• One is Directive 97/5/EC on cross-border credit transfers, the rules of which have already been implemented into Hungarian law (with the relevant provisions currently contained in Government Decree 227/2006 (of November 20) on payment services and electronic payment instruments and in Central Bank’s Decree 21/2006 (of November 24) issued by the Hungarian National Bank on the conduct of payments).

• The other one is Regulation 2560/2001/EC on cross-border payments in Euro, which contains a direct obligation for all Member States and the rules of which must be applied following accession even without their announcement in Hungarian sources of law.

Both sources of the law have the same geographic scope, extending to the Member States of the European Economic Area (EEA, including all EU Member States plus Norway, Iceland and Liechtenstein). As the titles of these laws show, both regulations should be applicable for cross-border payment transactions. Another similarity between the two laws is that they both apply to transactions with amounts of up to EUR 50,000 or an equivalent amount in the currency of some other Member State.

However, there are differences with regard to their material scope:

• The directive is only applicable to transfers while in addition to transfers the regulation also extends to payment transactions executed using electronic payment instruments.

• The directive regulates transfers made in Euro or in any other currency of a Member State, while the regulation as a base-case regulates only payment transactions executed in Euros. Specific Member States have discretion as to whether or not they apply the regulation to payment transactions made in other currencies (which only Sweden has exercised by extending the scope of the regulation to transactions executed in Swedish Crowns).

In the future, not later than 1 November 2009, Directive 2007/64/EC on payment services in the internal market (the Payment Services Directive – PSD) will be implemented into Hungarian law, which will invalidate Directive 97/5/EC as of 1 November 2009. The fundamental purpose of the PSD is for the current, fragmented payment regulations in the national laws of the EEA to be replaced with a single law setting identical requirements for payment services on the level of the EEA, and thus to create a standardised legal framework to promote the realisation of a single payment market.

We shall now present the essential rules of Directive 97/6/EC and of Regulation 2560/2001/EC on the following pages to enable the customers of financial organisations to understand their rights and obligations arising from the directive implemented into Hungarian law and from the Regulation that has taken effect automatically.

 

The realisation of integrated payments among the Member States will only be possible following the creation of the Single Euro Payments Area, SEPA.

SEPA is actually a pan-European project involving the countries of the European Union plus Iceland, Liechtenstein, Norway and Switzerland. The aim of the SEPA is to standardise European payments and to create an integrated efficient internal payment infrastructure.

Following the introduction of the common currency, the Euro, the next step, in addition to creating a standardised legal background, is to disseminate the application of standardised methods for payments in Euro, i.e., SEPA credit transfers, SEPA direct debits and SEPA card transactions.

By standardised methods of payment in Euro, i.e., by SEPA services we mean payment instruments – credit transfers, direct debits, card and e-payments, mobile payments – that are standardised within the Euro zone with respect to technology (account number, message format, etc.) and procedural rules (specified service criteria and fee settlement methods) as a result of the standardisation process and which in time will replace the special national payment methods and standards.

Within the framework of the European Payments Council – EPC, created in collaboration by the associations of credit institutions, credit cooperatives and savings cooperatives, European credit institutions will develop the new payment and settlement methods and standards in self-regulation in a broad professional interbank cooperation and will establish the corresponding infrastructure, for payments with low-value payments in great volumes. The banks of the countries outside the Euro zone are not obliged to join the SEPA payment schemes and infrastructures, but they will be allowed to do so on an individual, voluntary basis. Our domestic banking system also makes efforts to introduce the SEPA payment methods and preparations will continue within the framework of the Payment System Forum and the Hungarian SEPA Association established in the spring of 2008.

Customers within the Euro zone will be able to use the SEPA Credit Transfer – SCT, starting from 28 January 2008, as a first of the new payment methods. Also in Hungary a number of credit institutions have prepared their information technology systems to be able to receive and also to initiate such types of transfers.

The major features of SEPA transfers are as follows:

• Only the EUR currency is allowed;
• There is no limit on the value of the paymemt;
• The maximum settlement time is three business day
• The bank of the beneficiary will credit exactly the same amount to the account of the beneficiary as was sent by the party making the payment. The amount credited is thus not reduced due to the fees of corresponding banks;
• Both the obligated party and the beneficiary of the payment will pay only the fees charged by their own banks;
• When making a SEPA transfer, the initiating party must always provide to its bank the following: The International Bank Account Number (IBAN) of the beneficiary and the SWIFT/BIC identifier of the beneficiary’s bank.

Since SEPA Credit Transfers may appear as a totally new, standardised type of foreign currency order at the banks, where conditions may be different than customary, you should in every case seek information from your bank on the things that you need to know in detail (such as the possible methods for the use of the payment instructions and the determination of the related sharing of fees)!

It is important to know that you cannot send SEPA Credit Transfers to every bank. Banks capable of at least receiving SEPA Credit Transfers, so-called “SEPA-compliant” banks, are registered by the European Payments Council (EPC) with their lists posted on the EPC homepage. We recommend that you liaise with your partner before submitting an instruction for a transfer to confirm whether the bank of the beneficiary is a SEPA member. You may find the list of SEPA-compliant banks here: http://epc.cbnet.info/content/adherence_database

The following pages also provide useful information on the topic:

• The information brochure of the European Central Bank on SEPA in English on the homepage of the ECB and in Hungarian on the homepage of the Hungarian National Bank:
  • http://www.ecb.int/pub/pdf/other/sepa_brochure_2006en.pdf
  • http://www.mnb.hu/engine.aspx?page=pe_sepa
• The documents related to the Hungarian SEPA Association are located on the homepage of the Hungarian Banking Association:  http://www.bankszovetseg.hu/bankszovetseg.cgi?p=sepa_dokumentumok&l=eng&print=0&r=&v=262186199   
• further information on SEPA is available in English on the homepage of the European Payments Council: http://www.europeanpaymentscouncil.eu/

In order to understand the fees for foreign currency transfers there are product tables published for assistance on the homepage of the HFSAwhich also show charges for transactions on bank accounts.