Cross-border payments to be made easier and more efficient
From 1 Feb 2016, making a cross-border payment will be easier as banks will require less information from consumers and businesses – customers will just need their IBAN (international bank account number). Currently customers are required to give their BIC (bank identifier code) to help the bank identify an account when making SEPA transactions.
This move, which was driven by the European Parliament through Article 5(7) of the SEPA regulation EC No 924/2009, will bring the UK in-line with the eurozone countries that use this internationally recognised standard format. It will also increase efficiency and reduce the instances of payment errors, as more payments can be made without the need for manual intervention through the use of Straight Through Processing.
Although customers will soon no longer be required to supply their BIC, some banks may still need it to correctly route the payment on behalf of their customers. In order to ensure that the UK complies with the European legislation in this area, Payments UK, the trade association for the payments industry, has led the project to develop the SEPA IBAN-Only directory, with SWIFT and in liaison with the Bank of England and the Financial Conduct Authority. More information will follow about the launch of this service in due course.
Maurice Cleaves, chief executive of Payments UK, said:
“The move to SEPA IBAN-Only (SEPAIO) is significant as it constitutes the first change in decades to how international payments are processed. As the organisation focused on delivering world class payments, Payments UK is proud to be leading the way. Our system in the UK offers one of the most comprehensive and sophisticated solutions, and it will help ensure the correct routing data is identified.
“Efficiency in payments is a key priority of ours, and by adopting the new SEPA standards, not only will those receiving payments in the UK benefit from a more streamlined system, but this simplification also has the potential to attract and encourage more European business.”