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Euro banks unhappy with proposed e-payment rules

Tighter security and fewer fees would interfere with the 'business model'

Internet Security Threat Report 2014

The European Payment Council has taken issue with a number of the European Commission's proposals to try to make direct debits and credit transfers across the continent easier and cheaper.

The council, which is a group of European banks and financial institutions helping to standardise e-payments, is unhappy with the changes to the process of creating a Single Euro Payments Area (SEPA) that will allow money to move freely around the Eurozone.

The EPC has been getting its members ready with the technical specifications they'll need to get all their payment systems to talk to each other, but the upcoming SEPA regulation, which will give a mandatory deadline to the alignment process, has rubbed the banks up the wrong way.

The Commission is mulling over whether to get rid of mandatory fees for direct debits, have two deadlines – one for credit transfers and one for direct debits – and introduce mandatory checks on direct debits.

The council claims the new rule gives the Commission unprecedented control over payment systems, which have traditionally been decided by market forces. In other words, it doesn't want regulations to decide how payments work, it wants whatever people will pay for and the banks are willing to provide to be the deciding factors.

"It is neither warranted or efficient that business rules and technical standards are defined and evolve by law," the chair of the EPC and executive at ABN AMRO Gerard Hartsink said in a presentation response to the proposed regulation.

"Self-regulation by banks in the past 30 years has created and maintained effective, secure and stress-resistant payment systems."

The group also insists that getting rid of "transaction-based multilateral interchange fees" – a fee paid between the two banks or payment service providers for cross-border direct debits – will interfere with its individual firms' business models.

"Payment service provision is a commercial offering; a viable business model is needed," Hartsink said.

If the commission won't remove the ban on fees, the council wants a "sunset clause" added, which would mean the fees were gradually phased out.

"This would enable banking communities to develop new direct debit business models," the EPC said in a canned statement.

The banks are also opposed to mandatory checks on direct debits, which they say will push up the price of direct debits for the consumer and turn people back to less efficient payment methods because the system will become more complex.

One of the aims of the SEPA is to bring down the cost of moving money around the Eurozone and the EPC says mandatory checks will defeat this aim, although this doesn't come up in its argument against abolishing direct debit fees, saying only that it's "not in consumer interests".

Another aspect of the draft SEPA regulation indicates a need to review the EPC's governance, which the council insisted misrepresented it.

The assistant general manager of Banco Santander Javier Santamaría, who also chairs a SEPA payment scheme working group at the EPC, said that the EPC should not be part of a legislative text.

"The EPC is a private initiative and we don't wee why a private initiative should be represented in a legislative document," he said.

He added that though the council had developed its payment schemes in response to the European Central Bank and the European Commission, it was still a separate and private group.

The council is currently the subject of a European Commission antitrust investigation over allegations that it was stopping non-bank payment providers from entering the market for payment service provision.

It said during the presentation that while its intention was "to be as open and transparent as possible in its communications with its stakeholders and the media", it wouldn't be commenting on the investigation. ®

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