and
        micro-enterprises.
        Continuity over time of the data collected: the indicator will be reliable over time as the 10
        banking groups selected have committed to providing this indicator on a quarterly basis.
        However, given that there will be no regression in their remote banking offer, the banks
        may no longer be surveyed once they reply YES.
        Other details: banking groups can use the "partially" response if not all banks within
        their group offer SEPA credit transfers online.
        Confidentiality of individual replies: responses are transmitted confidentially to the Banque
        de France, which only publishes data via the global indicator, and in no way discloses
        individual responses provided by banking groups.




38                                                                               National SEPA Committee
                                                                             French Migration Report 2008




                         National SEPA Committee Reporting Tool
            Description of the indicator of the percentage of SEPA originators
      Name of indicator: originators of SEPA credit transfers transmitted electronically
                              Contributors: Banking community



1. Description of indicator
This indicator measures the proportion of electronic originators who use SEPA credit transfers.

2. Data collection
        Body responsible for collecting data: Banque de France
        Population s u r v e y e d : panel o f 10 banking groups, representative of the French banking
        community.
        Question asked: what proportion of your originators who initiate electronic credit transfer
        orders use SEPA credit transfers?
        Answer expected: the percentage within the banking group.
        Continuity of the population surveyed: the same panel w i l l b e s u r v e y e d e a c h t i m e .
        Frequency: quarterly as of early 2009 (situation at 31/12/2008)
        Method for calculating the percentage for the community as a whole: the ratio will
        calculated by the Banque de France using the responses received, with:
            numerator: sum of each percentage received, weighted by the bank's market share in
            terms of credit transfer orders transmitted electronically (excluding remote banking) as
            per the information collected each year by the Banque de France;
            denominator: sum of the market share of the banks surveyed in terms of credit transfer
            orders transmitted electronically (excluding remote banking).

3. Additional comments
        Validity of the indicator for the community concerned: the 10 banking groups selected are
        largely representative of banks for businesses and public administrations. Each member of
        the panel will report an indicator of the percentage of its clients who issue electronic credit
        transfer orders using the method best suited to its information system. The method for
        calculating the percentage must be valid throughout the transitional phase.
        Continuity over time of the percentage collected: the indicator will be reliable over time as
        the 10 banking groups selected have committed to providing this indicator on a quarterly
        basis.
        Other details: a client with several banks will be included in the figures of each of its banks,
        both on the denominator as an originator, then on the numerator after its migration as an
        originator of SEPA credit transfers.
        Confidentiality of individual replies: responses are transmitted confidentially to the Banque
        de France, which only publishes data via the global indicator, and in no way discloses
        individual responses provided by banking groups.




National SEPA Committee                                                                                  39

				
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