EU to remove cost disparities in cross-border payments


By the end of 2008, direct automatic debit payments such as mortgage instalments should cost the same across the EU, regardless of whether they are carried out within a member state or involve a cross-border transaction inside the European Union.

In February, the European Commission adopted a report which suggests extending the provisions of Regulation 2560/2001 to direct debit payments.

Direct debit payments are executed by a bank automatically, following instructions from the customer. A typical example is the payment of fixed expenses such as rent or mortgage instalments. The customer sets an order and a beneficiary, and the bank pays accordingly every month.

Thus far these operations have been more expensive, and often impossible, when carried out through cross-border transactions. Now, legislative action from the Commission “could be expected in autumn 2008,” according to a press release issued on 26 February. The new measures would then enter into force in the following weeks.

European banks have already agreed to harmonise direct debit payment procedures by November 2009.

The Commission is also requesting that balance of payments reporting obligations be gradually lifted. The obligations are applied to payments above 12,500 euros, which are still in place in some EU states. Brussels considers them to hamper the development of the Single Euro Payments Area (SEPA). They are currently used for the preparation and communication of monetary policy, although they are being gradually replaced by other statistics collected directly from enterprises.

This week also saw the first meeting of the Commission Expert Group on electronic invoicing. The objective of the group is to remove barriers to e-invoicing in Europe in order to create a single and more efficient European system. The experts are supposed to present a list of recommendations by the end of 2009.

Internal Market and Services Commissioner Charlie McCreevy said: "The Regulation on cross-border euro payments has already brought real benefits to consumers. We have seen price reductions in many countries. We now want to build on this by improving consumer protection and by extending the scope of the Regulation to direct debits. We also want financial institutions to provide consumers with clear and transparent information on their payment services which can be easily compared between banks and countries."

UEAPME, which represents small and medium-sized enterprises in Europe, has often stressed "the absence of rules concerning remittance information, which is crucial for tools such as e-invoicing and e-accounting, as well as on the practicalities surrounding debit transfers".

"Consumers have been waiting for far too long to reap benefits from the achievement of the Single Payment Area. There is a dire need to improve on payment efficiency, security and protection," said BEUC, which represents European consumers.

The European Bank Federation (EBF) "recommends that for the successful roll-out of products and services by banks based on the SEPA Direct Debit Schemes, SEPA countries implement a common legal framework for payments and, in particular, ensure a consistent interpretation and transposition into national law of the Payments Services Directive".

Despite the introduction of the European common currency in 1999, cross-border payments have remained more expensive than equivalent domestic transactions.

To fill this gap, the European Commission in 2001 adopted an immediately binding regulation that eliminated cost unbalances for payment card transactions, withdrawals from cash machines and credit transfers. The result is that the same bank cannot apply higher fees if these operations are carried out by a customer in another EU member state.

At the same time, EU institutions are moving towards harmonisation of payment rules across the European Union. In 2007 the Payment Services Directive was adopted with a view to entering into force by the end of 2009. Since January 2008, the Single Euro Payments Area (SEPA) has been in operation. It focuses first on credit transfers (see EURACTIV 29/01/08).

  • Autumn 2008: Possible EU legislative action in the field of direct debit payments.
  • 1 Nov. 2009: Deadline for the introduction of a SEPA payment instrument for direct debits.
  • By end 2009: Commission Expert Group on electronic invoicing expected to present its report.

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