Single payments area – too little, too late?

The EU has made important progress in moving towards a single payment area over the past year.

It is now expected that harmonised cash and card services for citizens and businesses will be available in the eurozone from the beginning of 2008, with complete transformation of national systems from 2010 onwards.

Citizens and businesses will, within the next four years, be able to make and receive payments in the Single Euro Payments Area (SEPA) as easily, and at the same cost, as in their own country.

SEPA aims to break down barriers in national regulation and to harmonise payment facilities and processes. EU member states outside the eurozone will also have the opportunity to participate.

"I suspect that over the next years it will start to be a reality for the man in the street," says Charles Bryant, secretary-general of the European Payments Council. There will clearly be practical issues on the way to this. We have to get banks and customers ready. Central banks are very involved. They will be participating, monitoring and helping."

The European Payments Council is the body charged with overseeing the restructuring of payment structures across eurozone countries.

Last year, it succeeded in securing the commitment of participating member states on the rulebooks for credit transfers and direct debits, and on the framework that will define the single market for cash and cards. "It’s obviously very important for us to get the engagement of public authorities for the millions of payments they make," says Bryant.

While SEPA deals with the technical structures needed to haul together diverse national systems, the EU payment services directive is the legal framework underpinning the entire scheme. Initially the directive was intended as a consumer rights document, but it has since been developed to cater for the requirements of the business community as well. The proposal is currently being subjected to a first reading by the European Parliament and was recently approved by the European Parliament’s economic and monetary affairs committee. The text, with amendments, is to go before a vote of the full Parliament in October.

Jim Murray, director of the European consumers’ organisation BEUC, feels that consumers have been badly let down by Parliament’s revised version of the directive. "The Commission’s proposal was not that bad. Parliament has weakened it badly," he says. "In general, it seems Parliament’s text leaves a lot of discretion with companies. "Companies often seem to have a lot of discretion to decide when you should be penalised. Our experience is that they have abused this in the past."

Under the revised version of the directive, consumers will no longer be offered credit card protection outside the EU. Murray argues that companies such as Visa and Mastercard, advertise and operate internationally, in any case, and that the European Commission’s original proposal should have been preserved.

The EU has made important progress in moving towards a single payment area over the past year.

• Primary Source