EU agrees cross-border payment overhaul


Finance ministers have backed proposals for an EU-wide payment services system, which aims to make it cheaper and easier to use payment cards throughout the 27-member bloc. New takeover rules in the banking sector were also given the green light.

Finance ministers unanimously approved a general approach on the Payment Services Directive on 27 March 2007. The Directive proposal aims to:

  • Enhance competition by opening markets;
  • harmonise market-access requirements for non-bank payment service providers;
  • introduce a clear and simple set of information requirements, and;
  • standardise rights and obligations for users and providers of payment services.

One of the main sticking points was the requirement for non-bank service providers. Allowing non-bank providers into the payments market would, for example, let consumers make payments with their mobile phones or pay their electricity bill in supermarkets.

The agreement followed intensive discussion by member states between those favouring a more liberal approach on regulatory requirements for non-bank service providers (the UK and Sweden), and those who support a stricter set of rules, namely France, Spain and Italy. In its report on payment service, the Parliament’s Committee on Economic and Monetary Affairs also favours a higher level of regulation (see EURACTIV 18 September 2006).

The compromise formula that member states agreed on allows non-banking institutions to be able to offer credit but only within a limited 12-month period.

Parliament sources suggest that, in the end, the liberal camp had to give in. However, Commission spokesperson Oliver Drewes insisted that the fact that it was voted by unanimity showed that all sides were satisfied with the compromise.

Along with the Payment Services Directive, finance ministers agreed on a directive to improve rules on how banking mergers are approved, making them more transparent and free from political intervention. (see EURACTIV 14 March 2007).

German Finance Minister Peer Steinbrück, who chaired the meeting, said: "This is practical progress on the way to financial integration in Europe."

Internal Market Commissioner Charlie McCreevy stated: "This is a decisive milestone towards making the Single Euro Payments Area a reality. This is a good compromise and contributes to the twin objectives of market-opening and consumer protection."

The Parliament's rapporteur on the payment services directiveJean Paul Gauzès said the deal reached between member states in the Council was "satisfactory", as it included many points contained in the report adopted by the Economic and Monetary Affairs Committee in September 2006.

Guido Ravoet, secretary-general of the European Banking Federation (EBF) welcomed the vote, saying: "We are delighted that a solution has finally been adopted and commend the German Presidency for its efforts in finding a suitable compromise, particularly as a result of a renewed, complete and professional consultation process."

Visa Europe President and CEO Peter Ayliffe welcomed the agreement, but also warned: "We should not lose sight of the next phase, the implementation of this complex piece of legislation in the member states: the success of the directive will depend on how it is implemented."

European craft and SME employers' organisation UEAPME welcomed the agreement on cross-border payment services and warned that "the transition period towards a single payment system will be of the utmost importance. Changeover measures should be state-tailored and as user-friendly as possible."

European consumer organisation BEUC supports the Payment services Directive and said that banks and card companies had been exploiting the lack of harmonised rules for too long.


The new Payment Services Directive, known as the "New Legal Framework", is intended to create a more efficient and competitive payments market. The system is aimed at bringing benefits to consumers, who could save on basic banking costs, which currently range from €34-€252 per year. 

The New Legal Framework will allow the establishment of a Single European Payments Area (SEPA) by 2010. SEPA is to introduce an EU-wide payments infrastructure and aims to improve credit- or debit-card use for consumers across Europe, making it as cheap and easy to use payment cards and facilitating credit transfers across the EU as it is at home.

  • Following “trialogue” negotiations between the Council Presidency, the Parliament and the Commission on 22 March 2007, the directive will be adopted in first reading.
  • The Parliament is expected to waive through the Directive during its plenary session on 23-26 April 2007.
  • The Payment Services Directive is expected to enter into force by November 2009.

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