Kroes issues monopoly warning

European Competition Commissioner Neelie Kroes recently expressed concerns that the Single Euro Payments Area (SEPA) could, contrary to its pro-competitive aims, end up creating a monopoly or a duopoly on the retail payments market.

Speaking at a conference organised by think-tank Eurofi this month (3 December), Kroes said that banks should not necessarily replace existing payment card schemes with international systems such as Maestro, Visa and MasterCard.

The commissioner said that the roll-out of SEPA over its 31 member countries should be driven by market forces. Banks, she said, should be free to choose whether it made good business sense to join schemes.

"Experience shows that when national card schemes have migrated to international brands, as has happened in the UK and Austria, there has been an increase in fees charged to retailers. But guess who pays in the end: these fees were ultimately passed on to customers in the form of higher prices," she said.

Consumer groups are concerned that SEPA will ultimately end up benefiting businesses more than citizens. Levi Nietvelt, economic adviser at consumer group BEUC, said that ordinary banking services should still be made available to consumers. There was a risk, he said, that banks migrating to new schemes might increase charges for all customers whether or not they use cross-border payment facilities.

"There might be an increase in the fees you have to pay. It’s very good for people who travel, but for pensioners, it might well be that what they need is a basic payment service and nothing more," he said. "We’re not saying that we are against SEPA. But the normal banking services should still be offered."

An official working at the European Commission’s directorate-general for the internal market denied that there would be price increases for consumers. "All the evidence is that prices will go down," he said. "That’s one of the important deliverables of SEPA, that prices through competition will go down."

European Competition Commissioner Neelie Kroes recently expressed concerns that the Single Euro Payments Area (SEPA) could, contrary to its pro-competitive aims, end up creating a monopoly or a duopoly on the retail payments market.