The Council of Ministers voted to approve the SEPA Migration Regulation earlier this week.
The Regulation allows EU businesses to continue processing euro currency payments in accordance with a number of different national standards and formats up until 1 August this year. After that, all credit transfers and direct debit payments made in euros within the EU will be required to adhere to set standards laid out under EU law.
The European Commission proposed the new rules earlier this year after raising concern about the number of businesses unprepared for a then 1 February deadline to comply with the new payment processing standards. The European Parliament gave its backing for the Regulation earlier this month. The Regulation applies retroactively from 31 January.
"On the basis of data compiled by national central banks, reports show that a number of eurozone Member States are well on track, with migration rates for credit transfers close to 100%," a statement issued by the Council of Ministers said. "The large majority of payment service providers have reported that they are already SEPA-compliant. However, in several other member states migration rates are not yet at the required level, in particular for direct debits."
"Extension of the deadline will enable banks, payment service providers and users to exceptionally and temporarily continue using existing standards alongside the SEPA-standard-based schemes, given that the rate of migration needs to be raised significantly before the final end-date. This will minimise disruptions that could particularly affect SMEs and consumers," it said.
A variety of different payment processing systems, which conform to a range of different standards, are currently in operation in EU member states.
In an effort to boost cross-border electronic payments across the 'single euro payment area' (SEPA), new rules have been designed to standardise payment schemes. In geographical terms, SEPA refers to all 28 EU member states, Iceland, Liechtenstein, Norway, Switzerland and Monaco.
EU member states are subject to set EU rules that underpin the SEPA system, which were first introduced through common rules for the authorisation and the revocation of direct debits set out in the wide ranging Payment Services Directive. Further technical specifications for the payment systems, and compliance deadlines, are set out in the SEPA Regulation and the rulebooks that have been developed alongside it.
Under the SEPA Regulation, payment service providers must establish "payment schemes" that have the same "rules" for the purpose of carrying out cross border and national credit transfers and direct debits. The measures are designed to ensure that different payment systems are "technically interoperable" with one another.
The Regulation sets out certain requirements that payment service providers must conform to when conducting those transactions, which include using a particular "payment account identifier" and "message formats", among other things.
The 1 February 2014 deadline had been imposed on EU member states to ensure their systems conformed to SEPA standards for euro currency transactions. The deadline for non-euro currency transactions to be SEPA-compliant is 31 October 2016.