Commission shelves payments threat

By Anna McLauchlin

Date: 16/06/05

European Commission plans to force Europe's banking industry to speed up the creation of a pan-European payment system have been shelved, at least for the time being, European Voice has learnt.

Next week the executive's original proposal - minus the extra obligations - will be sent to the rest of the Commission for approval.

Last month, Internal Market Commissioner Charlie McCreevy's department, irritated at the lack of progress being made by the banking sector to make it as easy and cheap for consumers to make payments anywhere in the EU as at home, distributed an 'incentives paper' to a working group.

The paper would have increased the pressure on banks by calling for a market-led standard in payment systems and a standardisation body to oversee the process and could have been incorporated into the soon-to-be-adopted law on the Single European Payment Area (SEPA).

But during discussions European banks criticised the incentives, arguing that the sector was on track to meet its objective of creating SEPA by 2008 and that any regulation would hinder their efforts.

But in March they admitted that their target would be restricted to the eurozone rather than the whole of the EU. Under the new scenario, two pan-euro payment schemes for credit transfers and direct debits, as well as a framework for having a single market for cards, will be up and running by January 2008.

Despite the hard-hitting language in the incentives paper, which accused banks of leaving "questions unresolved and back-doors open", the Commission has, for the moment, put its threats to regulate SEPA to one side, and will plough ahead with its original proposal - known as the New Legal Framework (NLF).

The NLF will set out the basic legal rules for payment service providers to offer services in the EU, such as registration requirements, information to be given to consumers and liability rules, paving the way for the creation of SEPA.

It will be sent for 'interservice consultation' with the rest of the Commission next week prior to final adoption before the summer break.

But it is still likely to face opposition from European banks, who are angry that the plans will open up the payment market to non-banking institutions without imposing similar solvency or management rules.

"We are not happy and we will continue to express our concerns," said Chris de Noose, chairman of the European Savings Bank Group's management committee.

According to sources, the Commission may still launch further consultation on the incentives paper later this year before transposing the elements into legislative action.

Article reports that European Commission plans to force Europe's banking industry to speed up the creation of a pan-European payment system were shelved for the time being, after strong criticism from the banking sector. The Commission decided not to issue an incentive paper in which it was planning to strongly criticise providers of financial services for their lack of co-operation. Instead, it was decided to return to the original approach, the New Legal Framework (NLF).