Banks foresee higher costs for SEPA than PSD


European banks expect to spend between €10 and €100 million each to apply the new provisions of the Payment Services Directive, the EU legislative initiative designed to increase competition in the payment sector and facilitate a gradual migration to a non-cash economy, according to a new survey.

The poll, carried out in June across 30 major EU banking institutions by the payment system consulting organisation PSE Consulting, reveals that banks expect relatively limited costs but minimal competitive benefits of the new directive. On the basis of the answers collected, PSE Consulting estimates that the total cost for banks will be €6 billion by November 2009, when the directive is supposed to enter into force. In addition, almost 60% of the sample are sceptical about the actual advantages that the new rules will bring (see our Links Dossier on the PSD).

The survey comes as the banking sector voluntary agreed to establish the Single Euro(pean) Payment Area (SEPA), an initiative to harmonise bank procedures with the aim of creating a genuine EU market for payment services. According to the consultancy TowerGroup, SEPA costs the EU banking sector around €10 billion in investments, much more than the implementation of the PSD (see our Links Dossier on SEPA).

The two initiatives are expected to bring benefits for consumers, who will be able to enjoy cheaper and more competitive payment services throughout the EU, as the Commission keeps pointing out. But banks themselves are set to profit from SEPA and the PSD by gaining easier access to other EU national markets. Indeed, the relative majority of the financial institutions interviewed by PSE Consulting (37%) consider the increased cross-border competition as the most positive effect of the PSD on their revenues.

The following table explains the differences between SEPA and the PSD:




Euro + Currencies of Member States

Geographical coverage

EU + EEA + Switzerland + potentially other partners



Interbank relationships

Bank-consumer relationship

Legal status

Self regulation


Services regulated

Direct debt, credit transfer, payment cards

Payment services including mobile money, low-value payments, e-money

Providers affected


Banks, credit institutions, e-money providers, postal services, supermarkets, money remittance services, etc.

Involved changes for financial institutions

IT, back-office activities

Contracts, contractual relationships with customers

Estimated costs for the banking sector

€10 billion

€6 billion

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