Est. 3min 05-09-2008 (updated: 28-05-2012 ) bank_people_02.jpg Euractiv is part of the Trust Project >>> Languages: Français | DeutschPrint Email Facebook X LinkedIn WhatsApp Telegram The European Commission will allow banks to temporarily charge more for certain financial transactions to encourage them to invest in a smooth transition to the Single Euro Payments Area (SEPA), the platform aimed at making cross-border payments as easy as domestic ones. A helping hand The Commission’s decision is an attempt to grant incentives to credit institutions, increasingly strained by the recent turmoil on financial markets, to speed up the deployment of SEPA. Indeed, the banking sector has been claiming it will otherwise not be able to respect the November 2009 deadline for launching a SEPA direct debit scheme across the EU. A direct debit allows a user to instruct his bank to carry out regular payments on his behalf. It is particularly useful for bill charges. A consumer no longer has to remember to pay his monthly electricity bills as his bank does it for him, using his bank account of course. Companies can also lighten their bureaucratic burden by using such a direct debit service. So far, the operation is only possible at national level, but SEPA would make it doable at European level. But for this to happen, banks need to invest money, particularly in updating their systems (EURACTIV 24/07/08). In exchange, they want incentives. Brussels responded to this need yesterday (4 September) by agreeing to turn a blind eye to banks charging “transitional” interbank fees (so-called multilateral interchange fees or MIFs) for direct debit services. Consumers worse off? In practice, acceptance of MIFs will allow the bank issuing a direct debit for its client to charge the receiving bank a fee, which at the moment can vary from three to 90 eurocents. Such fees are often passed on to the customer and, if the customer is a company, it will likely transfer the cost to its clients. For example, if an Internet provider has to pay a fee for every direct debit it receives from its clients, it will increase its charges, goes the argument. The Commission has in fact challenged the legality of multilateral interchange fees imposed by Visa (EURACTIV 27/03/08) and Mastercard (EURACTIV 04/03/08) on international card transactions, based on the same argument that consumers are being unfairly penalised. But now the Commission is saying such fees are legitimate, provided that they are justified by banks’ actual costs and are limited in time. Moreover, the fees applied to SEPA transactions may not be higher that those used at national level by the existing systems, which will be gradually replaced. Nevertheless, both consumers and SMEs are unhappy with the measure, considering it as a negative signal which is not fully justified. Read more with Euractiv EU clears Porsche's Volkswagen takeover The announcement by the Commission on Wednesday evening (23 July) came as a blow to German trade unions and to the Land of Lower Saxony but it could give the luxury carmaker a helping hand in meeting the stringent new emissions targets planned by the EU. Subscribe now to our newsletter EU Elections Decoded Email Address * Politics Newsletters Positions EU Competition Commissioner Neelie Kroes said: "It may prove necessary to have a multilateral interchange fee for cross-border SEPA direct debits in the very initial stage. But we will have to be convinced that these fees will be strictly limited in time and objectively justified - that they are for example not aimed at providing additional profits to banks." Internal Market Commissioner Charlie McCreevy stated: "The SEPA direct debit scheme is one of the key elements in establishing a single euro payment area. It offers enormous potential for individuals and businesses to manage cross-frontier payments on the basis of a single bank account. Most national direct debit schemes are free and I would expect that the introduction of SEPA direct debits would not involve any increase in fees for customers." European Central Bank Executive Board Member Gertrude Tumpel-Gugerell stated: "It would not be acceptable that bankers are not able to deliver the SEPA direct debits by November 2009. A European solution has to be found by the banks which are also agreeable to the competition authorities. In this respect, the idea of maintaining at national level the same interchange fee for national legacy and SEPA schemes during a limited transitional phase should facilitate the rolling out of the SEPA direct debit scheme. This would also ensure the necessary level playing-field in the national context for the SEPA direct debit scheme and the national legacy direct debit schemes". Gerhard Huemer, director for economic and fiscal policy at UEAPME, the association of the European small and medium enterprises, commented: "Multilateral interchange fees can be acceptable only if they are transparent and if it is demonstrated that they are strictly necessary. At the moment this has not been proven yet," he told EURACTIV, warning of the extra charges that companies might be forced to pay. Anne Fily, an economics officer at BEUC, the European consumer organisation, commented on the Commission's green light for multilateral interchange fees by telling EURACTIV: "Even if it is only for the short term, it is not a good signal to consumers". On direct debit in general, she added: "We are still wondering where the consumer's interest lies in switching from well-functioning national systems to SEPA." The European Banking Federation did not have any comment to make. The European Savings Banks Group (ESBG) "regrets the announcement by the European Central Bank and the European Commission that a default interchange fee for direct debit transactions will not be permissible “after a short transition period”. Although the relevant information had been available to the Commission since October 2006, this position communicated a year prior to a possible launch of the SEPA Direct Debit Scheme will impact all payment services both in terms of pricing transparency and innovation", reads a statement. BackgroundThe Single Euro Payments Area, or SEPA, is an industry initiative seeking to extend the possibilities offered by the common European currency to electronic and non-cash payments. At the moment, cross-border transactions in Europe are only possible under a range of different national schemes that make them more complicated and less reliable. The first phase of SEPA has already been in place since January 2008. It concerns credit transfers in euro, with the final objective of making them as quick and cheap at EU level as at national level. The second step should be introduced by November 2009, with the creation of a SEPA common instrument for direct debit operations. Finally, all payment cards in the EU should be replaced with SEPA-compliant cards by the end of 2010 (Links Dossier). Timeline 1 Nov. 2009: Deadline for the introduction of a SEPA payment instrument for direct debits. 1 Nov. 2009: Deadline for the implementation of the Payment Services Directive. 31 Dec. 2010: Deadline for the replacement of current credit cards with SEPA-compliant cards. Further ReadingEuropean Union European Commission:Guidances to industry on SEPA direct debit(4 September 2008) [FR] [FR] [DE] European Commission:Memo on SEPA(28 January 2008)
