EN    EN EN 
EN    EN  EUROPEAN COMMISSION 
Brussels, 16.12.2010 
SEC(2010) 1583 final 
  
COMMISSION STAFF WORKING DOCUMENT 
SUMMARY OF THE IMPACT ASSESSMENT 
  
Accompanying document to the 
 
Proposal for a 
 
REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 
 
establishing technical requirements for credit  transfers and direct debits in euros and 
amending Regulation (EC) No 924/2009 
 
(Text with EEA relevance) 
SEC(2010) 1584 final 
 SEC(2010) 1585 final 
 COM(2010) 775 final 
 
EN 2   EN TABLE OF CONTENTS 
1. Introduction................................................................................................................ .. 3 
2. Problem definition........................................................................................................ 3 2.1. Reasons for the slow migration to SEPA..................................................................... 3 2.2. Effects of slow migration w ithout an end-date: a baseline  scenario (no intervention) 4 
3. EU’s right to act and justification ................................................................................ 5 4. Objectives.................................................................................................................. ... 5 
5. Policy options.............................................................................................................. .6  
6. Analysis of impacts and comparison of options .......................................................... 6 6.1. Impact of additio nal incentives .................................................................................... 6 
6.2. Impact of setting a SEPA  migration end-date.............................................................. 6 
6.3. Comparison of baseline scenario versus setting an end-date....................................... 7 
6.3.1. Comparison in terms of achie ving the specific objectives........................................... 7 
6.3.2. Comparison in terms of stakeholder impact................................................................. 7 6.4. Technical sub-options for the implementation of a SEPA migration end-date ........... 8 
7. Monitoring and evaluation ........................................................................................... 9 
EN 3   EN 1. INTRODUCTION  
The vision of a Single Euro Payments Area (SEPA)  aims at creating an integrated market for 
electronic payments in euro, with no basic di stinction between national and cross-border 
payments. For electronic payments, a large numb er of different national payment formats, 
standards, and rules still exist across the EU . SEPA shall provide Eu ropean citizens and 
businesses with low cost, user-friendly and reli able payment services, and create favourable 
conditions for increased competition and deve lopment of payments-related innovations. 
The success of the SEPA initiative is very important in the current economic, monetary as 
well as political context. The potential direct and indirect benefits of SEPA for the wider 
European economy exceed EUR 300 billion over a six-year period – assuming that migration 
to SEPA payment instruments is comprehensiv e and rapid. Two crucial milestones on the way 
towards the realisation of SEPA  have already been achieved: the launch of the SEPA Credit 
Transfer (SCT) on 28 January 2008, and the la unch of the SEPA Direct Debit (SDD) on 
2 November 2009. 
SEPA was originally conceived as a primaril y market-driven project. The pan-European 
schemes are designed and implemented by the European Payments Council (EPC), a coordination and decision making body set up by the European banking sector. However, 
there is increasing recognition by all categories of stakeholders that a legally binding end-date 
may be necessary to achieve successful project completion. 
The scope of this impact assessment is limited to two payment instruments, euro credit 
transfers and euro direct debits.  
2. P
ROBLEM DEFINITION  
Full integration of the payment market w ill only be accomplished once pan-European 
payment instruments replace the national legacy instruments. At the current stage however, pan-European payment instruments are far fr om substituting national payments. As of 
April 2010, only 7.5 % of all cr edits transfers processed by clearing and settlement 
mechanisms were executed in the SCT format. An  extrapolation of this data results in the 
projected completion of SEPA after more than 30 years of migration. 
2.1. Reasons for the slow migration to SEPA 
Root cause: Uncertainty of SEPA comp letion and phase-out of legacy products. The lack of 
a common time horizon encourages market players on the supply and demand side to delay migration efforts. As long as existing legacy  payment instruments can be used, payment 
service users will postpone the re quired migration efforts. On the other side, banks shy away 
from necessary infrastructure and marketing inve stments for SEPA until they are certain that 
customers and their systems are 'SEPA-ready'. He sitation on the supply si de is exacerbated by 
the perceived lack of clarity on an appropriate long term bus iness model for SDD complying 
fully with EU competition rules. Both sides of the market – supply and demand – are waiting 
for the other one to move first. 
Reluctance to invest: fi rst mover disadvantage. Payment service provide rs (PSPs) deciding to 
market the new SEPA instruments early and ac tively have a major first mover disadvantage. 
EN 4   EN During the transition period these PSPs still have to support duplicate costs, i.e. for both the 
existing payment systems as well as the new SEPA system.  
Missing incentive for PSPs to develop SEPA products fully meeting user needs. As long as 
there is no certainty about SEPA completion PSPs can continue to offer existing legacy products to their customers a nd do not have a sufficient incen tive to develop and actively 
market SEPA products which meet all customer requirements. 
Fragmented demand side and low level of SEPA awareness. The market for payment services 
is characterised by the demand side (payment service users) being much more fragmented 
than the supply side (PSPs) a nd not aware of SEPA benefits.  
2.2. Effects of slow migration without an end-date: a baseline scenario 
(no intervention) 
Untapped economies of scale due to diver ging payment standards and processes. Despite the 
existence of SCT and SDD payments domestic tr ansactions, are still do ne predominantly in 
national legacy formats. In 2009, there were still over 20 different national processing 
infrastructures and schemes for retail euro payments.  These differences hamper the inter-
operability of payment services between Memb er States and impede the realisation of 
economies of scale effects. 
On the demand side, businesses operating in a multi-national environment still need to 
organise their treasury operations  and cash pools at national le vel. They have to maintain 
relationships with many PSPs offering different  kinds and levels of services and using 
different payment formats. 
Limited competition in the EU payments market . Currently, any PSP planning to enter 
a foreign market for payment services needs to  fulfil a number of purely national technical 
and business requirements. The complexity an d the resulting cost of such adjustments 
represent a significant barrier for operators which want to offer their services abroad. 
Cross-border mobility of payment service users is also an important requirement for effective 
competition in the payments market. The opening of a payment account in another 
Member State today is often refused by PSPs on the mere basis that the consumer is not 
a resident or a national in the Member State co ncerned. Consequently, the choices of users are 
often restricted to the incumbents of the national markets and the provision of payment 
services on a cross-border level is non-exis tent or more complic ated than necessary. 
As regards direct debits specifically, the persistence of business models based on multi-lateral 
interchange fees (MIFs) between PSPs in a li mited number of Member States, set up to 
finance the whole operation of the direct debit system, also restricts competition and prevents the emergence of an effective, efficient and competitive market. 
Hindered innovation. A fragmented payments market impairs the emergence of efficient 
pan-European payment related innovations, su ch as online and mobile payments or 
e-Invoicing. As innovative services  mostly emerge at national le vel only, there is a risk that 
market fragmentation is increased and perpetuated.  
Non-productive investments and duplicate opera tional cost for legacy and SEPA systems.  
Many participants in the European payments ma rket suffer from duplicate, transitional costs 
of providing or using payment services. Simultaneously mainta ining national legacy payment 
EN 5   EN platforms and a new pan-European SEPA plat form requires significant extra resources and 
leads to a missing return on already taken investments. 
A protracted migration to SEPA would result  in an overall loss of EUR 43 billion for the 
economy just over six years period. The nega tive effects would be spread over all 
stakeholders with the exception of consumers. 
3. EU’ S RIGHT TO ACT AND JUSTIFICATION  
By its nature an integrated euro payments ma rket requires a Community-wide approach as the 
underlying standards, rules and pro cesses have to be consistent across all Member States. This 
supports the aim of Article 3 of the Treaty on the European Union stipulating an internal 
market and an economic and monetary union w hose currency is the eur o. The alternative to 
a Community-wide approach would be a system of multilateral or bilateral agreements whose 
complexity and costs would be prohibitive as compared to legislation at European level. 
An intervention at EU level therefore complies with the subsidiarity principle. 
4. OBJECTIVES  
In accordance with the identified problems, the following policy objectives are identified: 
General: 
– To increase the efficiency and competitiveness of the EU payments market by 
realising economies of scale and opera tional synergies on both the supply and 
demand side. 
– To create an open and level playing fiel d for competition in the payment service 
market at European level and facilitate downward price convergence for payment services in Europe. 
– To establish a pan-European platform from which innovative and value-adding 
payment services and products can be launched. 
Specific: 
– To achieve full operational integration of the payments market in Europe for credit 
transfers and direct debits. 
– To eliminate excess complexity and the dupl icate cost resulting from the need to 
maintain multiple payment platforms on the supply and demand side. 
Operational: 
– To create transparency and market certain ty regarding SEPA completion for credit 
transfers and direct debits and the pha se-out of corresponding national legacy 
payment instruments. 
EN 6   EN 5. POLICY OPTIONS  
Three main scenarios can be envisioned: 
No intervention – baseline scenario.  Under this scenario, SEPA migration would be left to 
market forces. 
Give new impetus to SEPA migration by additional incentives. In this scenario the SEPA 
migration process could be accelera ted and reinforced by a series of measures at the level of 
Member States.  
Setting a SEPA migration end-date.  Under this scenario, an end date for SEPA migration 
would be set by a Regulation. National legacy payment inst ruments would need to be 
phased-out and replaced by pa n-European instruments. 
6. ANALYSIS OF IMPACTS AND COMPARISON OF OPTIONS  
6.1. Impact of additional incentives 
Slow SEPA migration process could be in principle boosted  by a series of measures 
undertaken by or aimed at different SEPA stake holders at the national level. On the supply 
side a full scale communication and awareness-raising campai gn, addressed to the payment 
service users would be useful. On the demand si de these measures could be complemented by 
investment support for companies, for example relaxed amortisation rule s, write-off of the 
cost of personnel training or even tax rebate s. In addition, public au thorities could play 
an avant-garde role in the migration pr ocesses and actively promote SEPA payment 
instruments. Some forms of coordination at the EU level could be also contemplated. 
A major advantage of such an approach would be the fact that it does not require lengthy 
legislation procedures and remains quite flexib le. A fundamental weakness of such approach 
is that any set of non-binding measures aimed at  simply accelerating SEPA  migration will not 
resolve the root problem, as  discussed in 2.1. Besides,  such measures may be simply too 
costly in the current economic climate and their added value difficult to measure in terms of increased welfare. 
The option of additional incentiv es is therefore discarded.  
6.2. Impact of setting a SE PA migration end-date 
A study by CapGemini estimates that  the benefits of a swift mi gration from legacy payment 
instruments to SEPA instruments could re ach EUR 123 billion over a six-year period. 
According to the study, the esti mated total benefit results from  an even higher gain on the 
demand side (EUR 175 billion) offset by a loss on the supply side (EUR 52 billion). Benefits 
on the demand side are driven by two factors: 
– operational cost savings due to opt imisation of payment operations; 
– a positive effect from the reduction of bank fees resulting from more intense 
competition. 
EN 7   EN The study predicts that the bene fits on the demand side would be  spread fairly evenly across 
all stakeholders, i.e. consumers, businesses and the public service. These benefits are just the 
direct effects of migr ating to SEPA rapidly. 
In more qualitative terms, an end-date for SEPA credit transfers and direct debits accelerates 
benefits for the stakeholders  in the following areas: 
Increased standardisation leading to comp lexity reduction and economies of scale. With full 
SEPA migration, businesses woul d be able to centralise thei r euro cash management and 
simplify/automate their payment procedures. For consumers, who are becoming increasingly 
mobile standardised cross-border payments would eliminate the need for several bank 
accounts in different countries.  
Increased competition in an open and more transparent playing field. For PSPs, an integrated 
payments market would lower en try barriers across borders, thereby attracti ng new market 
players and intensifying competition.  Furthermore, standardised payment instruments would 
allow consumers, businesses, and public admi nistrations to more easily compare payment 
products and thus allow users to benefit from  more intense competition and better prices.  
Opportunities for pan-European innovation. Through common standards and the creation of 
a European level playing fiel d, a completed migration to SE PA would foster payments 
modernisation and the development of new servi ces such as mobile and online payments, or 
e-Invoicing, on a pan-European basis.  
6.3. Comparison of baseline scenario versus setting an end-date 
6.3.1.  Comparison in terms of achiev ing the specific objectives 
Effectiveness 
Objective/Option Integration of the 
European payments 
market for credit 
transfers and direct 
debits Elimination of duplicate 
cost and excess 
complexity of payment 
systems Efficiency 
Base scenario 'do 
nothing' 0 0 0 
Setting an end-date +++ ++ ++ 
Contribution to objectives:  
+++ (Strong); ++ (Moderate); + (Weak) positive contribution  
– – – (Strong); – – (Moderate); – (Weak) negative contribution; 0 neutral contribution 
6.3.2.  Comparison in terms of stakeholder impact 
Stakeholder Benefits Costs Overall 
effect 
EN 8   EN Businesses Improved cash/treasury management 
Greater liquidity 
Reduced banking fees and internal payments 
admin costs 
Straight-through-processing 
Development of added value services Migration effort 
– new or 
upgraded 
payment 
systems and 
processes 
Staff training  +++ 
Public 
Administrations Reduced banking fees and admin costs 
Straight-through-processing 
Development of added value services 
Increases the benefits of public tendering of 
payment services, since offers could be better 
compared and inefficiencies caused by 
national payment formats should disappear. Migration effort 
– new or 
upgraded 
payment 
systems and 
processes 
Staff training ++ 
Consumers Reduced banking fees/wider range of services 
due to increased competition 
More innovative, user-friendly, secure, and 
convenient payment instruments Change of 
habits – IBAN 
(and BIC 
where 
necessary) ++ 
Banks/PSPs Scale economies/Operational savings 
New business opportunities as competition 
barriers reduced Investments 
for SEPA 
payment 
platform 
Revenue 
impact for 
incumbents 
due to 
increased 
competition + 
Overall effect compared to the baseline scenario 
Based on this comparison, it is recommended to pursue the option of setting an end-date.  
6.4. Technical sub-options for the implementa tion of a SEPA migration end-date 
In order to be effective an end- date needs to be clear ly defined at technica l level. A number of 
sub-options for the end-date implementation exis t in six relevant areas. These sub-options 
have been compared against the sets of criteri a deriving directly from the policy objectives. 
Reference basis for adopting pan-European  credit transfers an d direct debits.  The 
recommended option is to establish an end-date on the basis of general essential requirements 
which need to be fulfilled by pan-European cred it transfers and direct debits. The essential 
requirements will also include the existing inte rnational and non-proprietary standards. Two 
other alternatives were assesse d and rejected, in particular an approach based on existing 
schemes and rulebooks as developed by the EPC and an approach limited to existing technical standards. 
Transaction domain.  It is recommended to follow an approach where the essential 
requirements would apply throughout the whole payment transaction domain. An estimated 
EUR 84 billion of operational savings on the de mand side depends entirely on payment 
market integration extending beyond the inter-bank space. Consequently, the option of 
EN 9   EN limiting essential requirements to  the inter-bank space has been assessed and rejected for the 
above reasons. 
Cross-border opening of bank accounts.  It is recommended to abolish any discriminatory 
treatment of non-residents and non-nationals as regards the opening of payment accounts. 
This would ensure that the full benefits of SEPA in terms of increased competition 
(EUR 91 billion) could be reaped. A continuati on of the current practice has been assessed 
and rejected for the above reasons. 
Product specification.  It is recommended to apply an-end da te also for niche products i.e. 
credit transfers and direct debits which represent low volume payments and offer specific functionalities. However, in order to allow for the necessary adaptations in the pan-European 
schemes, a transitional period in the range  of 3–5 years shall be granted. Two other 
alternatives were assessed and rejected, namely an all-inclusive approach applying to niche 
products in the same way as to standard products, and a permanent exclusion of niche 
products from the essential requirements. 
Member States scope.  It is recommended to pursue the sub-option with a common end-date 
for the euro area and a later common end-date  for the non-euro area, since euro payment 
volume shares in non-euro area represent only an estimated 2 % of all euro payments. Two 
other alternatives were assessed and rejected, in  particular individual  end-dates by Member 
State, and a common unique end-date for euro and non-euro area Member States. 
Deadline.  It is recommended to pursue  the sub-option of separate end-dates: one year after 
entry into force of the Regulation at the latest  for credit transfers and two years for direct 
debits. The sub-option of a common end-date fo r credit transfers a nd direct debits was 
assessed and rejected. 
Clarity on the long term business model for pan-European direct debits.  It is recommended to 
prohibit the general application to every direct  debit transaction of multi-lateral interchange 
fees (MIFs) between PSPs (and measures of equi valent object or eff ect) and to allow MIFs 
only under certain conditions for direct debit transactions which cannot  be properly executed 
or which are being reclaimed  by a PSP. To ensure a level play ing field, bilateral and unilateral 
interchange fees for these transa ctions should also only be allowed if cost based and aiming at 
an efficient allocation of costs to the entity ha ving caused these transactions. The alternatives 
of continuing the current prac tice or imposing a positive or a capped MIF for every direct 
debit transaction have been assessed and reje cted as they would not address the currently 
perceived lack of clarity whic h slows down migration to SEPA. 
7. M
ONITORING AND EVALUATION  
An evaluation is recommended three years after the entry into force of the regulation so as to 
assess how effective and efficient it has been in terms of achieving the objectives presented in 
the impact assessment and to decide whethe r new measures or amendments are needed.