On 8 June the permanent representatives of EU Member States approved the text of the Hungarian presidency amending the European Commission’s (EC) draft single euro payments area (SEPA) migration regulation. EU Member States act as co-legislator; the other co-legislator, the European Parliament, is due to vote on this subject at committee level on 27 June.
The EU Member States confirm that existing national credit transfer and direct debit schemes will have to be discontinued and replaced by pan-European ones by 1 February 2013 and 1 February 2014, respectively, which will mainly impact payment end-users (individuals, small and medium-sized enterprises (SMEs), corporations, government entities, etc).
Unfortunately, the great majority of EU Member States that either do not use direct debits or use them only rarely prevailed, with the consequence that interchange for direct debits (compensation for the service that debtor banks are mandated to provide to creditor banks) will be banned (from 1 November 2012 for cross-border transactions, and from 1 February 2018 for national transactions). The approved text also enlarges the perimeter of consumer protection for direct debits far beyond the current, tested practice in those Member States that record the bulk of today’s 21 billion direct debit transactions, thus increasing significantly the production cost of that service.
“The SEPA Migration Regulation text agreed on 8 June not only sets end dates for the migration from existing schemes, it also sets an end date for payment innovation in SEPA,” said European Savings Banks Group (ESBG) managing director Chris De Noose. “Without any interbank service remuneration mechanism allowed there is no room for co-operative developments which alone enable the interoperability required in a network industry.
“Without interchange we have to expect a standstill, fragmentation and the emergence of oligopolies. This is not what banks set out to achieve with SEPA and this is not what EU citizens deserve. We do hope that the European Parliament, which expressed strong support not only for SEPA but also for an interbank service remuneration mechanism, will make sure the two are reconciled in the final text,” he added.
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