Exemptions of the use of the International Bank Account Number (IBAN), the Business Identifier Code (BIC) and the ISO 20022 XML message standards came to an end on 1 February 2016. This marks another milestone in the migration to the Single Euro Payments Area (Sepa).

Regulation (EU) 260/2012 allowed countries in the euro area to choose whether or not to postpone the deadline for the adoption of IBANs, BICs and ISO 20022 XML by end-users and for the conversion of some ‘niche products’, from 1 February 2014 until 1 February 2016. Several EU countries made use of this option.

This means that, as of 1 February, Eurozone banks and payment service providers (PSPs) can process Sepa payments using only a customer’s IBAN. A BIC will no longer be required.

The last remaining milestone for the migration to Sepa is 31 October 2016, which is the deadline for the IBAN-only requirement in non-euro countries, meaning that UK banks and PSPs will be able to continue using BICs until that date.

According to Payments UK, this change should also reduce the instances of payment errors, by encouraging more SEPA payments to be made electronically and minimising the need for manual intervention.

Also, Payments UK, together with the Financial Conduct Authority (FCA) and the Bank of England, a Sepa IBAN-only directory, developed and built by SWIFT. The directory enables banks and PSPs to look up the BIC from the IBAN. The directory can be downloaded, integrated into the end user’s back office systems or accessed using the individual lookup facility, which is free to use from swift.com.

Click here for more information on Sepa's legal framework.