31 banks automate euro payments in time for EC Price Regulation

31 banks are now live on the new Euro Banking Association (EBA) STEP2 panEuropean automated clearing house, meeting tomorrow’s deadline for the EC Regulation 2560/2001 on cross-border payments. 18 banks started operations in pilot mode on the new system on 28 April 2003 and a further 13 banks went live today including Commerzbank, HSBC, JPMorgan Chase, HypoVereinsbank and Rabobank.

The EC Regulation, which comes into effect on 1st July 2003, requires that banks in the EU offer cross-border credit transfers in euro at the same price as corresponding domestic transactions, bringing down the total amount of cross-border charges from approximately 16 euros per transaction to less than 0.5 euro.

With STEP2, EBA Clearing is helping banks to mitigate the cost implications of the EC Regulation by enabling them to automate low value, high volume bulk payments in euro within the EU. The EBA’s highly flexible STEP2 system was built by Italian technology service provider, SIA and uses Microsoft technology to allow banks to connect all internal systems quickly and simply to the automated clearing house.

Deutsche Bank which joined STEP2 earlier this year has already gained experience with the EBA STEP2 system. Hansjörg Nymphius, Global Head of Methodologies & Performance Management at Deutsche Bank said, “STEP2 has been great for us because we have been able to reduce our interbank costs so that we are now wellprepared to process EU-regulated payments.”

Linda Smith, Head of Payments Industry Management and Strategy at HSBC said “The EC Regulation has placed significant pressures on banks in the EU to reduce bank charges and we believe that we will be able to meet these new regulatory requirements by connecting to STEP2, which through the hard work and co-operation of the EBA and the pilot banks, creates a very simple, quick and low cost process.”

Gilbert Lichter, CEO of EBA Clearing, said: “We had a single market and a single currency but we did not have a single retail payments area. Crossing a border should not cost a customer more and therefore banks needed to get their cost structures down. The creation of STEP2 has been all about reconstructing the way bulk payments are made across Europe and delivering greater efficiency across the region.”

Renzo Vanetti, CEO, SIA said: “With tight deadlines it was essential for us to develop an automated platform that could be integrated quickly and easily by banks wishing to participate in EBA STEP2. Microsoft has helped us to change the economics of this type of solution by improving cost, flexibility and speed to market. The single payments area, a key reason for creating the single currency in Europe, is now becoming more of a reality.”

Paul Shetler, Financial Services Industry Manager for Microsoft EMEA said: “XMLbased technology is all about breaking down barriers – between systems, between companies and across geographies. The retail payments arena is a great example of where this technology can make a real impact. EBA STEP2 was developed by SIA in just ten months and banks are already experiencing the benefits. We believe we can offer real support in creating efficient, streamlined systems and are committing significant resources to help drive these initiatives in the financial services industry.”