Battle looms over cross-border payments

Date: 22/02/1996

By Fiona McHugh

A CLASH between finance ministers and MEPs now looks inevitable following the decision of the European Parliament's influencial economic and monetary committee to broaden the scope of new rules governing cross-border payments.

Keen to limit the reach of the draft directive to small-scale bank transfers, ministers decided last year that it should apply only to payments of less than 25,000 ecu for the first two years, and to those worth less than 30,000 ecu thereafter.

But the committee, whose lead is likely to be followed by the assembly as a whole when it votes on the draft law next month in Strasbourg, has called for the ceiling to be raised to 50,000 ecu as soon as the directive comes into force.

“I think it is crazy to have a change in the ceiling after two years,” explains Dutch MEP and rapporteur Karla Peijs.

The committee also voted to raise the maximum guaranteed refund from 10,000 to 20,000 ecu, but shied away from demanding the 50,000-ecu ceiling originally envisaged - a concession which Peijs hopes will smooth the way for an agreement with member states.

One of the issues most likely to cause problems between the two, however, is the planned implementation timetable for the directive, which sets a six-day deadline for transfers and insists on full disclosure of costs.

Members of the Parliament's monetary committee want governments to transpose the directive into national law within 18 months, whereas ministers want member states to be given 30 months to put it into force.

Peijs argues a 30-month deadline would be too long. “I think that it is ridiculous that we might have monetary union by 1999, but we would not have a common system for making cross-border payments,” she said.

The proposal put forward by the Commission in 1994 is designed to force banks to speed up and reduce the cost of small cross-border payments. It was drawn up after a Commission study found that it took an average of 4.8 days to transfer money from one EU country to another and cost an average of 25.4 ecu.

Money transfers, usually made by banks sending money to corresponding banks in the destination country, vary hugely both in quality and cost.

The study also found evidence of double-charging, where both the recipient and the sender of the cash were charged for the same transaction, and of poor quality information given to the public on transfer services.

Banks had pressed for an optional arrangement, arguing that small transfers accounted for only a small part of total payments and that firms would be able to negotiate their own deals with banks advantageously. The Commission gave them a chance to self-regulate, but lost patience when the system remained unchanged despite their pledges.

If ministers fail to agree to changes made by the assembly, MEPs will be forced into formal negotiations with ministers to try to resolve their differences.