About the Author

Elbert Bautista

Software Architect

in Development 10 min read

Implications of SEPA on Your eCommerce Business and How Broadleaf Can Help

Those currently conducting business in the Euro Zone have most likely heard about SEPA and all the new regulations that come with it. Well, the deadline to migrate to the new system was on February 1, 2014. However, due to sluggish adoption of the new norms, the European Commission proposed to extend the deadline by six months and make it August 1, 2014.

If you aren't familiar with SEPA, or are starting to conduct business in the Euro Zone, or are one of those unfortunate not to have already converted their existing payment systems, don't fret! This article aims to help clarify your questions and show you how Broadleaf may help your eCommerce system achieve SEPA-compliance.

What exactly is SEPA?

SEPA stands for Single Euro Payments Area and is a project managed, supported and promoted by the European Payments Council. The initiative aims to replace differing cross border payment methods with a single common system. For example, it was a challenge or even impossible for an Irish person to buy something online, from France, using their Irish debit card or from setting up a direct debit. Thus, uniform SEPA standards were created to help solve this. To make this all possible, these standards stated that all Euro next-day-payments and collections would flow through an integrated European ACH system designed to make sending and receiving Euro payments much more efficient.

The SEPA regulations include a set or rules, standards, procedures and requirement relating to three main focus areas and are called (with their acronyms):

  • SEPA Direct Debits (SDD)
  • SEPA Credit Transfers (SCT)
  • SEPA Card Framework (SCF)

SDD and SCT regulations deal with Euro Direct Debits and Wire Transfers and may affect your business directly. SCF regulations mainly apply to Card Issuers and have rules that protect the consumer. For example, one regulation states that a SEPA compliant card cannot prevent any other SEPA card from being accepted and must ensure merchants and cardholders receive the same services within the Euro Area, etc...

Is my eCommerce business impacted?

If your business is currently accepting or wishing to accept Direct Debit or Credit Transactions in the Euro Zone, or your corporation is currently utilizing Direct Debit (ACH) transactions in a localized domestic system, you will need to upgrade and use the new SEPA-compliant procedures.

SEPA replaces a network of 17 country-specific ACH systems that required corporations that conduct business in several different Euro countries to maintain separate accounts for every country they serve. This should ultimately benefit the consumer, as the corporations now no longer need to maintain separate accounts which lead to savings that can be passed down to the customer. Business now becomes easy as all cards accepted by SEPA can be used without any extra charges.

What are some of the SEPA changes?

The three more important SEPA enhancements include:

  • National Account and Sort Code numbers will be replaced by an IBAN (International Bank Account Number) and BIC (Bank Identifier Code) number

  • Payment file formats will change from the current domestic ‘Standard 18’ to the new SEPA ‘ISO 20022’ standard

  • Regulation states that the purchaser sign a mandate releasing those funds to the creditor's bank. This can be accomplished via a paper-based form or electronically

How do these changes affect my eCommerce site?

Well, if you are currently accepting direct debit currently on your site, you will want to have your Customers update their Bank Account.

You may want to introduce a new customer flow like this

SEPA Wireframe

How can Broadleaf help?

One of the requirements states that a purchaser must sign a mandate releasing their funds and authorizing the direct debit transaction. This means that the merchant is now responsible for managing and tracking this mandate by either having the customer mail a paper based form or have them sign an electronic version. If you wish to do this electronically, Broadleaf provides a rich extension model which you can read about here: http://docs.broadleafcommerce.org/core/current/broadleaf-concepts/data-and-service-models/extending-entities

One option would be to extend our Customer or CustomerPayment entities and provide a reference to this new SEPA mandate that the customer is now required to sign. Or, you can just as easily integrate with your existing CRM solution such as SAP or Microsoft Dynamics AX etc... to manage it.

If you wish to have your mandate management handled by a third party, Broadleaf provides a very extensible Payment Gateway integration framework which allows you to integrate with a SEPA compliant payment provider of your choice. Read about our payment integrations here: http://docs.broadleafcommerce.org/core/current/broadleaf-concepts/payment

We highly recommend this approach as there are many payment gateways that provide the "heavy-lifting" SEPA compliant procedures out of the box. Integrating with a secure payment gateway may also alleviate a lot of PCI-comliance-type concerns depending on your integration method. Some SEPA payment provider solutions we've seen include but are not limited to:

  • Cybersource Direct Debit Service (http://www.cybersource.com/)
  • Sentenial Direct Debits (https://www.sentenial.com/)
  • SAGEPay SEPA Payments (http://www.sagepay.ie/)

So, hopefully for those of you that have been looking for SEPA clarifications, this has been useful. If you have any more questions or comments, feel free to use the comment section below, and we'll try our best to answer it!