The European regulation is clear: the banks must only accept XML payment flows after February 1st, 2014 in most Euro countries. They should not convert files themselves.

In the past few months, some banks have been challenging the legal aspects about the definition of a payment order to get around this constraint. Others think about the use of non financial institutions to convert their customer payment flows and others propose tools as SEPA_NDAT to their customers.

Among the few which are ready to propose internal conversion services, one of them was recently advertizing such service but was obliged to withdraw its message.

With SEPA, roles change (at least in France). Conflicts are handled directly between debtor and creditor, but funds recovery in case of non authorized direct debits is still done through the debtor's bank.

Debtor banks have the obligation to propose services to block or limit direct debit transactions on debtor's accounts when this is a consumer:

• limitation based upon amount, periodicity or both
• refusal of all direct debit transactions
• refusal or acceptance of direct debit transaction based on payees.

They can also propose additional services to their clients.

In France, debtor banks still share a responsibility with the creditor when the mandate is migrated (usually identified by a mandate ID beginning with ++).

The penalty system has not yet been discussed by the European authorities but it will be over the summer. The result of those debates will condition the final behavior of all the actors.