Campless Berlin: A Fresh Look at wf Berlin
Berlin establishes a framework for peer-to-peer financial transactions
Let's dive into the eagerly anticipated direct payment scheme straight from the Federal Ministry of Finance! The federal government has greenlighted essential aspects for this pioneering project in our nation's capital - Berlin. This innovative mechanism equips us for swift, crisis-ready payments, as well as politically-driven projects such as climate financing. The ultimate goal? A user-friendly system that will roll out this year, leaving the). The mastermind behind this vision, Federal Finance Minister Jörg Kukies (SPD), explained that the deciding factors for specific benefits will fall to the incoming federal administration. By establishing a dependable, secure, and low-hassle framework, we'll be empowered to deliver direct payments to German citizens with greater efficiency.
But what's the meat and potatoes of this mechanism? At its heart lies a network storing bank account details within the tax ID database at the Federal Central Tax Office. Believe it or not, around 13.9 million bank account details are already on file via the Family Benefits Office. On top of that, this basic mechanism is flexible enough to accommodate interfaces enabling automated, income-dependent payments in the future.
Now, it's essential to differentiate this direct payment scheme from other payment-related developments dotted across Germany's regulatory landscape. While the term "direct payment mechanism" hasn't been explicitly used in recent updates, there have been a few payment-related advancements worth mentioning:
Stepping into the Payment Zone
- Virtual IBANs: Known for improving payment precision and curbing bank charges[1], Virtual IBANs are governed by the German Banking Act (KWG §24c) and overseen by BaFin. Complete IBAN registration, along with anti-money laundering compliance[1], is required.
- Instant Payments: The European Central Bank advocates pan-European instant payment solutions as part of its retail payment strategy, although specifics for Germany remain unspecified[2]
- B2B E-Invoicing: Large taxpayers (>800k EUR) must adopt EN 16931-compliant e-invoices by 2027, followed by all taxpayers by 2028[5]. This initiative primarily targets invoicing rather than direct payment execution.
Implementation & Purpose
1. Virtual IBANs
- Purpose: Simplify incoming payments, cut down on bank fees, and promote transparency[1].
- Implementation:
- Credit institutions must document all issued IBANs, including virtual ones, in BaFin's file system[1].
- Compliance with Payment Services Supervision Act (ZAG) and GwG for anti-money laundering checks[1].
2. ECB's Pan-European Strategy
- Purpose: Unify disparate payment systems throughout the EU, promoting instant settlement[2].
- Implementation: Collaboration with the European Payments Council to normalize standards[4].
Regulatory Framework
- BaFin Oversight: Access points to monitor IBAN issuance and payment services via KWG and ZAG[1].
- SEPA Compliance: Adherence to Bundesbank's 22-digit structure (DE + checksum + bank code + account number)[1].
- E-Invoicing: Mandatory formats (Xrechnung, Peppol BIS) for B2G from 2025, with B2B phase-in[5].
If discussing a particular direct payment initiative missing from this list, it might still be in the proposal phase or part of broader ECB harmonization efforts. The focus of recent updates has been on e-invoicing and virtual account infrastructure rather than the development of new payment rails.
The direct payment scheme, spearheaded by Federal Finance Minister Jörg Kukies (SPD), is rooted in the use of Virtual IBANs, a mechanism governed by the German Banking Act (KWG §24c). This mechanism aims to simplify incoming payments, reduce bank fees, and promote transparency.
In the future, automated, income-dependent payments may be enabled through interfaces within this system. This flexibility is already present in the mechanism's design, with around 13.9 million bank account details stored in the Federal Central Tax Office's database.
The SPd-backed scheme should also be differentiated from other payment-related developments, such as the European Central Bank's advocacy for pan-European instant payment solutions or the mandatory e-invoicing initiative.
Establishing a dependable, secure, and low-hassle framework, this direct payment scheme will empower us to deliver direct payments to German citizens with greater efficiency, ultimately enabling climate finance and financially supporting businesses.
