The Single Euro Payments Area (SEPA) enables cashless euro-denominated retail payments to be made across the European Union and European Economic Area under the same basic terms and conditions.
From 1st January 2021, payments to and from the UK will be treated as payments to and from a third country for the purposes of Regulation 2015/847/EU - Funds Transfer Regulations (FTR). This means that additional information, including the payer address, will be required for fund transfers between Ireland and the UK.
The Central Bank of Ireland has had extensive and ongoing engagement with the payment service providers (PSPs) e.g. banks and payment institutions, UK supervisory authorities and industry representative bodies to understand the potential consumer impact, to assess the impact of mitigating actions taken on residual risks, to emphasise the mandatory requirements for additional information from 1 January 2021 and to monitor progress towards compliance.
There is regular reporting from Irish PSPs to the Central Bank of Ireland on the volume and value of SEPA credit transfer and direct debits between UK and Irish PSPs. Additionally, there has been regular data exchange with UK supervisory authorities to facilitate a joint and consistent approach to mitigating the risk of failed payments.
To date action has been taken by most businesses and PSPs to address the issue, and while the risk in terms of value and volume of potentially rejected payments has significantly reduced, there remains residual risk that a number of payments may be rejected from 1 January 2021 due to non-compliance with the Funds Transfer Regulation and the SEPA scheme rulebooks.
It is primarily an issue for UK payment service providers offering services to Irish customers (creditors) to ensure they have obtained the necessary authorisations from an EU competent authority before the end of this year to ensure that they can continue to offer their services.
The Central Bank of Ireland continues to engage with all relevant parties, including supervisors in other jurisdictions, to further reduce this residual risk and officials in the Department of Finance are monitoring the situation.