Financial Regulatory Forum

ECB official urges deadline for switch to pan-EU payments

July 6, 2009

   LONDON, July 6 (Reuters) – A deadline is needed to ensure full switchover to a single pan-EU system of bank payments and help industry and public authorities plan ahead, a top European Central Bank official said on Monday.
   The European Union’s executive European Commission has launched a public consultation on whether such an end date is needed and, if so, when it should be.
   The EU has adopted a law to introduce a single euro payments area (Sepa) so that consumers can send and receive payments in euros and use their payment cards anywhere in the 27-nation bloc, all from one bank account.
   The aim is to exploit the single currency to boost competition and choice in services to bring down prices for the EU’s 495 million consumers. National payments systems would be shut down with transactions moved to the new Sepa system.
   “We have strong signals from banks that an end date would help them to work with their customers to use the new standards,” said Gertrude Tumpel-Gugerell, a member of the ECB’s executive board.
   “I personally think an end date would be useful,” she told reporters, but declined to say what the deadline should be.
   Sepa has already reached a “tipping point” and is now being used for more than just cross-border payments, she said.
   Tumpel-Gugerell said a new European forum was needed by the end of 2009 to steer the region’s retail payments market as this could not be left to the banking industry alone.
   “We can learn from the experience of the Payments Council in the UK,” she later told an industry conference.
   The introduction of direct debit under Sepa was on track for November 2009, she said, but there was still not enough competition in cross-border cards where MasterCard <MA.N> and Visa Europe dominate.
   “Competition concerns are an on-going concern,” she said.
   The EU’s executive European Commission has agreed to allow banks to use the so-called interchange fee system for an interim period to encourage them to launch cross-border direct debit schemes.
   The Commission has said the interchange fee system as used by MasterCard is illegal and a court case is pending. It is also probing Visa Europe’s interchange fee.
   Tumpel-Gugerell said the Commission’s grace period for using the interchange fee had given banks the reassurance they need.
   “It’s not seen as a hurdle for card schemes any more. It seems that clarity is now provided,” she said.
   “Overall, I am quite confident for the outlook for Sepa. It has made considerable progress since last year, especially on direct debits and settling the interchange fee question,” Tumpel-Gugerell said.
   “The concept of European card schemes is becoming more concrete. We simply need more competition,” she said.
   Public authorities, for example, in the Netherlands, Spain and France are also making preparations to join Sepa but more needs to be done in coming forward with innovative payments services that use Sepa, Tumpel-Gugerell said.
   (Reporting by Huw Jones; Editing by Victoria Main/Ruth Pitchford)

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