Many organisations in the payments industry affected by SEPA are taking a short term view, making the bare minimum changes in order to be able to process SEPA formatted payments messages from January 28th, 2008.
The International Bank Account Number (IBAN) is an international standard for identifying bank accounts that applies across borders. However there are a wide variety of IBAN formats and up to 14% of Bank Identifier Codes (BIC) change each quarter, which complicates the task of identifying customer bank accounts and the institutions to which they belong throughout Europe.
âFor correct payment message routing, a combination of the IBAN and the BIC must be used. However there are a number of issues arising from linking and validating IBAN account numbers to the institution to which they belong. As a result, organisations that validate messages and reject any that do not have the right information have simply passed the problem on, rather than solving the underlying issue,â comments ACE Software Solutions CEO Parth Desai, âThose transactions that are not validated are either passed to an exception queue or rejected and returned to the originator, thus the process becomes a barrier to achieving STP.â
The opportunity exists now to gain real benefits from solutions that minimize both the time and cost associated with manual repair or rejection of payment messages. Failure to do so will lead to additional processing costs related to rejected payments and an impact on customer service and reputation.
Desai comments, âThe ACE philosophy is simple. We believe that organisations should look to systems and solutions that validate, fix and repair transactions rather than validate and reject. These represent low risk, cost effective solutions that give institutions the ability to automatically identify, extract, validate, create and repair all cross-border payment messages, irrespective of the format.â
The ACE BIC IBAN module uses intelligent rules based processing, combined with reference data, updated daily. It can analyse a payment message and where information is missing, incorrect or in the wrong format, it can be automatically transformed and reformatted so that it is ready for immediate onward processing. This gives organizations the ability to reduce failed transactions and increase processing efficiency leading to a reduction in costs and operational risk.
In order to promote industry best practice, ACE is making access to the ACE BIC IBAN module free of charge to qualifying companies for a limited period of time in order to further industry movement towards SEPA compliance and greater STP for European cross border payments.