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Payments: Commission and ECB support launch of pan-European SEPA Direct Debit; provide guidance to industry

4 September 2008

The European Commission and the European Central Bank (ECB) have encouraged the European Payments Council ('EPC') to move ahead with the launch of the SEPA Direct Debit scheme. Under this scheme, bank customers would be able to arrange direct debits to pay companies with bank accounts in any of the 31 European countries participating in SEPA (Single Euro Payments Area). The Commission and ECB recognise the potential advantages of the SEPA Direct Debit scheme, in terms of economies of scale and increased competition liable to drive efficiency and innovation in the area of payments to the benefit of European consumers and companies. The Commission and the ECB have indicated to the EPC that they would be prepared to support the idea of a 'multilateral interchange fee' for cross border direct debits within the framework of the SEPA scheme on condition that such fees were objectively justified and transitional (applicable only for a limited period).

Internal Market Commissioner Charlie McCreevy stated "The SEPA Direct Debit scheme is one of the key elements in establishing a single euro payment area. It offers enormous potential for individuals and businesses to manage cross frontier payments on the basis of a single bank account. Most national direct debit schemes are free and I would expect that the introduction of SEPA Direct debits would not involve any increase in fees for customers. With today's clarification I would call on the industry to come forward with their detailed proposals so that the necessary decisions can be taken to launch this important project.'

Competition Commissioner Neelie Kroes said "It may prove necessary to have a multilateral interchange fee for cross border SEPA Direct Debits in the very initial stage. But we will have to be convinced that these fees will be strictly limited in time and objectively justified, i.e. are not aimed at –providing additional profits to banks."

ECB´s Executive Board member Gertrude Tumpel-Gugerell stated “it would not be acceptable that bankers are not able to deliver the SEPA Direct Debits by November 2009. A European solution has to be found by the banks which is also agreeable to the competition authorities. But SEPA direct debits have to be rolled out in a little more than one year from now. In this respect, the idea of maintaining at national level the same interchange fee for national legacy and SEPA schemes during a limited transitional phase should facilitate the rolling out of the SEPA Direct Debit scheme. This would also ensure the necessary level playing-field in the national context for the SEPA direct debit scheme and the national legacy direct debit schemes”.

In order for SEPA Direct Debit to take off, the right incentives should be in place. In particular, banking communities where an interchange fee for national transactions exists could be allowed to apply this fee at national level also for SEPA Direct Debit transactions, but only during a limited and well defined transitional phase. At the end of the transitional phase there would no longer be any transaction-based multilateral interchange fee, neither at the national level, nor at the cross border level, neither for SEPA Direct Debits, nor for national 'legacy' Direct Debits.

Direct debit schemes allow bank customers to give companies or organisations authorisation to take money directly from their bank accounts to pay their bills (e.g. gas, electricity, telephone). Currently there are separate national direct debit schemes and it is not possible to establish direct debit arrangements across frontiers in Europe.

For further details on SEPA, see:

European Central Bank

Directorate General Communications

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