Implementation of the Single Euro Payments Area (SEPA) (debate) 
President
The next item is the oral question to the Commission by Sharon Bowles on the Single European Payment Area (SEPA).
Sharon Bowles
author. - Mr President, my predecessor as Chair of the Economic and Monetary Affairs Committee brought a resolution on SEPA to this Chamber on 12 March 2009. Not much has changed and now I bring mine here in March 2010. Can I say that we really do expect progress before the Ides of March 2011.
The Commission has made an effort in its SEPA roadmap of September 2009. We agree with the actions in the six priority areas, but a large majority of the respondents of the Commission's own consultation said that it was necessary to fix an end date in order to incentivise the reluctant. Those are the Commission's own words. Now, you cannot put it any straighter than that, and we suggest that the binding end date be fixed for no later than 31 December 2012.
We live in times when there are increasing numbers of cross-border purchases and contracts. Having common standards for these cross-border payments, credit transfers and direct debits is an important part of the health and growth of the single market. It is much better for consumers when they do not have to check whether there are different arrangements from country to country or get caught out because there are.
So consumers are not unfavourable to this project, but they do have to have security, and it is a worry if there are not sufficient safeguards for the management and checking of the mandate of direct debits. Payment systems take up one third of the operating costs of banks so there is a lot in it for banks to get SEPA right, but they cannot have it all their own way. The European Payments Council must recognise that consumers are worried about frauds and confidence tricks, and who is looking out for them. Some busy people may not notice a new transaction, especially if the amount is a common one. Therefore, there must be possibilities for the consumer to have extra safeguards around the setting up of direct debits. It is no good to say that banks will pick up all the frauds. Banks have not picked up fraudulent cheque practices. For example, in France, there have been problems with back-of-cheque endorsement frauds on cheques made out to a bank being paid into a third-party account. This has happened four years after the UK Financial Services Authority closed that loophole. It is not satisfactory to solve these problems with add-ons or additional offers of services which do not protect everyone. That is the fraudster's charter. It is not satisfactory to be done country by country. That is the cross-border fraudster's charter.
So, Commissioner, we look to you to be firm, fix these problems and come forward with solutions for SEPA direct debits by 30 September 2010.
This year should see a significant increase in the use of SEPA by public authorities, so the moment is right to press forward, especially asking Member States that have not made plans to participate in the surveys. We also ask that those - or maybe it is that - Member State that has not solved the problem of continuing legal validity of existing direct debit mandates to get on with it and solve the problem. Perhaps the other main stumbling block is the multilateral interchange fee for card payments and, again, this needs resolving in a way that is also in accord with competition policy.
These are important issues and, Commissioner, we say that the moment has come to be firm and set an end date so that we can successfully migrate to SEPA and make this project - which is very important for the single market - truly take off.
Michel Barnier
Mr President, ladies and gentlemen, I am pleased to see you again and I would like to start by expressing my agreement with what Mrs Bowles just said, namely that consumers need security. That echoes an ambition that I stated during my hearing before this House for consumers to reclaim the domestic market through specific projects. One of these is the single euro payments area (SEPA). It is a complicated project but its aim - that of simple financial transfers within Europe - justifies our action.
Mrs Bowles, ladies and gentlemen, I would like to thank Parliament for its support for SEPA and to give concrete responses to the five points mentioned by Mrs Bowles, which correctly identify the problems that we must solve. I am also mindful of the preliminary work that was carried out and of Mrs Berès' and Mr Gauzès' extremely positive and interesting reports on matters relating to SEPA.
It is true, Mrs Bowles, that a deadline could give the SEPA project some of the impetus it needs. That is what I believe. An expiry date would indeed have several positive effects. It would make the legal position clearer, allow the planning of necessary investments, and bring an end to the coexistence of two payment systems - national and European - which leads to needless expenditure.
A deadline presupposes legislation. My staff are currently analysing various options and their analyses should be finished next spring. We will decide on the most effective course of action on that basis. I can confirm for you that it will be based on legislation.
As I speak to you now - it is early March - it is really too early for me to announce that end date. I have noted your suggestion of 2012, Mrs Bowles, and I will bear it in mind. Whatever the case, we will have to permit operators an adjustment period, for example, 12 months for transfers and at least 24 months for withdrawals. Another advantage of a legislative initiative could be to deal with some of the issues raised by your resolution and by the Economic and Financial Affairs Council in order to improve the quality of SEPA products for users.
My second point, Mrs Bowles, is that we need clarification on multilateral interchange fees. It is an important issue for the financing and therefore the development of SEPA cards and withdrawals. In late 2009, the Commission published a discussion document which included new data as well as the opinions of various types of users on this issue We will touch on the result of that public consultation in a moment. This issue must, of course, be analysed on the basis of its compatibility with competition policy, for which my colleague, Mr Almunia, is responsible.
Nevertheless, I would like to make several comments. There is a short-term, transitory system in place for withdrawals until November 2012, allowing multilateral interchange fees of up to 8.8% for cross-border transactions. I note, however, that more than 70% of withdrawals in Europe are now carried out without the imposition of any multilateral interchange fee on the transaction. The multilateral interchange fee, therefore, does not seem to be the only financing mechanism, or even the most effective one.
For cards, as you know, the Commission has adopted a decision against MasterCard's cross-border multilateral interchange fees. We did the same for Visa. The procedure regarding MasterCard is being appealed before the Court of Justice. As part of this procedure, specifically with regard to the level and type of these fees, the European Commission has already clarified the rules of the game. The Court's final rulings should contribute to giving this a firmer legal basis.
Thirdly, as I had the opportunity to mention at my hearing, I am in favour of launching a European initiative on cards. A series of initiatives is being developed in the private sector, for example, the Monnet project, PayFair, and the European Alliance of Payment Schemes. Mrs Bowles, ladies and gentlemen, I will soon be meeting the main players in this market in order to jointly assess their willingness to move forward and perhaps to coordinate their initiatives and determine a framework for action. At the same time, the Commission will be analysing, from the perspective of competition regulations, the arguments presented by the card systems in order to justify their financing system.
The fourth point relates to the future of governance. As you know, the SEPA does not benefit from a pan-European system of governance. That is why there has been a joint initiative with the European Central Bank to create a SEPA council that brings together a limited number of high-level representatives of the payments industry and users. The objective is not to make decisions but to facilitate dialogue to ensure the SEPA project is properly implemented. The first meeting will take place in the spring.
Mrs Bowles, ladies and gentlemen, I will personally keep Parliament well informed about the work of the SEPA council, particularly when I appear before the Committee on Economic and Monetary Affairs.
My final point concerns respect for the interests of users, a subject which you mentioned, Mrs Bowles. It is unfortunate, but the bank payments industry often seems somewhat reluctant to recognise users' concerns. Improvements can be made to the way in which the European Payments Council governs, which would encourage transparency and the recognition of users' concerns. The SEPA council will constitute a good platform for moving towards these improvements.
I also intend to take more direct action on specific points, in particular, the improvements that must be made to the withdrawals system. The Commission and the European Central Bank will be writing very shortly to the European Payments Council to request that they incorporate certain modifications in response to consumers' concerns. I cannot exclude the possibility that the Commission may take measures if it notices obstacles preventing this, in order to take account of the worries of consumers.
Mr President, Mrs Bowles, ladies and gentlemen, you will have understood that I am determined to act and make SEPA work, as I told you in January. I will, of course, rely on the support of this House and your determination in making these improvements.
Jean-Paul Gauzès
Mr President, Commissioner, I do not doubt your determination, and you have, in the points that you have just covered, already answered most of the questions we were going to ask and that are raised by this resolution.
I will simply remind you that the difficulty of the subject stems from the fact that the single euro payments area (SEPA) is an initiative of payment institutions, particularly banks. Also, may I say that the purpose of the directive on payment services, for which I had the honour of being rapporteur, was specifically designed to enable us to identify and define the legal instruments needed in order to put this European payments system in place. Another purpose of the directive was to improve competition in the area of payments, and Title II made provision for the creation of payment institutions, which were intended to break the monopoly of the banks.
This complicated beginning certainly explains part of the delay, but it is certainly also true, as you have said, that payment services establishments - that is, banks - have demonstrated a certain reluctance to implement this mechanism. There is an explanation: the cost. I am sure you already know this, but to give you an idea: in France, for example, the cost of implementing SEPA is higher than that of changing to the euro.
There has also been the matter of interchange fees, which deserves to be tackled. There are two issues involved. The first, as you mentioned, is that of conformity to the rules of competition, but the second issue, which must not be neglected, is that the payment service is a commercial activity for payment institutions which must, therefore, be fairly remunerated. What has been condemned is the possibility of setting interbank margins unilaterally, arbitrarily and without consultation, when these rightly appear excessive.
Commissioner, we are counting on you to ensure that the progress we have made with the creation of a single-payments market can result in the swift implementation of European tools for transfers and direct debits.
Udo Bullmann
Mr President, Commissioner, the Single Euro Payments Area is an important, indeed central, instrument of the European single market. It is thanks to Mr Gauzès that we have got it off the ground. My group is fully behind it and would like to see it working well. I personally also have nothing against us setting a deadline for the migration, and here to me it is not so much a question of whether it takes three, four or five months as the fact that it then actually works.
Whether it actually works depends on two things. Firstly the appeal to industry that it must be end-user friendly. These days, we cannot afford any rumours, any secret resistance, any hankering after the old system. Therefore, it must be functioning properly, also in respect of those who ultimately have to use it.
Secondly, it must, of course, also work for the benefit of the economy. Here I would like to mention one point, which is still a bone of contention, namely the matter of how direct debits will be calculated. Here, the economy does not yet seem to be in a position to propose a sensible model. There are still snags, there are still sticking points and if the economy is not in a position to present a common model that works within the European Union, then the Commission - as stipulated in this proposal for a resolution - must present a concrete proposal within a certain period of time, let us say before the end of the year. It should not be the case that we confront the economy and demand a deadline for the migration, but do not take the initiative to remove the resistance that the payment service providers are obviously not in the position to overcome single-handedly. We need a community initiative here, so the whole thing can work. That is our approach to the discussion.
Martin Ehrenhauser
Mr President, it is good that we have the euro. Small countries like my native Austria would have otherwise come under immense pressure during the financial crisis of 2007.
The other side of the euro coin is, however, the lack of consistency and the lack of accountability, and here there are, of course, some questions for the Commission. Firstly, who is responsible for the lack of control in the euro system? Secondly, who is responsible for the fact that the false budget figures from Greece were not recognised sooner? Thirdly, is it not the case that while we are talking about Greece today, the real problem is Spain? Fourthly, can the European Commission guarantee that Spain will not submit false budget figures and what is it doing about this?
I demand clarity and transparency and, above all, that those people who bear responsibility are ultimately brought to account. Only then, when these people are actually made responsible, can we guarantee that the rules of the game will, in the end, be adhered to consistently.
Markus Ferber
(DE) Mr President, Commissioner, ladies and gentlemen, to begin with, it is right that common procedures should go with a common currency. It is right to consider how these common procedures, which have not yet been implemented everywhere in the Single Euro Payments Area, might be enforced a little better.
On the other hand, I will say quite clearly that we still have to adapt the rulebook in a few places. I myself come from a country where the direct debit procedure is a very widespread procedure, in order to facilitate the processing of certain regular payments.
The procedure that is currently planned in the rulebook is a very bureaucratic, very complicated procedure and therefore, I would be very pleased, Commissioner, if, with regard to a final date - something we all want - this area in particular is tackled once again. On the one hand, there should be no vulnerability to fraud - that is a problem in the cross-border area - but on the other hand, it should also be possible for local charges to be debited, and for any magazine subscription, any insurance premium, any mobile phone bill, and so on to continue to be collected in a simple procedure by the companies concerned.
That is my request and there is also a corresponding passage in our motion for a resolution on this subject, so that we can contribute to ensuring that procedures that have proved successful in the Member States can also be guaranteed after the final introduction of the Single Euro Payments Area.
Othmar Karas
(DE) Mr President, ladies and gentlemen, we are probably all united in our approval of the answers given by the Commissioner to the question and are grateful for them. They are in keeping with the objectives of the European Parliament.
Secondly, I would like to say that the method of self-regulation in the banking area that we have chosen for SEPA is a method in which the organs work well and several hundred banks have joined the SEPA area in a very short space of time. SEPA is part of the single market, it is larger than the euro area, but it is not complete. I am very much in favour of a consistent, legally binding final date, because I hope that with such a date, we will increase the pressure to take care of outstanding questions and the legal obligation to get consistent implementation off the ground. This will allow all participants once again to present everything that still has to be done. A common date is essential to implement the SEPA area as quickly and efficiently as possible and to ensure maximum suitability for the single market.
David Casa
Mr President, SEPA is a commendable initiative that will undoubtedly be of great benefit in improving the efficiency of cross-border payments and turning the fragmented national markets for euro payments into a single domestic one, by enabling customers to make cashless euro payments to anyone located anywhere in the area using a single bank account and a single set of payment instruments.
Another major benefit will result from the reduction of the overall costs to the European economy of moving capital around the region, which is estimated today at two to three per cent of the total gross domestic product. We must remember that the end goal of SEPA was to create a truly domestic payments environment all around Europe, and it is understandable that achieving such an ambitious goal is by no means easy, especially when considering the unfortunate necessity of finding compromises between the often conflicting interests of the pan-European banking community.
The economic crisis has only hindered the process of implementing SEPA standards; this is a costly process and the banks have understandably had other, more urgent priorities in recent times. An analysis of the current situation should be carried out and, I think, a realistic timetable set as soon as possible.
It is now essential that a legally binding deadline for migration to the use of SEPA instruments be established, as my colleague, Mr Karas, has just said. It is unacceptable that to date, there is no concrete schedule in place. The notion that domestic standards should be allowed to run in parallel with SEPA is inefficient and counterproductive.
I therefore call on you, Commissioner, and the Commission, to bring certainty to this already fragile sector and ensure that a legally binding end date for migration to SEPA instruments is finally set.
Elena Băsescu
(RO) I would like to inform you that my country, Romania, is taking some important steps with regard to the implementation of and migration to SEPA. In October 2009, Directive 64/2007/EC on payment services in the internal market was transposed into Romanian legislation. Back in 2007, the Romanian Banking Association, a member of the European Payments Council, took on the role of support organisation for joining the SEPA schemes. In fact, the migration to SEPA Credit Transfer will be completed by the date when the euro is adopted, while, so far, only five banks are planning to join the SEPA Direct Debit scheme in the next three years.
Public administration plays a key role in the process of migrating to SEPA. Public institutions, along with the utilities, telecom operators and insurance companies, can provide the critical mass necessary to boost the SEPA migration process. Romania's Minister for Public Finances announced that Romania will join the SEPA schemes once the euro has been adopted.
Thank you.
Michel Barnier
Mr President, I would like to thank all those who spoke for their contribution. What particularly struck me during the course of Mrs Bowles's initial speech was the fact that the whole Parliament has shown unanimous support for the implementation of the single euro payments area (SEPA), as it had already amply demonstrated in the past. That is confirmed by the draft resolution. It is a project that is two years old and I think that it needs to be implemented now. Once again, I repeat that I have been struck by the unanimity that was expressed again a moment ago on the need to set a deadline.
I therefore confirm my commitment to setting that deadline. Please allow me a few weeks simply to take the time - I believe it will be time well spent - to meet with all of the key players in the banking sector. I will carry out this brief consultation - on this subject and on others relating to the proper implementation of SEPA - and then I will take the decisions quickly, as Mrs Bowles has asked.
SEPA will only be a success if it fully meets the expectations of consumers and the people who use it. I am talking about businesses, particularly small businesses, consumers, and national administrations. The Commission hopes - and it will move in that direction - that the concerns of users are taken into account when implementing SEPA. I would like to say to Mrs Băsescu that I will also pay attention to the efforts of the new Member States - and I know that such efforts exist in your country as well as in others - to be fully included in the SEPA project, which is in everyone's interests.
Finally, with regard to cards, which I mentioned in my hearing, it seems that greater clarity is needed. Once again, I need a few weeks, or a few months at most, in which to hold meetings in order to clarify the key players' intentions and determine the extent to which they are prepared to coordinate or combine their efforts regarding the financing model for a potential pan-European card system. As for the competitive framework in which it should operate, that is a issue that I will have to raise with the banking sectors' key players.
I would like to thank you, Madam Chair, ladies and gentlemen, for the constructive and diligent support that you have once again expressed for the SEPA project. It is matched by the commitment of the European Commission.
President
The debate is closed.
The vote will take place at 12 noon on Wednesday, 10 March 2010.
