OREANDA-NEWS. From 1 January 2016, Lithuania is entering the Single Euro Payment Area (SEPA) which comprises 34 countries of Europe. This will be the final step in the country’s euro area integration process. Please find the below provided summary information on key changes pending after the New Year.

Direct debit alternative – E-invoices
The direct debit service provided in Lithuania at present does not meet the SEPA requirements and, therefore, as from 2016 it will no longer be acceptable in the country. Banks are offering to their customers a new convenient way of payment of invoices of service providers – electronic invoices (e-invoices). If companies choose to issue e-invoices to their clients who until present had used a direct debit, the payers will not have to worry about anything additionally – their direct debit agreements will be replaced by an E-invoice automated payment agreement, and automated payment of invoices will be continued. Automated payments to the company’s account with Swedbank will be free of charge, like in the case of payment by direct debit. More info about e-invoices is available here.

After the New Year, the clients of companies, which decide not to choose the E-invoice solution, will have to take care of payment of their invoices themselves, because the automated payment will no longer be available. They will be able to do that by making a payment (if a company is a recipient of payments), a simple payment order or by concluding a standing payment agreement where a payee receives a fixed amount each month.

Clients will be notified personally of the decision of each company. A regularly updated list of companies which have decided to issue E-invoices to their clients is available here.

Debit services will not be provided
The service of submission of debit orders and of debit of funds according to a debit order provided in Lithuania at present does not meet the SEPA requirements and from 2016 will no longer be acceptable in the country. The debiting of accounts according to debit orders will not be carried out and clients’ consents submitted for debiting of funds by way of debit will be cancelled. From the New Year, it will be possible to settle with payees for provided services using a local payment order, a periodic payment or any other manner agreed upon with the payee.

Changes in the form of a money transfer
From 2016, a local money transfer will have to meet the credit transfer requirements of the SEPA, which means that a local or international payment order in euro will be carried out according to a SEPA-wide scheme with uniform payments. Due to the SEPA requirements, we would like you to take account of the following changes when filling in a money transfer form:

  • “Payment purpose” – instead of 300 it will be possible to enter 140 symbols. This box should contain a payment code or a free text.
  • “Payment code” – instead of 16 it will be possible to enter 35 symbols. You will be able to indicate only one of the two: either a payment code or a payment purpose (i.e. having entered a payment code it will not be possible to additionally fill in a payment purpose field).
  • “Payer’s/Payee’s name” – instead of 200 up to 70 symbols can be used. If you make a payment for another person, you will be able to indicate the “Originator of payment” in the money transfer form.
  • “Payer’s/Payee’s identifier” – when making a payment you will be able to enter one identifier agreed in advance with the payee: a VAT number, a social insurance number, a code assigned by the service provider, etc.
  • In the case of payments made between accounts in Lithuania, it will be possible to continue using Lithuanian characters (e.g., “?”, “?”, etc.) in the money transfer form  (in the fields of the payment purpose, payee’s/payer’s name, payment originator’s name, final beneficiary’s name). If the payee’s account is outside Lithuania, it will be possible to use only Latin characters.

Changes in periodic payments
In order to ensure that payments according to previously concluded periodic payment agreements continue reaching the payee, it will also be necessary to adapt periodic payment services according to the SEPA requirements. The main changes are as follows:

  • A payer will be able to specify one of the two: either a payment code or a payment purpose – if both the “Payment code (Payee’s reference)” and “Payment purpose” are indicated in your periodic payment agreement, from 1 January 2016 only the “Payment code (Payee’s reference)” will be transferred to the payee.
  • The field of “Payer’s/Payee’s name” will be shortened from 200 to 70 symbols. If the payer’s/payee’s name indicated in periodic payment agreement contains more than 70 symbols the first 70 symbols will be transferred to the payee.
  • The “Payment purpose” data field will be shortened from 300 to 140 symbols. If the payment purpose indicated in a periodic payment agreement contains more than 140 symbols, the first 140 symbols of the payment purpose will be transferred to the payee.

We recommend our customers revising their periodic payment agreements. If you think that due to envisaged changes the payee will not receive the information significant for the customer, we recommend terminating the existing and concluding a new periodic payment agreement.

Periodic payments to charge accounts of the STI, SODRA, and Customs Department
From 1 January 2016, the “Payment purpose” details specified in the periodic payment agreement will not be transferred to the STI, SODRA, and Customs. If you indicate in the payment purpose that you are making payment to these organisations for another person, payees will be unable to determine that. In the case of clients, who use periodic payments to pay for another person and who have specified such a person’s details in the “Payment purpose”, when the payment form is updated according to the SEPA requirements after 1 January 2016, we recommend terminating the periodic payment agreement, concluding a new agreement and indicating in it the payment originator, i.e. the person for whom the payment will be made.

Transfers to accounts with other banks
From the New Year, the clearing system between banks will change – payments between banks will be carried out via the European Clearing House. Transfers between accounts on working days will be carried out five times a day. Clients who need payments to the account with another bank to be made on the same working day should submit their payment order to the Bank until 16:00, as before.

Submission of payment and account details to companies in files using the ISO 20022 standard format messages
Companies which submit e-payment details in files until the end of 2015 will have to adapt their work and accounting systems for operation according to the SEPA requirements. From 1 January 2016, the LITAS-ESIS format will be replaced by the ISO 20022 XML standard format for both initiation of payments in files (local, international and group (DU) payments) and for obtaining an account statement from the Bank. From 1 January 2016, there will be no possibility to submit payment details in the LITAS-ESIS format files. The ISO 20022 XML standard format is available for companies already since July both in the internet bank for business and via Swedbank Gateway.

After 1 January 2016, the possibility to receive an account statement from the Bank in the LITAS-ESIS format (*.acc) will still exist, however, the format will not be updated and payment details transmitted using this format after 1 January will be incomplete (e.g., without unique payment reference, payment type and category, payer’s and payee’s ID classifiers, etc.). Considering these circumstances we recommend the statement of account in the ISO 20022 XML standard format.

The companies which do not prepare for work according to the SEPA requirements, after the New Year can face problems in making settlements with their business partners, tax administrators and employees and in the processing of information on the effected payments.