Payments hopes rise

The European Commission’s proposal to create a single payment area for card transactions could still be approved in Parliament with a single reading after support from EU finance ministers this week.

French centre-right MEP Jean-Pierre Gauzès, who is drafting the response of Parliament’s economic and monetary affairs committee to the proposal, said that even though the Council of Ministers had not reached agreement on all outstanding issues, strong expressions of support for the directive, and evident determination to reach a compromise, had sent a sufficiently strong signal to the Parliament for it to postpone until early next year a vote that had been scheduled for 17 December.

This leaves open the possibility of clearing the directive on a single reading early next year and keeps on track the timetable for launching the first stages of a Single European Payments Area (SEPA) in 2008.

The directive is an important part of European Commissioner Charlie McCreevy’s efforts to lay the foundations for the creation of SEPA. He is relying on a combination of voluntary initiatives by the banking sector through the European Payments Council, backed up by EU legislation, to create a single payments market in euros which would include credit and debit cards and other payments systems. The Commission has said such a move could reduce payments costs by 2-3% of EU gross domestic product.

One area of contention is the clause which would establish capital requirements for new, non-bank "payments institutions". McCreevy is anxious that capital adequacy levels should not be set so high that they inhibit competition.

The European Commission’s proposal to create a single payment area for card transactions could still be approved in Parliament with a single reading after support from EU finance ministers this week.