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SEPA Migration Checklist

Dear client,

Single Euro Payments Area (SEPA) standards become mandatory across 17 Euro member states on 1 February 2014. If your organization initiates Euro ACH payment or direct debits, action needs to be taken to ensure compliance. This email series is intended to provide you with relevant information and practical guidance.

What do I need to consider for Payroll?

Payroll SEPA Credit Transfer adoption has been accelerating since January 2012 when new regulation established certainty around the maximum execution cycle for SEPA Credit Transfers. No matter how you manage your payroll payment files today, whether it may be in house or via a third party payroll provider, it is worth paying special attention to overall payroll migration to ensure that you become SEPA compliant in time and that your organisation and any third-parties involved are ready to cope with the changes.

Considerations for using SEPA for Payroll:

Acceptance – The vast majority of banks within the SEPA regions are ready to send and receive SEPA Credit Transfers, and as per regulation, banks within the EUR member states should today already be reachable for SEPA transactions. Prior to implementation, Citi recommends running a reachability check on your beneficiary banks.

Account portability – In the short term, certain local requirements for making domestic salary or third party salary related payments (e.g. payroll tax to authorities) might require local accounts.

Confidentiality – In order to protect sensitive salary information, SEPA Credit Transfer bulk debit is an important payment functionality that can enable protection by resulting in a single posting on bank account statements.

Payment instructions – Within SEPA ISO XML 20022 standards there is a field entitled “Category Purpose” that can be populated with the pre-defined code “SALA” (to refer to salary payments). While at this point not all banks are recognising the code word, usage and recognition will increase as SEPA matures. It is advisable to use “SALA” where possible to allow for the beneficiary bank to apply special conditions regarding the incoming payment (e.g. mortgage payment deduction etc). General BIC and IBAN requirement also applies to SEPA Credit Transfer payroll payments.

Timing – The payment execution cycle for SEPA Credit Transfers is D+1 maximum cycle time.

Amount – With SEPA Credit Transfer payments beneficiaries receive full value, with beneficiary bank charges applied separately. Those bank charges will have to be agreed with the beneficiary and also they must be priced the same as for receiving a domestic SEPA payment as for a cross border SEPA payment.

Third party payroll provider – if you are using third parties to create your payroll payment files, then it is advisable to engage them as soon as possible to ensure that they are actively managing SEPA migration of your payroll files and will be completed in time.

SEPA has the ability to deliver real value to your organization. Citi is committed to delivering solutions that enable you to capitalize on the benefits that SEPA offers.

To put our expertise to work for you today, please contact your Citi representative or visit our SEPA website at www.transactionservices.citi.com/SEPA

We have an upcoming SEPA webinar on 19th June on “Practical Steps to Meet the Deadline” at 3pm BST – to register your attendance visit: https://www.citibank.com/transactionservices/home/about/online_academy/form.jsp

Regards,

Treasury and Trade Solutions.


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