EU authorities have called on banks to push ahead with plans to introduce a pan-European direct debit payments system, even if interchange fees are initially charged for cross-border transactions.
In a statement the European Commission (EC) and the European Central Bank (ECB) say they have indicated to the European Payments Council (EPC) that they would be prepared to support the idea of a multilateral interchange fee on condition that the charges were "objectively justified and transitional".
In order for Sepa direct debit to take off "the right incentives should be in place", so interchange fees can b applied for Sepa direct debit transactions "during a limited and well defined transitional phase", says the EC and ECB. After this transitional phase all multilateral interchange fees would be scrapped.
The move - which is at odds with the EC's previous statements on interchange fees - highlights serious concerns about the delay in rolling out cross-border direct debit system in the singe euro payments area.
Europe's banks missed the first Sepa deadline for direct debits due in part to delays in passing a new Payment Services Directive (PSD). Now ECB executive board member Gertrude Tumpel-Gugerell says it would "not be acceptable that bankers are not able to deliver the Sepa direct debits by a November 2009 deadline.
"A European solution has to be found by the banks which are also agreeable to the competition authorities. But Sepa direct debits have to be rolled out in a little more than one year from now," states Tumpel-Gugerell. "In this respect, the idea of maintaining at national level the same interchange fee for national legacy and Sepa schemes during a limited transitional phase should facilitate the rolling out of the Sepa direct debit scheme. This would also ensure the necessary level playing-field in the national context for the Sepa direct debit scheme and the national legacy direct debit schemes."
However the move does appear to back-track on moves by Competition Commissioner Neelie Kroes to crack down on the non-negotiable interchange fees that banks and card companies charge for cross-border card transactions.
"It may prove necessary to have a multilateral interchange fee for cross border Sepa direct debits in the very initial stage," says Kroes in the statement. "But we will have to be convinced that these fees will be strictly limited in time and objectively justified, i.e. are not aimed at providing additional profits to banks."
However last year Kroes ordered MasterCard to cut the interchange fees it charges for cross-border credit and debit transactions in Europe, as it violated EC Treaty regulations. MasterCard lodged an appeal against the ruling but suspended the fees in June in order to avoid heavy daily penalties.
In March, the EC launched an investigation into the interchange fees charged by Visa for cross-border card transactions. The new probe follows the expiry of a 2002 antitrust agreement between the card company and the EU's competition commission when Visa agreed to reduce levels of interchange fees for processing card transactions in return for immunity from legal action.
MasterCard has previously warned that the EC's actions over interchange fees could could deter "investment in Sepa initiatives" and warned that banks may not be inclined to invest in Sepa while the EC debates what to do with interchange fees.
In its progress report last year the ECB called on the banking industry to set up a rival debit card scheme to challenge the dominance of MasterCard's Maestro in Sepa, but warned that the current uncertainty in the market surrounding interchange fees was "hampering the transformation of existing domestic schemes and the start of potential new schemes offering a European alternative".