EU to simplify crossborder banking

The Commission has unveiled new proposals to sweep away the obstacles to making payments across borders.

The aim of the proposal, as outlined by internal market Commissioner Charlie McCreevy on 1 December 2005, is to make payments across borders, whether made by credit card, debit card, bank transfer or direct debit, as easy, cheap and speedy as those made within one country.

Currently each member state has its own system for making payments, leading to average bank charges for the consumer ranging from €34 to €252 in different member states. The new proposal will create one single system, so bringing those costs down and saving the estimated 2-3% GDP currently spent on transfers between the competing systems.

The aim is to have a fully functioning single payments area by 2010 and Mr McCreevy would not rule out further ‘incentives’ for banks if they did not look likely to meet this target, although he would not specify what these might be.

The directive will apply to all the 25 EU member states, not just the eurozone but only covers electronic payments, not cheques and cash.

Consumer groups and business alike have welcomed the proposal: for Jim Murray of the consumer organisation BEUC, it is a “bold move in the right direction”.

EURACTIV will provide further details on this proposal in a new Single Payments Area LinksDossier.

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