EN    EN EN 
EN    EN  EUROPEAN COMMISSION 
Brussels, 16.12.2010 
SEC(2010) 1584 final 
  
COMMISSION STAFF WORKING DOCUMENT 
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) 1583 final 
 SEC(2010) 1585 final 
 COM(2010) 775 final 
 
EN 2   EN TABLE OF CONTENTS 
1. Introduction................................................................................................................ .. 5 
2. Procedural issues and consulta tion of interested parties.............................................. 6 
3. Policy context and problem definition ......................................................................... 9 3.1. Background and context............................................................................................... 9 3.1.1. Nature and size of the market concerned ..................................................................... 9 3.1.2. Actual migration status of SEPA ............................................................................... 11 3.2. Problem definition...................................................................................................... 12  
3.2.1. Specific problem: Slow migration to  pan-European credit transfer and 
direct debit resulting in co-existence of national legacy systems and SEPA............. 12 
3.2.2. Effects of slow migra tion without an end-date: a baseline scenario.......................... 16 
3.2.2.1. Effects at macro (market) level.................................................................................. 16 3.2.2.2. Effects at micro (individual market participant) level ............................................... 22 
3.3. The EU’s right to ac t and justification ....................................................................... 24 
4. Objectives.................................................................................................................. . 25 
4.1. General, specific, and oper ational policy objectives.................................................. 25 
4.2. Consistency of the objectives  with other EU policies................................................ 25 
5. Policy options............................................................................................................. 2 6 
5.1. No intervention – baseline scenario ........................................................................... 26 5.2. Give new impetus to SEPA migr ation by additional incentives................................ 26 
5.3. Setting a SEPA migration end-date............................................................................ 26 5.3.1. Option 1 – Self-regulation.......................................................................................... 26 5.3.2. Option 2 – Non-binding Community instrument....................................................... 26 5.3.3. Option 3 – Binding ECB instrument.......................................................................... 27 5.3.4. Option 4 – Binding Community instrument .............................................................. 27 6. Analysis of impacts and comparison of options ........................................................ 27 6.1. Impact of possible additional in centives for SEPA migration................................... 27 
6.2. Impact of setting a SEPA  migration end-date............................................................ 28 
6.3. Comparison of baseline scenario versus setting an end-date..................................... 32 
6.4. Assessment of the instruments for setting an end-date .............................................. 33 6.4.1. Self-regulation......................................................................................................... ... 33 
EN 3   EN 6.4.2. Non-binding Community instrume nt (Commission Communication or 
Recommendation) ...................................................................................................... 33 
6.4.3. Binding ECB instrument............................................................................................ 33 6.4.4. Binding Community instrument................................................................................. 34 6.5. Assessing technical sub-options for th e implementation of a SEPA migration 
end-date...................................................................................................................... 3 5 
6.5.1. Reference basis for pan-European cr edit transfers and direct debits ......................... 35 
6.5.2. Transaction domain.................................................................................................... 38  
6.5.3. Product specification.................................................................................................. 3 9 
6.5.4. Member States scope.................................................................................................. 41 6.5.5. Deadlines............................................................................................................... ..... 43 
6.5.6. Cross-border opening of bank accounts fo r pan-European credit transfers and 
direct debits ................................................................................................................ 45  
6.5.7. Clarity on the long term business mode l for pan-European direct debits.................. 47 
6.5.8. Overview of the chosen sub-options.......................................................................... 54 6.6. Other impacts ............................................................................................................. 55 
7. Conclusions................................................................................................................ 5 6 
8. Monitoring and evaluation ......................................................................................... 56 9. Glossary.................................................................................................................... .. 57 
10. Annexes.................................................................................................................... .. 59 
Annex 1: Key statements by European Inst itutions and stakeholders supporting the 
establishment of an end-date for SEPA migration................................................................... 59 
Annex 1a: Key statements by European Institutions requesting clarification 
for Multilateral Interchange Fee (M IF) for SEPA Direct Debit............................................... 61 
Annex 2: Chronology of key consultations a nd events regarding th e establishment of 
an end-date for SEPA migration .............................................................................................. 63 
Annex 3: Summary of the public consulta tion on SEPA migration (September 2009)........... 64 
Annex 3a: Dialogue with the Industry and Pub lic Consultation on MI F for Direct Debit 
Dialogue with the Industry..................................................................................................... .. 73 
Annex 4: Integrating a fragmented market – the background of the SEPA project................. 79 
EN 4   EN Annex 5: Payment data EU ...................................................................................................... 8 3 
Annex 6: Overview of nationa l SEPA migration plans ........................................................... 91 
Annex 7: SEPA migration progr ess in the Member States ...................................................... 92 
Annex 8: Reasons for slow migration to SEPA ....................................................................... 94 Annex 9: National differences of payment characteristics....................................................... 97 Annex 10: Overview of national payment systems in the EU ............................................... 103 Annex 11: Prices of retail bank account services in the EU .................................................. 107 Annex 11a: Impacts of prohibiting MIFs  per transaction and allowing MIFs 
for R-transactions ............................................................................................................. ...... 109 
Annex 12: Cost-benefit analysis – scope and methodology of the SEPA study 
by CapGemini ................................................................................................................... ..... 118 
Annex 13: SEPA end-date objectives .................................................................................... 120 Annex 14: Benefits of an end-date  and rapid migration to SEPA ......................................... 121 
Annex 14a: Benefits of Prohibiting MIFs per transaction and conditionally allowing 
MIFs for R-transactions thr ough a provision on MIFs in the Regulation on end-dates......... 124 
Annex 15: Cost-benefit analysis for a full SEPA migration with an end-date 
(CapGemini study) .............................................................................................................. ... 128 
Annex 16: Essential requirements for pa n-European payment credit transfers 
and direct debits .............................................................................................................. ....... 132 
EN 5   EN 1. INTRODUCTION  
Secure, rapid and efficient payment system s are crucial for th e conduct of economic 
transactions and to the prope r functioning of the Internal Market. While the euro has 
facilitated cash payments between Member Stat es since 2002, for electronic payments, a large 
number of different national payment formats,  standards, and rules still remain across 
Member States.  
This divergence has been addressed on the lega l side by the Payment Services Directive or 
PSD (2007/64/EC)1. This aims at establishing standardis ed conditions and ri ghts for payment 
services offered in the internal market ther eby benefitting consumers and companies across 
the EU. The Regulation on Cross-Border Pa yments in the Community (EC) No 924/20092 
obliges payment service providers (PSPs) to char ge the same price for cross-border payments 
in euro up to EUR 50 000 as fo r corresponding national payments in euro, irrespective of the 
real costs of transactions. 
Building on this common legal framework, th e vision of a Single Euro Payments Area 
(SEPA) is to create an integrated market for electronic payments in euro throughout the 
European Union. As a result of the introduc tion of open, common payment standards, rules 
and practices, SEPA should make electronic payments across the EU – by credit transfer3, 
direct debit4, debit card, and credit card – as easy as domestic payments within one country. 
The establishment of such an integrated pa yments area has enjoyed strong political 
endorsement at EU and national level. This has encouraged ba nks to develop pan-European 
payment schemes. These schemes are designed and implemented by the European Payments Council (EPC), a coordination and decision- making body set up by th e European banking 
sector. The schemes developed by  the EPC apply to the EU and closely associat ed countries 
with significant euro payment volume, na mely the EEA members (Norway, Iceland and 
Liechtenstein), Switzerland and Monaco. 
The accomplishment of a Single Euro Payments Area is very important in an economic, 
monetary and political c ontext. It is fully in line with the Europe 2020 strategy which aims at 
developing a smarter economy in which prosper ity results from innovation and more efficient 
use of available resources. 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 instruments is comprehensive and rapid
5. 
                                                 
1 http://eur-lex.europa.eu/LexUriServ/LexUriSe rv.do?uri=OJ:L:2007: 319:0001:01:EN:HTML  
2 http://eur-lex.europa.eu/LexUriServ/LexUriSe rv.do?uri=OJ:L:2009: 266:0011:01:EN:HTML  
3 A payment service for the purpose of  placing funds at the disposal of the beneficiary. Both the payment 
instructions and the funds move from the bank of the payer to the bank of the beneficiary. 
4 A payment service for debiting a payer’s account.  The payment transactio n is initiated by the 
beneficiary on the basis of the payer’s consent (e.g. mandate) previously given to the beneficiary, to the 
beneficiary’s bank or to the payer’s bank. It is typically used to make recurring payments, such as for 
utility or telephone bills but can also be used for on e-time payments, in some c ountries even at the point 
of sale. 
5 SEPA: potential benefits at stake , CapGemini, 2007,  
http://ec.europa.eu/internal_market/payments/docs /sepa/sepa-capgemini_study-final_report_en.pdf . 
EN 6   EN Two crucial milestones on the way towards the realisation of SEPA through pan-European 
schemes have already been achieved, namely th e launch of the SEPA Credit Transfer (SCT) 
on 28 January 2008, and the launch  of the SEPA Direct Debit (SDD) on 2 November 2009. 
The latter represents a true innova tion at European level as for th e first time it enables direct 
debits to take place on a cros s-border basis. Actual migratio n from national legacy payment 
instruments to these core SEPA payment inst ruments is, however, lagging behind and mainly 
limited to cross-border transacti ons using the SCT. Migration rates for the SDD are not yet 
available but are estimated to be off to an even slower start. 
While SEPA was originally conceived of as a market-driven project, there is increasing 
recognition by stakeholders that  a legally binding end-date may be necessary to achieve 
successful project completion. Furthermore, the current difficult economic climate acts as a disincentive for significant discretionary investment even if this will be profitable over the long term. Indeed, while the preference of th e Commission has always been for a market-
driven approach, given the importance and the size of the social and economic benefits of 
SEPA, the Commission expressly reserved
6 the right at an early da te to introduce or propose 
further legislation to achieve it. Therefore, to overcome the current inertia and unlock the 
long-term economic potential of an integrated payments market, a SEPA  migration end-date 
could be established through which legacy paymen t instruments would have to be phased-out 
and replaced by SEPA products. This view is sh ared by both, the European Parliament and the 
Council as described below. Detailed statements  supporting an end-date, both from a political 
as well as from a stakeholder vi ew, are provided in Annex 1. 
This impact assessment therefore analyses th e rationale and potential implications of such 
an intervention at EU level. 
Scope covered by the Impact Assessment 
The scope of this document is limited to two payment instruments, euro credit transfers and 
euro direct debits. Debit cards and credit cards are out of the scope of this assessment as 
SEPA card schemes and rulebooks, comparable to those for credit transfer s and direct debits, 
have not yet been designed by the industr y. Although a general SEPA card framework has 
been developed by the EPC, furthe r standardisation work is sti ll required before an end-date 
for card payments s could be envisaged. 
2. PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES  
The present impact analysis for the setting of a SEPA migration end-date was conducted 
between September 2009 and March 2010, followi ng the publication of the Communication 
Completing SEPA: a roadmap for 2009-20127. A Steering Group composed of various 
Commission services (Internal Market and Serv ices; Competition; Ente rprise and Industry; 
Economic and Financial Affairs; Employment, So cial Affairs and Equal Opportunities; Health 
and Consumers and the Secretariat-Gene ral) was established for this purpose8. 
Representatives of the European Central Bank  (Directorate General Payments & Market 
Infrastructure) were closely involved in this process. 
                                                 
6 Joint statement of the Commission and the ECB on SEPA, 4.5.2006. 
7 http://ec.europa.eu/internal_market/pay ments/docs/sepa/com_2009_471_en.pdf  
8 Even though not represented in the Steering Grou p, the Directorate General for Taxation and Customs 
Union has been consulted on the issue of cross-border bank account opening. 
EN 7   EN In its opinion 21 May 2010, the Impact Assessme nt Board (IAB) gave a favourable view on 
the impact assessment but requested a number of  clarifications and im provements. Therefore, 
as recommended by the IAB, analysis of the r easons for slow migratio n to SEPA, including 
the impact of the adverse economic climate, ha s been further developed in Chapter 3.2.1 and 
in Annexes 7 and 8. The option of accelerating SEPA migration through enhanced communication and awareness, particularly  on the demand side, has been added in 
Chapter 6.1 and the rationale behind the proposed  migration deadlines further developed in 
Chapter 6.5.5. Chapter 6.2 and Anne xes 12 and 15 now present a more  detailed analysis of the 
costs and benefits, including analysis at Member  State level, and exte nsive information on the 
scope and methodology underpinning the SEPA study carried out by CapGemini. The arguments for non-discriminatory cross-border account opening have been further developed 
in Chapter 6.5.6. Finally, some reader-friendl y improvements have been made to the 
presentation of the document, including a fu ll summary of the primary SEPA end-date 
consultation in Annex 3, a glossary in Chapter 9 and a summary table of  preferred sub-options 
in Chapter 6.5.7. In the framework of the in ter-service consultation on the proposal for 
Regulation which ended in July 2010, a provisi on addressing the long-term business model 
for pan-European direct debits was adde d. Following the modification of the Impact 
Assessment to incorporate the rationale for a proposed regulatory inte rvention on interchange 
fees and the additional analysis carried out to this effect, it has been examined by the Impact 
Assessment Board. The Board’s recommendations have led to changes compared to the earlier draft aimed at further cl arifying the nature of the proble m and the baseline situation, at 
making the variation in stakehol der opinions transparent and at  strengthening the assessment 
of impacts. Besides, on the initiative of Co mmissioner Barnier, a Public Hearing has been 
organised on 17 November 2010 to 
assist the Commission in the finalisation of its proposal.  
The analysis in this impact assessment builds on the extensive preparatory work and a variety 
of consultations carried out by the Commi ssion since 2006 (see Annex 2 for a chronological 
overview of the main events as well as refere nces to relevant documents and reports). These 
include: 
– A comprehensive study into the costs and be nefits of SEPA migr ation carried out by 
CapGemini Consulting. The final study result s, published in Janua ry 2008, indicate 
that the potential benefits of a rapid migr ation from national payment instruments to 
SEPA instruments9 were around EUR 300 billion ove r a six-year period (2007–2012) 
for the EU economy as a whole. This estim ate was based on the assumption of swift 
and comprehensive migration on both the s upply and demand sides. In contrast, the 
study shows that protracted migratio n has a significan t negative impact. 
– A study10 aimed at preparing the monitoring of  the impact of SEPA on consumers, 
carried out by Van Dijk Management C onsultants and published in August 2008. 
This study provided data on the prices of the means of paymen t and will allow the 
comparison of these data with those whic h will be collected in future studies. 
                                                 
9 The scope of the analysis by Ca pGemini includes credit transfers, di rect debits and payment cards. As 
mentioned previously, the last are not in the scope of this Impact Assessment. As will be shown in 
Chapter 6, however, the ov erall economic benefits of SEPA mainly relate to operating savings on the 
demand side, especially for businesses. The latter make relatively rare use of payment cards for their 
payment operations, consequently the overall share of card payments is low for businesses. Furthermore, having regard to the related processing operations linked to credit transfers and direct 
debits, operational savings are unlikely to be derived from card payments. 
10 http://ec.europa.eu/consumers/rights/docs/SEPA_monitoring_study.pdf  
EN 8   EN – A public stakeholder consultation on whether and how deadlines should be set for the 
migration of existing national credit transf ers and direct debits  to the new SEPA 
payment instruments. The primary consul tation was organised by the Commission 
services between June and August 2009. Re sults were published in September 2009 
and reveal that a large majority of st akeholders generally expressed support for 
fixing, at EU level, a deadline for fu ll migration to SEPA (see Annex 3). 
– Discussions with the banking industry on the SEPA Direct Debit business model. 
These discussions focused on the issue of multilateral interchange fees (MIF)11 and 
led to the adoption of transitional provisions on MIF in Regulation (EC) 
No 924/2009.12 Nonetheless, exchanges of opini ons continued as the long term 
business model for SDD had not been determ ined. In order to provide guidance to 
the banks, the Commission and the ECB i ssued a joint statem ent in March 2009, 
followed by a Commission Working Document in November 200913. A public 
consultation on this document has been completed in December 2009 (see Annex 3a for the summary of its results). 
– Annual consultations on SEPA through the Eu ropean Business Test Panel. The last 
consultation was undertaken in the second half of 2009 and more than 400 enterprises participated. These were composed of 85 % SMEs and 15 % larger 
corporations. The 2009 consultation incl uded questions on phasing out legacy 
payment instruments and setting a SEPA migration end-date. Almost 70 % of the 
respondents argued that SEPA instruments sh ould not only complement but should 
replace existing legacy in struments. Around two thirds of respondents favoured 
setting a migration end-date by regulation. 
– A questionnaire sent to selected banks by the Commission services in 
December 2009–January 2010. This questionnai re concentrated on the specific issue 
of duplicate costs incurred by individua l PSPs for running payment systems and 
processes (payment platforms) for existing national payments and new pan-European 
SEPA payments in parallel. For this pur pose, 19 of the largest banks or banking 
groups in Europe, representing a mix of co mmercial, savings, and cooperative banks 
from nine countries, were selected. A larg e majority of responde nts indicated that 
such costs were significant and therefore suppo rted an end-date for full migration to 
SEPA. Even if a sample of this size cannot be considered fully representative in statistical terms, it can nevertheless be assu med that the replies received from these 
banks are a reasonably valid indication of  the importance of duplicate costs across 
different bank categories and in  different Member States. 
– Similar surveys sent out to payment proce ssors and to payment service users (mostly 
businesses) did not yield a sufficiently high response rate for analysis. Half of the 
respondents however indicated that there were duplicate costs for running legacy and SEPA payment platforms. On the other ha nd, it must be recognised that payment 
                                                
 
11 Multilateral interchange fee is the amount paid by a payment service provider of the payee to the 
payment service provider of the payer as a remunera tion for each direct debit transaction. See Glossary 
in Chapter 9. 
12 Articles 6 and 7 as well as Recital 11 of Regulation (EC) No 924/2009 on cross-border payments in the 
Community. The provisions of these Artic les will expire on 31 October 2012. 
13 For more information and full texts of these documents see: 
http://ec.europa.eu/competition/sectors/financial_services/banking.html / 
EN 9   EN users do not face the same investment pre ssure and do not incur duplicate costs as 
banks and processors since users can delay SEPA migr ation as long as legacy 
instruments are still available. 
– A variety of discussions and exchanges of opinions were held between 2008 and 
2010 with Member States, financial instituti ons, consumer organisations and other 
social and economic partners, notably th rough the existing consultative committees 
on retail payments, namely: the Payment Systems Market Expert Group (PSMEG), 
the Payments Committee (PC) and the EU Forum of national SEPA Coordination 
Committees. As regards PSMEG members, th eir comments closely reflected those 
made in the public stakeholder consulta tion mentioned above. Concerning the PC 
members, almost all of those expressing a vi ew were in favour of setting a binding 
migration end-date. 
3. POLICY CONTEXT AND PROBLEM DEFINITION  
3.1. Background and context 
An overview of the historical background of SE PA and the aim of integrating the European 
payments market is provided in Annex 4. 
3.1.1.  Nature and size of the market concerned 
This chapter analyses the situation of the EU retail14 payments market focussing on credit 
transfers and direct debits. These two payment instruments together represent around 54 % of 
all retail electronic payments in the EU27 in terms of transaction volu me (or around 42 billion 
transactions in 2008)15. In terms of transaction value, reta il credit transfers and direct debits 
represent over 95 % of non-cash payment tr ansactions in the European Union (or 
EUR 248 trillion in 2008, which is roughly 20 times more than the 2008 GDP of the EU). 
                                                 
14 Retail payments typically mean payments on behalf of bank customers, such as individuals, companies, 
and public authorities. 
15 ECB Payment Statistics , September 2009. 
EN 10   EN Graph 1:  Non-cash payments in the EU – volume by payment instrument 
 
Source: ECB, Comparative tables, Retail transactions  
Graph 2:  Non-cash payments in the EU – value by payment instrument 
 
Source: ECB, Comparative tables, Retail transactions  
More detailed volume and value data on th e use of different payment instruments by 
Member State is provided in Annex 5. As mentioned in the introduction, the analysis in this Impact Assessment is restricted to credit transf ers and direct debits in euro. Cards, cheques 
and other instruments are out of scope of this assessment and are therefore not further 
discussed in this document. 
EN 11   EN 3.1.2.  Actual migration status of SEPA 
SEPA is now a market reality . The SEPA Credit Transfer scheme (SCT) has been launched 
on 28 January 2008 and around 4 500 banks, repres enting more than 95 % of the payment 
volume in the EU, adhere to this scheme (s tatus December 2009). Furthermore, the launch of 
the SEPA Direct Debit scheme (SDD) ha s taken place on 2 November 2009 and by 
December 2009 almost 2 700 banks, representing around 70 % of the EU payment volume, adhered to the scheme. 
Scheme adherence is however only one pre-cond ition for the development of SEPA, even if 
a crucial one. Progress in term s of payment market integration is determined by actual usage 
of SEPA instruments and in this respect migr ation results are disappointing. As of April 2010, 
only 7.5 %
16 of all credits transfers processed by cl earing and settlement mechanisms located 
in the euro area were executed in the SCT form at. In most Member States, SCT transactions 
were mainly limited to cross-border transact ions. Public Administrations as high-volume 
payment users were even falling short of this with an average SCT rate of only 1.5 % in the euro area (status September 2009 as co mpared to overall SCT rate of 4.5 %)
17. As regards 
SDD, it is still too early to assess actual migration only a few months after the launch of the scheme. Nonetheless, a first observation can al ready be made: while many banks are already 
reachable for SEPA direct debits, only a very small number of them seem to actually market 
the SDD payments. 
                                                
 
16 Latest figures on http://www.ecb.int/paym/sepa/timeline/use/html/index.en.html . 
17 2nd SEPA Progress Report , Commission Services, November 2009,  
http://ec.europa.eu/internal_market/payments/docs/sepa/progress_report_2009_en.pdf . 
EN 12   EN 3.2. Problem definition 
An illustrative description of the problem and market failure underlying this Impact 
Assessment is provided in the problem tree below. 
 
3.2.1.  Specific problem: Slow migration to pan-Eu ropean credit transfer and direct debit 
resulting in co-existence of national legacy systems and SEPA 
As discussed in the previous chapter, full in tegration of EU payment markets with all the 
expected benefits will only be accomplished once pan-European payment instruments will have completely replaced the national legacy instruments. 
At the current time, however, the pan-European  payment instruments (SCT and SDD) are far 
away from full substitution of  national payment schemes, a lthough the usage rate of SCT 
varies significantly between Member States. Specific target dates for replacing national 
instruments with the SCT and SDD schemes have only been set in a small number of 
countries and often are conditional on attainment of a 'critical mass' of SEPA payments rather 
than defining a concrete deadline. Based on the current SCT migration rate of 7.5 % more 
than two years after launch (see Graph 3 belo w), linear extrapolation would imply complete 
SEPA migration after 30 years. Even in a more optimistic sc enario, it seems very unlikely that 
SEPA migration would be completed in less than 15–20 years without additional intervention. 
Annex 6 presents an overview  of national SEPA migration plans, while Annex 7 provides 
statistics on SEPA migration progress by the Member State a nd identifies possible success 
factors which promote rapid migration. 
EN 13   EN Graph 3:  Credit transfer transactions processe d in SEPA format (in the euro area) 
 
Source: European Central Bank 
While SEPA migration shows a relatively stead y upwards progression, there remain notable 
differences in the degree of SEPA readine ss between the supply (ban ks and other payment 
service provides) and the demand sides (compa nies, public administra tions and individual 
consumers) of the market. As mentioned befo re, the technical capability to handle SEPA 
transactions and offer the co rresponding SEPA payment instru ments already exists on the 
supply side, investment in SEPA compliance has al ready been made (in particular for SCT) or 
is in progress (for SDD). However, many EU PSPs are reluctant to actively promote SEPA 
payments while legacy payments exist. One of the more prominent results of the cost–benefit 
analysis of SEPA migration (see  Chapter 6.2 and Annex 15) is th e fact that due to enhanced 
competition, the supply side is expected to experience sizeable revenue reduction upon full 
SEPA migration. Nevertheless,  major international banks operating across many different 
Member States see an opportunity to increase pa yments market share by offering standardised 
products, a better, more integrated service and the cross-selling of other cash management 
products to 'premium' users, t ypically larger businesses with cross-border activities. On the 
other hand, smaller banks, less internationally or iented, may fear that although they have to 
make comparable investment, they will not enj oy the same business opportunities and will be 
EN 14   EN more affected by revenue compression. At the same  time, there seems to be a view by banks, 
that they have now undertaken the basic SEPA compliance investment and are awaiting more 
commitment in public authority migration and,  in particular, a bind ing end-date before 
actively marketing SEPA. 
The reluctance of EU PSPs to invest in SDD is  exacerbated by the perceived lack of legal 
certainty on an appropriate long term busin ess model for SDD complying fully with EU 
competition rules after November 2012. Although only currently in place in a handful of 
Member States (see below), the business model under focus has been the one of a multilateral 
interchange fee (MIF) per transact ion, i.e. a collectively agreed fee to be paid by the payment 
service provider of the payee to the one of  the payer for each DD transaction. MIFs per 
transaction are taken to be a restriction of co mpetition, in particular by object as such an 
arrangement sets a collectively agreed floor for the fees that payee banks charge to their corporate customers, which in turn will have to  pass on these inflated fees to their consumers 
through their bills. Since the consumer’s own ba nk – the payer bank – r eceives its revenues 
from the payee bank it might not charge the cons umer, who might then thinks he receives the 
service for free whilst the consumer has no wa y of knowing that he pa ys indirectly through 
the company beneficiary of the direct debit an d how much he pays. Ho wever, to incentivise 
banks, in particular the ones which currently r eceive high MIFs, to migrate towards SDD, the 
cross-border payments Regulation (EC) No  924/2009 contains a transition regime with 
respect to the acceptability of multilateral interc hange fees as a financing model for direct 
debit transactions, in force until 31 Oct ober 2012. Under this transition regime, per 
transaction MIFs applied for national direct debits can be maintained, unless competition proceedings at national level would lead to th ese MIFs being decreased, in which case this 
lower level would apply. A transitional defa ult MIF of maximum 8.8 cents for cross-border 
SEPA direct debit transactions (that applies if  no other, lower MIF is agreed) has also been 
set. MIFs for R-transactions (i.e . direct debit transactions that  cannot be properly executed or 
are being reclaimed by a payment service provider
18) are also in place in five Member States, 
three of which also have a MIF per transaction in place. At pres ent the direct debit schemes of 
only six EU Member States – 25 % of the market in terms of volume – operate with a per transaction MIF. Currently, su ch per transaction MIFs exist in Belgium (2 cents per 
transaction), Spain (less than 3 cents), Swed en (11 cents), France  (12 cents), Portugal 
(23 cents), and Italy (25 cents ) and are gradually decreasi ng in most Member States. 
R-transaction MIFs of varying sizes exist in  Austria, France, Germany, Portugal and Spain 
(for a minority of labour in tensive R-transactions Busi ness models with MIFs for 
R-transactions which have been  set up as a financing mechanis m (i.e. not to compensate and 
allocate the costs of R-transactions only) te nd to have equivalent effects to MIFs per 
transaction business models
19. Some PSPs believe that further le gislation is needed to clarify 
the validity of a long-term business model afte r this date. This is clear from the comments 
received by the Commission services to their respective public consultations on end-date(s) 
for SEPA migration and on th e Commission Working Document  on the applicability of 
Article 81 EC to MIFs20. The perceived lack of legal certa inty means that PSPs may try to 
maintain their existing schemes for as long as po ssible and delay the eff ective transfer to the 
SEPA systems. 
                                                 
18 See Glossary in Chapter 9. 
19 See the Commission Working Document on the Applicability of Article 81 of the EC Treaty to 
multilateral interbank-payment s in SEPA Direct Debit , published on 3.11.2009, p. 11. 
20 http://ec.europa.eu/competition/sectors/financial_services/SEPA_working_document.pdf  
 See in particular the responses received from Banque Postale, Deutsche Sparkassen and ESBG. 
EN 15   EN Also, earlier calls for clarity by the European Institutions (for more details please see 
Annex 1a) illustrate the concerns that the lack of such clarity a nd predictability with respect to 
the long term business model is a key problem  inhibiting the effective establishment of 
a Single Euro Payment Area with resp ect to direct debit transactions. 
The perceived lack of clarity ma y therefore lead to a slower ta ke up of SEPA direct debit 
services by banks and providers of  direct debit payment services. This risk of  a slower take up 
as a consequence of a lack of  clarity has in particular be en highlighted by the European 
Central Bank (ECB). In its 7th SEPA Progress Report  published on 21 October 201021 the 
ECB signals that although the launch of SD D was a major achievement, the figures on the 
take up of the system in the first few months after the launc h have been fairly modest, 
amounting to well below 1 % of transactions. Identifying the multilateral interchange fee 
(MIF), as one of the issues that has proven quite complex to solve the ECB notes that the Regulation on cross-border payments only prov ides a temporary charging model for direct 
debits until 1 November 2012. The ECB adds that the financial industry expects the European 
Commission to provide clarity on the long term charging principles  for SDD in order to avoid 
concerns over competition. In conjunction with  the issue of the reluctance to invest 
exacerbated by the perceived lack of clarity, the necessity for the clarity provided to comply 
with competition rules and the earlier guidance al ready provided will be addressed in more 
details further below (see 6.5.7). 
On the demand side (in practice mainly compan ies and public administrations, as consumers 
do not need to undertake any specific migration investment, apart from changing some habits) 
there is an even stronger reason to maintain th e status quo. Basically, as long as the old legacy 
systems remain operational, the demand side doe s not need to undertake any significant SEPA 
investment and can delay migration indefinitely. This attitude will be reinforced by the adverse economic climate which militates against i nvestment – even if in the longer run, this 
will ultimately be to the advantage of users. This assessment is shared by stakeholders. For 
example, anecdotal evidence provided by corporat e treasurers indicates that as long as no 
deadline for migration is set, it remains difficult for them to secure the necessary priority for SEPA-related investment within their comp any. (see also Annex 8: reasons for slow 
migration: reluctance to invest). Public ad ministration migration, which could serve as 
a catalyst for changes, is lagging behind in many Member States (although there are 
exceptions) due to the lack of a coordinated effort, insuffici ent public involvement in the 
migration process and partly due to the comp lexity of the process. As a result, SEPA 
investment by the demand side lags the supply side. 
The danger of a protracted tr ansition period is also exacer bated by the aftermath of the 
financial crisis and the current adverse economic  climate. As mentioned above, this induces 
a very cautious approach to further SEPA investments by some PSPs and companies. Thus, on the supply side, while investment in SCT is largely finalised, the far more costly investments for SDD have been temporarily postponed in several banking communities or 
limited to ensuring only passive SDD reachability as required by law (cf. Article 8 of Regulation 924/2009). In general, most banks have also prune d their marketing budgets for 
SEPA and do not make particular efforts to prom ote existing SEPA solutions. In fact, in some 
cases, particularly outside the euro area, fees for SCT payments, which were initially much 
more attractive than for pre-SEPA payments, have been increased, as banks seek new sources 
                                                
 
21 7th Progress report on SEPA, p. 42, 
http://www.ecb.int/pub/pdf/other/s ingleeuropaymentsarea201010en.pdf , p. 17. 
EN 16   EN of revenue. On the demand side, as mentioned before, many companies find it difficult to 
assign specific budgets to SEPA migration, as it promises savings in the future while existing 
legacy instruments do not requir e any immediate investment. The impact of the most recent 
debt crisis and austerity measures taken by seve ral Member States are also not propitious to 
new investment. Moreover, these types of effect s are aggravated in a network business where 
the utility of the system depe nds largely upon all part ies migrating. Since th ere is no certainty 
that all will move, the safest c ourse is to stick with existing payment products and stagnant or 
slow migration is the result. 
However, at the same time, for early movers, the parallel existence of national and SEPA 
instruments causes significant operational complexity  and extra cost at mi cro level. Individual 
market participants on both the supply and demand sides have to maintain and update 
multiple platforms for their payment processes. At the macro level, this leads to continued market fragmentation with the attended conseq uences, such as: unreali sed economies of scale, 
barriers to competition, price and quality di vergence for payment services, and hindered 
innovation at European level. 
In summary, the SEPA project is far-reachi ng, and complex, and has an impact on many 
different categories of stakeholder. This leads to a number of different perspectives on SEPA 
which are hard to align, especially where a con certed migration effort by the market as whole 
is needed in a network business environment. The result is  gridlock and ma rket failure. As 
long as existing legacy payment instruments ca n be used and banks do  not actively market 
compelling SEPA products, payment service users will for the reasons described above delay the required migration efforts. On the flipsi de, banks will shy away from promoting SEPA 
products (and fully investing in SEPA) until th eir customers are 'SEPA-ready' and due to 
revenue considerations. Furthermore, even thoug h SEPA is highly advantageous to users, the 
high demand side fragmentation and lack of awareness of SEPA benefits, means that the 
demand side will not be able to drive forward migration. In conclusion, both sides of the 
market – supply and demand – will tend to wait fo r the other to move first and for clarity over 
the SEPA migration timeline to  be provided by the regulator. 
Annex 8 provides a more detailed analys is of the individual problem drivers. 
3.2.2.  Effects of slow migration without an end-date: a baseline scenario 
3.2.2.1.  Effects at macro (market) level 
Untapped economies of scale due to di verging payment standards and processes 
Despite the existence of pan-European paym ent instruments (SCT and SDD), payments 
within the EU, especially domestic transactions , are still predominantly in national legacy 
formats. This situation will prevail as l ong as national systems and SEPA co-exist. 
Today, national legacy credit transfers and direct debits significantly diverge across 
Member States. Especially account identifi ers and payment message formats vary highly 
between Member States. Remittance information carried with a payment differs substantially regarding length and format. While in some Member States this information may be 
structured to facilitate fully automatic reconcil iation of payments, in ot hers only short free 
text messages are possible. Most Member States  still use legacy account identifiers (Basic 
Bank Account Number – BBAN), allowing national transactions only. Different identifiers – 
IBAN and BIC – as well as different message formats are used for cross-border credit 
transfers within the Community. Additionally, in 12 Member States users or banks, on behalf 
EN 17   EN of the users, are requested to report all cross- border payments above the level of EUR 50 000 
for statistical balance-of-payment purposes.22 
Annex 9 presents a detailed overview of  these differences by Member State. 
Moreover, the number and variety of payment schemes and processing infrastructures for 
retail payments have not changed significantly  since the introduction of the euro and the 
launch of SEPA. In 2009, there were still aroun d 40 different, national retail payment systems 
in the EU. While 17 of them dealt with payments in currencies other than the euro, this still leaves over 20 different nationa l processing infrastructures and schemes for retail euro 
payments, with different standards, operationa l aspects, cost structures, and levels of 
efficiency. Annex 10 provides an overview  of payment systems by Member State. 
The differences in payment formats and paymen t processes described above represent severe 
barriers for the inter-operability of paymen t services between Member States. More 
importantly however, these differences impede the realisation of substantial economic scale 
effects for those market particip ants on the supply and demand side  which operate or desire to 
operate in more than one Member State. The cu rrent situation therefore results in substantial 
opportunity cost, both for the processing and for the usage of credit transfers and direct debits. 
A study published in the Journa l of Banking & Finance in 2008
23 confirms that there are 
substantial untapped scale economies in paym ent processing. The study suggests that in 
quantitative terms a doubling of the paymen t transaction volume only leads to 25–30 % 
higher operational cost24. 
Varying degrees of payment processing efficiency  also have direct implications on the costs 
of payments incurred by banks. A study undertak en by A.T. Kearney analysed the costs of 
payments for 40 leading banks in Europe in 200725. The results showed th at banks in the most 
efficient EU countries were able  to process an electronic nationa l payment at only one eighth 
of the cost incurred by banks loca ted in least efficient countries. 
Unexploited economies of scale are however  not limited to the supply and payment 
processing side of the market. Payment users, i.e. businesses operating in a multi-national 
environment still need to organise their treasur y operations and cash p ools at natio nal level. 
For this purpose, they have to maintain re lationships with a multitude of PSPs offering 
different kinds and levels of services using di fferent payment formats. All this limits the 
benefits of a common currency and significantly adds to the complexity and cost of the 
                                                 
22 This generates important additional costs on cross-border payments and affects automated processing of 
payments. 
23 Size matters: Economies of scale in European payments processing , C Bejnen & W Bolt, Journal of 
Banking & Finance 33, 2009, p. 203–210,  http://www.sciencedirect.com/science?_ob=MImg&_imagekey=B6VCY-4T1Y3SJ-2-
7&_cdi=5967&_user=586419&_orig=na&_coverDate=02%2F28%2F2009&_sk=999669997&view=c
&wchp=dGLbVlz-zSkzS&md5=3376eb71bdc1124f96e6b907b97a0978&ie=/sdarticle.pdf . 
24 Apart from the payments al ready processed via retail payment system s, there is a substantial untapped 
potential of payments which is still processed via correspondent banking relationships. In some 
countries (e.g. in Germany or Au stria) the share of payments ex changed via correspondent banking 
relationships is still higher than the one exchanged via retail payment infrastructures. Therefore not only 
a consolidation of payment systems might be induced by a successful  SEPA migration, but also a shift 
from correspondent banking to clearing and settlement  infrastructures. This could further increase the 
efficiency of the European  retail payments landscape. 
25 See The SEPA Shake-Out. Challenges in cards and payments , A.T. Kearney, 2008. 
EN 18   EN liquidity management of these businesses. The same holds true for SMEs and 
micro-enterprises which face significant barrie rs to develop efficient payment operations 
when entering foreign markets because of the complexity of setting up new payment 
processes. 
In summary, as long as different national pa yments systems, instruments and formats are 
used, the economies of scale and potential benef its of a fully integrated payments market will 
not materialise which means foregoing subs tantial saving opportunities at EU level. 
Limited competition in the EU payments market 
The payment industry is a netw ork industry and therefore to achieve inter-operability and 
competition, it is necessary to first establis h a substantial degree of harmonisation through 
common standards and processes. Currently, any PSP planning to enter a foreign market for 
payment services needs to fulfil a number of purely national, technical and business 
requirements. In particular, different payment scheme specifications (e.g. different technical 
specifications, testing and certification procedur es) need to be implemented which in some 
cases can take between 6 and as much as 12 months. Also, different payment schemes apply 
different financing mechanisms some of wh ich are under scrutiny by competition authorities 
or could well be challenged for compliance with  competition before national courts (see 
below). This results in complexity, cost and delay which cumulatively represent a significant 
barrier for operators desiring to offer payment services abroad. 
Restricted market entry and mobility for fo reign PSPs limit competition from one direction. 
Conversely however, cross-border mobility of payment service us ers is also an important 
requirement for competition to be fully effectiv e in the payments market. Customers should 
be able to choose the best payment offer on the market, no matter where the PSP offering the services is located, be it in the same Member  State or in another. Higher customer mobility 
across borders promotes more elastic demand which in turn leads to more intensive 
competition. The sectoral inquiry on retail banking by the Commission Services supports the 
conclusion that "…restricted customer mobility has profound implications for the intensity 
and nature of competition in the retail banking industry…".
26 
Experience has shown that ther e are major hurdles to the cro ss-border mobility of consumers 
demanding payment services. The opening of a payment account in another Member State 
today is often refused by PSPs on the mere basi s that the consumer is  not a resident or 
a national of the Member State concerned. Fu rthermore, as European payment users and 
consumers become increasingly mobile, and wo rk, travel, study and retire in different 
Member States of the Single Market, there is a growing need for them to be able to open 
a payment account on a cross-bo rder basis. Although there has been a spectacular growth of 
online banking services at nationa l level, this growth has not be en replicated at a cross-border 
level. In theory, distance is not a relevant parameter for th e provision of online banking 
services but in practice residency obligations blocks the development of this market. Not 
having this possibility creates a gap for a fully integrated payments market in which citizens 
should be able to make all payment transactions from one single payment account which is not necessarily in the country of residence. 
                                                
 
26 http://ec.europa.eu/competition/sectors/financial_services/inquiries/sec_2007_106.pdf  
EN 19   EN This need to open payment accounts on a cr oss-border basis has been confirmed by 
a significant number of complaints which the Commission receives from citizens on a regular 
basis. These complaints concern a la rge number of different Member States27 where a PSP has 
refused to open a payment account on the grounds of  nationality or place of residence (see 
examples in box below). Questions to the C itizen Signpost Service (C SS) of the Commission 
focussing on situations with a cross-bor der dimension corrobor ate these difficulties28. In an 
enquiry run by the Commission Services with  a number of national banking associations29, it 
was confirmed that there were no specific regula tory requirements or limitations at national 
level which would justify a gene ral restriction of payment account  services to residents only. 
Nevertheless, some of these banking associat ions acknowledged that a significant number of 
individual banks refuse to open payment account s to non-residents as a matter of principle30. 
Anecdotal evidence based on citizen compla ints sent to the European Commission: 
– A Belgian resident’s request to open an online bank account has been refused by several Dutch PSPs 
on the basis of him not having a residence in the Netherlands. 
– A German pensioner living in Spain tried to open a bank account with a German PSP for receiving her 
pension but was told she needed a permanent residence in Germany to do so. 
– A Belgian resident owning a flat in London wanted  to open a bank account with a UK PSP to handle 
her rent income but was refused on grounds of not being a UK resident. 
– A request to open a bank account by a Romanian c itizen studying in France was rejected by a French 
PSP on the basis of the student’s nationality. 
Consequently, the choices of users for purchasi ng payment services are often restricted to 
incumbents of national markets and the provision of payment services on a cross-border level 
is either non-existent or much more complicated than necessary. 
Ongoing fragmentation and limited competition in the European payments market are also 
important factors in explaining th e differences in price levels for payments across the EU. The 
price of current account payment services vari es dramatically between Member States as 
a recent study of Van Dijk Management Consu ltants on behalf of the European Commission 
demonstrates31. In particular, this affects consum ers, micro-enterprises and SMEs as 
corporates have stronger bargai ning power and the possibility to  seek tender offers for their 
payment needs. Annex 11 provides a detailed ove rview of the different bank account prices 
across EU Member States. 
                                                 
27 Over the past three years, the Commission Services  have received complaints concerning PSPs in 
Austria, Belgium, Czech Republic, France, Germany,  Italy, Ireland, Luxembou rg, Netherlands, Poland, 
Portugal, Slovakia, Spain and United Kingdom. 
28 Of all questions received by the CSS in relation to financial services during a 14-month period in 2006 
and 2007, 28.6 % of all enquiries concerned the opening of bank accounts. Questions on bank accounts were the leading category of all seven financial services concerned. 
29 In this context, the Commission Services corresponded with national banking associations in Austria, 
Belgium, France, Luxembourg, Netherlands and United Kingdom. 
30 For example, in its letter of 19.9.2008 to the Commission Services, the British Banking Association 
(BBA) wrote that "…many [financial] institutions are concerned over fraud implications of non-
residents’ access to bank accounts, so have  limited their offer to  residents for now". 
31 Van Dijk Management Consultants study for the European Commission, 2009,  
http://ec.europa.eu/consumers/rights/docs/study_bank_fees_en.pdf . 
EN 20   EN In summary, as long as competition in the European payment market is hampered by 
fragmentation along national barriers, simplif ication of payment processes, effective 
competition and downward price convergence will be difficult to achieve. 
In addition to these general aspects, as regard s direct debit specifica lly, the persistence of 
business models based on MIFs per transacti on or on MIFs for R-transactions set up to 
finance the whole operation of the direct debit system also restrict competition and prevent 
the emergence of an effective, efficient and competitive market. 
The reasons why per transaction MIFs restrict competition, are harmful to consumers and, 
according to current market information, are not necessary or indispensable for the efficient 
use of direct debit schemes, have been extensively descri bed in the Commission Working 
Document published in November 2009 that  was followed by a public consultation32. This 
document – inter alia – explained that MIFs result from a collective agreement between payer and payee banks that restricts competition between the payee ba nks on the fees they pay to 
payers’ banks. Such an arrangement distorts the competition between payee banks by setting a 
floor for the fees that payee banks charge to their corporate customers. Companies will have to pass on these inflated fees to their consum ers through their own bills. Since the consumer’s 
own bank – the payer bank – receives its revenu es from the payee bank it might not charge 
the consumer, who might then think he receives the service for free. This is however not true 
as costs are being passed on by the companies to  their customers, the final consumers. The 
consumer has no way of knowing that he pays indirectly through the co mpany beneficiary of 
the direct debit and how much he pays. 
Even if the consumer would know that his bank is charged for the transaction and if he would 
know the level of the fee, the collective character of the fees  prevents the consumer from 
'shopping around' and switching to a bank that will charge less for direct debit transactions 
with counterparties. Commercial enterprises w hose banks are being ch arged this 'minimum 
floor' are equally restricted in eliciting lower banking fees. In fact, how ever, the collectively 
fixed, hidden, fee is not observed by any of the us ers of the direct debit service. Neither the 
companies, nor the consumers are therefore able to verify the level of the fees or exercise 
a competitive pressure on them. 
It is for this reason that it is concluded in  the Commission Working Document that MIFs per 
transaction are taken to be a restrictio n of competition, in particular by object
33. 
As to stakeholder views and the reasons wh y alternative business models to MIFs per 
transaction under which the payer is charged dir ectly appear both more efficient in terms of 
an effectively functioning market to the benef it of companies and consumers, please refer to 
Annex 3a. 
                                                 
32 Cf. footnotes 16 and 17. 
33 Commission Working Document, p. 6. 
EN 21   EN Hindered innovation 
A fragmented payments market impairs the em ergence of efficient pan-European payment 
related innovations, such as online34 and mobile35 payments (e- and m-payments), or novel 
services which precede or succeed payment proce sses in the financial supply chain, such as 
e-Invoicing or e-Billing36. 
These new payment channels could promise signifi cant potential at global level, both in terms 
of economic benefits and user convenience, in part icular for consumers and SMEs. Recent 
estimates by Juniper Research suggest that pur chases via mobile devices of digital and 
physical goods will generate transactio ns worth over USD 600 billion globally by 201337. 
This means that the transaction volume for m- Payments is expected to grow over tenfold 
between 2008 and 2013. Similarly, the market for online payments is growing strongly. Deutsche Bank Research estimates that the turnover in e-Commerce in Europe will be growing from USD 130 billion in  2006 to more than USD 400 billion in 2011, representing an 
average growth rate of 25 % annually
38. e-Invoicing currently expe riences growth rates of 
around 40 % annually across Europe according to studies by Billentis39. The number of 
enterprises currently applying e-Invoicing in Eur ope is estimated to have crossed the 1 million 
threshold (out of a total of 23 million). 
Based on the growth potential indi cated above, it is not surprising that in its conclusions of 
2 December 2009, the ECOFIN Council called " …upon industry to deliver solutions for 
online electronic payments (e-Payments) a nd for mobile payments (m-Payments)…". 
However, market fragmentation currently hinde rs the emergence of potential pan-European 
payment innovations and consumers can only be nefit from these serv ices in their own 
domestic market. Technical differences between  national payment formats and infrastructures 
on which e- and m-services are built represent a major hurdle for the supply side. New market 
entrants or existing payment providers who woul d like to start offering innovative services see 
their business case restricted to the national market  which limits the scalability of the potential 
revenues and therefore discourages  start-up investments. Similarl y, market fragmentation also 
reduces potential economies of scale on the cost  side of these new initiatives and makes it 
difficult for existing schemes, interested in establishing interoperability, to justify this with a viable business case. More importantly, as innovative services mostly emerge at national 
level only, there is a risk that market fragmentation is increased and perpetuated. 
                                                
 
34 Online payments are defined as payments for which the payment instruction and payment data are 
transmitted via the Internet . Online payments can but do not necessa rily have to be performed through 
online banking systems. 
35 Mobile payments are defined as payments whose initiation is performed by using mobile phones. 
36 e-Invoicing is the electronic transfer of billing an d payment information, via the Internet or other 
electronic means between the trading parties – businesses, the public sector, consumers – involved in 
commercial transactions. 
37 Press Release: Juniper Research Forecasts Total Mobile Payments to Grow Nearly Ten Fold by 2013 , 
http://juniperresearch.com/shop/ viewpressrelease.php?pr=106 . 
38 E-Payments: Potenziale in novativer Bezahlsysteme ; S Heng, DB Research, January 2008,  
http://www.dbresearch.com/PROD/DBR_IN TERNET_EN-PROD/PROD0000000000220279.pdf . 
39 E-Invoicing/E-Billing: European Market Overview & Forecast ; B Koch, Billentis, February 2010, 
http://www.billentis.com/ebilling_e-invoic ing_European_Market_Overview_2010.pdf . 
EN 22   EN A multitude of different systems, standards, and rules in different countries also negatively 
impacts the development and security of i nnovative payment methods. A recent Commission 
report40 identified the lack of interoperable and efficient payment solutions as one of the 
major burdens for cross-border e-commerce in th e EU. The report reflects the results of a 
survey on cross-border sales and consumer protection. 63 % of the retail enterprises 
participating in this survey see a higher ri sk of fraud and non-pa yment in cross-border 
electronic sales compared to domestic sales41. 
In summary, the continuation of a fragmented pa yment markets presents a significant barrier 
for the emergence of novel payment means and channels at pan-European level, having 
potential repercussions on the competitiveness of the EU payments market in comparison to 
other regions, such as North America or Asia. 
3.2.2.2.  Effects at micro (individual market participant) level 
Non-productive investments and duplicate oper ational cost for legacy and SEPA systems 
The provision or use of electronic payment serv ices requires a dedicated IT infrastructure. 
The necessary systems and processes for such an  infrastructure need to be developed and 
set-up with significant investments in human  and financial resources. More importantly 
however, payment systems and processes requ ire ongoing maintenance to ensure their 
continuous and seamless integration with all ot her business processes throughout the financial 
supply chain. On the supply side, there is also a significant commercial cost of providing 
payment services which often exceeds the purel y system related cost of payments, for 
example product management, sales,  and client services costs. 
At this stage, many (typically supply-side) participants in the European payments market 
suffer from duplicate, transitional costs of  providing or using payment services. 
Simultaneously maintaining national legacy payment platforms and a new pan-European SEPA platform requires significant extra re sources and leads to a missing return on 
investment already taken. This is particularly true for PSPs wh ich are subject to both technical 
and commercial costs related to the provision of payment services. At the same time, early 
movers to SEPA on the demand side, for exampl e corporates who wish to integrate payments 
on a cross-border basis, also suffer from dupli cate system and process costs. The duplicate 
cost for PSPs and users of payment services can only be eliminated by comprehensive and 
concerted migration to SEPA and the subsequent  closing down of legacy payment platforms. 
The current situation in the pa yment market is characterise d by both the supply and demand 
side delaying at least part of their inve stments into SEPA compliant systems and 
infrastructure because of the uncertainty around SEPA completion. As pointed out above, a linear extrapolation of the baseline 'no-change' scenario wo uld result in completion of SEPA 
only after 30 years. 
According to the cost-benefit analysis, deve loped in the SEPA study by CapGemini (see 
Annex 12 for details on scope and methodology us ed) protracted migration to SEPA would 
result in an overall loss of EUR42billion for the economy as a whole over a six-year period. 
Of this loss, the supply side would incur EU R15billion and the demand side EUR 27 billion, 
                                                
 
40 http://ec.europa.eu/consumers/strategy/docs/com_staff_wp2009_en.pdf  
41 It is therefore not surprising that the European e-Commerce and ma il order trade association (EMOTA) 
in a letter to the EPC called upon banks to come forward with a proper solution for e-Payments. 
EN 23   EN almost completely driven by higher investment  and operational cost due to the running of 
duplicate systems, i.e. for legacy payment products and for SEPA products. 
Table 1:  Baseline scenario: impacts for suppl y and demand side of the market 
Supply side (EUR billion) Demand side (EUR billion) 
Reduced revenues -8 Reduced prices +8 
SEPA investment -7 SEPA investment  -10 
Operational savings 0 O perational savings -25 
Total effect supply -15  
Total effect demand -27 
Source: CapGemini SEPA study 
The negative effects would be spread over all st akeholders with the exception of consumers 
who would realise slight gains even under a sl ow migration scenario, because of general 
downwards price convergence and the absence of the need to invest. 
Table 2:  Baseline scenario: economic effects for stakeholders 
Stakeholder Baseline scenario 
(EUR billion) 
Payment service providers -15 
Corporate businesses -11 
SMEs -11 
Merchants -3 
Public administrations -6 
Consumers +4 
Total effect -42 
Source: CapGemini SEPA study 
Independently, in August 2007 the ECB also conducted a major study into the costs and 
benefits of SEPA on the supply side whic h confirmed the view that a dual SEPA 
implementation phase should be as short as pos sible. A longer migration period would give 
rise to higher costs than a shorter period a ccording to the study. In  particular, the ECB 
estimates that running national and SEPA system s in parallel increases the PSP’s total cost 
base for making payments by around 4.8 %42. In combination with the CapGemini and 
A.T. Kearney studies which measure the total cost of payments in absolute terms, this would translate into additional costs of around EUR 2 billion annually for banks in the EU27 – just for credit transfers and direct debits. 
Anecdotal evidence which the Commission Services  collected in the cont ext of this Impact 
Assessment, clearly confirms the problem of  substantial duplicate costs. As the public 
consultation on SEPA did not explicitly inquire  about duplicate costs for legacy and SEPA 
payments, the Commission Services decided to  contact banks individually to gather 
supplementary information on this specific point. 
                                                
 
42 The economic impact of the Single Euro Payments Area , Heiko Schmiedel, ECB Occasional paper 
series, No 71/August 2007. 
EN 24   EN Of the banks contacted, 15 classified the duplicat e cost of running legacy and SEPA payment 
platforms as 'significant' or 'very significant' . Annual cost estimates of these banks were 
mostly in the range of EUR 5–10 million for system, development and process costs only. However, and more significantly, several banks  stated that 'knock-on' cost effects for 
providing SEPA and legacy instruments simultaneously, such as duplicate product 
management, sales, client services and maintenance cost, could be much higher
43. 
An extrapolation based on the deposit shares held  by these banks in the euro area results in 
an estimated total excess cost of around EUR 500 million for purely system related duplication and a further EUR 1.5 billion if othe r cost components, as mentioned above, are 
included. 
Of the four remaining banks or bank groups responding to the questionnaire, one outsourced 
its payment operations and therefore does not experience the duplication issue itself. Three 
banks or banking groups explicitly mentioned th at they did not think duplicate costs were 
significant. Furthermore, two of the latter pointed out that SEPA  could lead to higher variable 
cost for payment transactions. In conclusion,  even if there were two dissenting opinions
44, 
almost 90 % of the sampled banks confirmed that setting an end-date would support the 
elimination of duplicate cost a nd increase planning visibility for the market as a whole. 
3.3. The EU’s right to act and justification 
According to the subsidiarity principle, Community action should only be taken if the 
envisaged aims cannot be achieved by Member St ates alone. At this st age, national migration 
plans to SEPA exist in almost all Member States. While all thes e plans support SEPA 
migration, only a few aim for the systematic  and full replacement of legacy payment 
instruments by a given deadline. In those nationa l migration plans this deadline is a 'target 
date' determined by stakeholders rather than a mandatory end-date for SEPA migration set at 
Member States level. Moreover, the defined target dates are often contingent on other 
conditions. These plans therefore do not pr ovide sufficient momentum for swift and 
comprehensive migration to SEPA, and are al so not coordinated between Member States. 
Annex 6 provides an overview of migrat ion target dates by Member State. 
By its nature an integrated euro payments ma rket requires a Community-wide approach as the 
underlying standards, rules and proc esses 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 eu ro. Only a European 
approach, co-ordinated on the supply and dema nd side, can unlock the full potential of the 
network benefits. The alternative to a Comm unity-wide approach would be a system of 
multilateral or bilateral agreements whose co mplexity and costs would be prohibitive as 
compared to legislation at European level. A possible intervention at EU level therefore 
complies with the subsidiarity principle. 
                                                 
43 One particular bank mentioned that these costs coul d reach up to as much as EUR 100 million annually. 
44 It is worth pointing out that the two banks with differing views both have substantial payment volumes 
in a single Member State, so that the potential standardisation and scale economy effects provided by 
SEPA are relatively small. 
EN 25   EN 4. OBJECTIVES  
4.1. General, specific, and operational policy objectives 
According to Article 26 of the Treaty on the Fu nctioning of the EU, the internal market shall 
comprise an area without internal frontiers in which the free movement of goods, persons, 
services and capital is ensured in accordance with the provisions of the Treaties. In the 
context of the Community policy and in accordance with the problems identified in Chapter 3.2, the following polic y 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 through non-cash payments standardisation. 
– To create an open and level playing field for competition in the payment service 
market at European level and facilita te downward price convergence for payment 
services in Europe. 
– To establish a pan-European platform from which innovativ e 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 duplicate cost resulting from the need to 
maintain multiple payment platforms on the supply and demand side. 
Operational: 
– To reduce the use of multi-lateral intercha nge fees per transact ion for SEPA Direct 
Debits to the efficient level of zero, and to  ensure that any fees for R-transactions 
support an efficient allocation of co sts to those giving rise to them. 
– 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. 
The link between the problems described in Chap ter 3.2 and the objectives identified above is 
presented in Annex 13. 
4.2. Consistency of the objectiv es with other EU policies 
The objectives outlined  above are consistent with the polic ies and objectives of the European 
Commission. They improve the functioning of th e European market for payment services 
through standardisation and provi de a platform for the devel opment of innovative financial 
services at EU leve l, such as e- and m-Payments , or e-Invoicing. Therefore, the 
accomplishment of the above objectiv es will significantly contribute  to the achievement of the 
Internal Market which is one of the cornerst ones of the EU. Furthermore, by facilitating 
EN 26   EN financial transactions within the EU the obj ectives also support the move to a smarter 
economy, an integral part of the Europe 2020 st rategy. An integrated payments market will 
also facilitate the participation of SMEs in the Single Market. SE PA, and especially its use as 
a platform for e-Invoicing by public administrati ons, can play an important role for delivering 
eGovernment services in Europe. The provision of payments and related value-added services 
by electronic as opposed to paper-based means, can  also contribute dire ctly and significantly 
to the development of a digital and green economy.  
5. POLICY OPTIONS  
In order to address the specific problem id entified in Chapter 3.2.1 and to achieve the 
objectives described above, the problem of co -existence of SEPA instruments and national 
legacy payment instruments needs to be resolv ed. Three main scenarios can be envisioned: 
(1) purely market driven migration to SEPA instruments and no intervention (2) additional incentives to support and acce lerate migration, particularly on demand 
side 
(3) the establishment of a SEPA migration end-date by which national legacy payment 
instruments would need to be phased-out and replaced by SEPA instruments. 
5.1. No intervention – baseline scenario 
Under this scenario, SEPA migra tion would be left to market forces. No future deadlines for 
the replacement of legacy payments by SEPA payments would be defined. 
5.2. Give new impetus to SEPA migration by additional incentives 
In this scenario the SEPA migration process co uld be accelerated and reinforced by a series of 
measures primarily at the level of Member St ates given the specifici ty of current national 
payments markets. These measures would be tailored to stakeholders. No SEPA migration 
end-date would be set. 
5.3. Setting a SEPA migration end-date 
Various options exist: 
5.3.1.  Option 1 – Self-regulation 
Under this option, market pl ayers on both the supply and de mand side of the payments 
market, would agree on a common migration end- date for SEPA credit transfers and direct 
debits. 
5.3.2.  Option 2 – Non-binding Community instrument 
Under this option, a Commissi on Communication, addressed to all stakeholders of the 
payments market, or a Comm ission Recommendation to Memb er States would call on the 
setting of a SEPA migration end-date. 
EN 27   EN 5.3.3.  Option 3 – Binding ECB instrument 
Under this option, an ECB Regulation would esta blish a mandatory SEPA migration end-date 
for credit transfers and direct debits. 
5.3.4.  Option 4 – Binding Community instrument 
Under this option, an EC Regul ation or EC Directive would establish a mandatory SEPA 
migration end-date for credit transfers and direct debits. 
6. ANALYSIS OF IMPACTS AND COMPARISON OF OPTIONS  
The first section of this chapte r (6.1) provides an analysis of possible measures that could be 
undertaken at the Member State level to ac celerate and support SEPA  migration without 
setting an end-date. The second part  of this chapter (6.2)  is dedicated to an  in-depth analysis 
of the impact of the key polic y option discussed in this document – the setting of a SEPA 
migration end-date. After a comparison (6.3) between this policy op tion and the baseline 
scenario discussed in the problem definition, po ssible instruments for setting an end-date are 
discussed (6.4). Subsequently, a number of impl ementing options for the definition of an end-
date are analysed and recommendations made ( 6.5). Finally, the impact of a SEPA migration 
end-date on other policy areas is briefly discussed (6.6). 
6.1. Impact of possible additional incentives for SEPA migration 
The current, slow SEPA migration process coul d in principle be boo sted by a series of 
measures undertaken by or aime d at different SEPA stakeholde rs. A major advantage of such 
an approach would be speed as lengthy legislat ive procedures are not required. This option is 
flexible and should help accelerate migrati on to pan-European payment instruments.  
On the supply side, as discussed in Chapter 3.2.1, the technical capabili ty to handle SEPA 
transactions already exists. Fr om this perspective, the slow  migration progress could be 
therefore addressed primarily by a full scale communication and awaren ess-raising campaign, 
addressed to the payment service users, a nd by active marketing of the SEPA payment 
offerings by EU banks. On the demand side , where SEPA investment and changeover 
processes are far less advanced, these measures  could be complemented by some form of 
investment support for companies, for example relaxed amortisation ru les, write-off of the 
cost of personnel training or even  tax rebates. In addi tion, public authorities, as major users of 
payment services, could play a pioneering role in the migration processes, drive forward the 
migration process by actively adopting SEPA  payment instruments and, consequently, 
promoting them among all other payment servi ce users. Similarly, public authorities could 
also conduct a SEPA communication and awar eness-raising campaign, reinforcing the 
marketing efforts of the supply side.  
Flanking measures could be undertaken at EU le vel. A more prominent role for the EU Forum 
of national SEPA coordination committees and the newly established SEPA Council could be 
envisaged. For example, more media attention co uld be given to the pa n-European scoreboard 
of SEPA migration by public au thorities already prepared by the Commission. Possibly, this 
scoreboard could be extende d to other categories of st akeholder. Coordination and 
cooperation could be intensifie d by increasing the frequency of  meetings. The emphasis could 
be firmly placed on practical, ready-to-use solutions for SEPA migration supplemented by 
bilateral contacts and for example, the twinning  of national projects. These tools would serve 
EN 28   EN to improve cooperation and especially should stri ve to create peer pressure and disseminate 
best practices among national authorities.  
Although such measures are clearly benefici al, there remains however a number of 
weaknesses to such an approach. First, as show n in the problem definition, a root cause of the 
slow migration progress is un certainty about final SEPA co mpletion. Any set of non-binding 
measures aimed at simply accelerating SEPA migration will not resolve this issue, as no obligation for migration is envisaged. Conse quently, there is no guarantee that the full 
benefits promised by an integrated EU payments  market (as discussed in  6.2) will be achieved 
in a reasonable time framework.  
Secondly, to be really effective the envisage d incentives, in particular those aimed at 
companies, will likely have to be of a financia l nature (e.g. more attrac tive pricing of SEPA 
payment instruments than of the legacy paymen ts, financial incentives by the state to promote 
SEPA investment). For example, it does not se em clear that a brochure or a media campaign 
extolling the long-term benefits of SEPA will in the current clim ate be sufficient to galvanise 
companies into making major SEPA investment s. Indeed, while it is recognised that 
considerable scope exists to market SEPA by pu blic authorities in the way that the launch of 
the euro was, nevertheless, some limited communication is alrea dy taking place today. 
Furthermore, in the current economic climat e and against a backgr ound of general public 
expenditure savings, it may be difficult for Member  States to free such resources. Similarly, at 
a public policy level it may be difficult to ju stify such investments when ultimately SEPA 
should be beneficial to users in its own right. 
Thirdly, while increased cooperation between  the SEPA Council a nd the EU Forum beyond 
that which is already taking place today could be beneficial it is not clear that will radically 
alter the existing situation. The same considera tion applies to increasi ng media attention on 
public authority migration.  
Finally, most of these steps would have to be  taken at national level. Consequently, the 
intensity of the media campaign and the degree  of the financial i nducements will vary by 
Member State. This does not provide the necess ary certainty for an EU wide project with 
strong network effects. 
In the final analysis, only a binding end-date will provide the certainty the market needs, 
communication and awareness measures remain important supporting activities for a legally 
mandated end-date, and unless an end-date exis ts, it is difficult to engage in clear 
communication.  
For these reasons the option of communication and awareness measures including additional 
incentives is discarded at this stage and not analysed further.  
6.2. Impact of setting a SE PA migration end-date 
Ensuring the completion of SEPA migration for cred it transfers and direct debits as described 
in the vision of SEPA (Annex 4) would be a major step towards the full integration of the 
European payment market. It would bring substa ntial benefits to the EU economy as a whole, 
including business, public bodies,  and consumers. This was confirmed in a recent survey, 
undertaken among 350 profession als of the financial indus try, in which 61 % of the 
EN 29   EN respondents said that an integrated payments market  is critical or very important for the future 
of Europe45. 
CapGemini estimated that the potential benefits  through rapid migration from legacy payment 
instruments to SEPA instruments could reach  EUR 123 billion over a six-year period (2007–
2012) for the economy as a whole. This estimate  was based on the assumption of a swift and 
comprehensive migration process on both the supply and demand sides. 
According to the study, the estimated total bene fit of EUR 123 billion re sults 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 ar e driven by two factors: First, operational 
cost savings due to optimisation of paymen t operations, straight-t hrough-processing, and 
simpler reconciliation of payment transactions . Second, a positive effect from the reduction of 
bank fees resulting from more intense competition. The negative effect on the supply side is caused by the flip side of lowe r bank fees, i.e. a loss of reve nues for banks in addition to 
investment costs. This loss is however offset by operational cost savings and efficiency gains. 
It is important to point out that this revenue re duction is primarily in relative terms. According 
to the study, in the absence of SEPA, banks  payments revenue would increase from 
EUR 46 billion in 2006 to EUR 73 billion in 2 012. With rapid and deep  SEPA migration, 
bank revenue is forecast to reduce slightly to  EUR 43 billion in 2012. However, at the same 
time through SEPA banks should achieve operati onal cost savings and efficiency gains of 
EUR 15 billion in 2012, so that in absolute term s, bank profitability for payments will still 
rise from EUR 10 billion in 2006 to EUR 21 billion in 2012. 
Table 3:  SEPA impacts, supply and demand side of  the market: 2007-2012- rapid migration 
Supply side (EUR billion) 
(rapid migration)  Demand side (EUR billion) 
(rapid migration) 
Reduced revenues -91 Reduced prices +91 
SEPA investment -10 SEPA investment  -17 
Operational savings +49 Operational savings +101 
Total effect supply -52  
Total effect demand +175 
Source: CapGemini SEPA study 
The study predicts that the benefits on th e demand side would be spread across all 
stakeholders, i.e. consumers, SMEs, corporat es, merchants and the public administrations. 
                                                 
45 Survey on the State of the European Payments Marketplace by the Financial Services Club in 
autumn 2009. 
EN 30   EN Table 4:  Economic effects for stakeholders 200 7-2012: Comparison of baseline and SEPA 
end-date scenario 
Stakeholder Baseline Scenario 
(EUR billion) 
(slow migration) Setting SEPA end-date 
scenario 
(EUR billion) 
(rapid migration) 
Payment service providers -15 -52 
Corporate businesses -11 +51 
SMEs -11 +38 
Merchants - 3 +14 
Public administrations -6 +28 
Consumers +4 +46 
Total effect -42 +123 
Source: CapGemini SEPA study 
As emphasised earlier, these benefits materialis e in a rapid migration scenario which can only 
be guaranteed by the setting of an end-date. 
Moreover, the benefits mentioned above are just  the direct payment ef fects of migrating to 
SEPA rapidly. The analysis by CapGemini showed  also that even more substantial gains 
could be achieved if SEPA were used as a platform for e-invoicing (additional benefits of 
EUR 238 billion over a six-year pe riod). Other value-added services building on the SEPA 
platform, such as pan-European e-Payments or  m-Payments solutions could be expected to 
further contribute to the indirect benefits of SEPA, but no quantitative estimates are available. 
However, a study undertaken by the ECB46 concludes that organisations which embrace new 
technological developments and provide innovative services ar e likely to gain most from 
SEPA. 
Annex 14 describes in more quali tative terms how an end-date for SEPA credit transfers and 
direct debits accelerates benefits for stakeholders. 
Requirements for migrating to SEPA 
High-volume payment users, such as businesses and public administrations, need to change 
their payment systems and processes in order to  migrate to SEPA. For example, migration to 
IBAN and BIC will require significant efforts in terms of changing master data in their IT 
system infrastructure. This requires investme nt and development costs (as quantified in the 
CapGemini estimates above), but also staff trai ning in order to deal  with the changes of 
systems and processes. On the other hand, high volume payment users have anyway to 
regularly update their systems which could soften the SEPA migr ation effect, provided 
account is taken of their 'n atural investment cycle'. 
System and process related invest ments would be more significant for PSPs but it has to be 
noted that most of these investments have alr eady been taken. The majority of banks already 
adhere to the SCT (banks representing 90 % of the payment volume) and SDD schemes 
(banks representing 70 % of the payment volume) . This point about SEPA investment having 
                                                 
46 Cf. footnote 28. 
EN 31   EN already been undertaken by PSPs was confir med in the bank questionnaire mentioned 
previously. The competition effect of SEPA put s pressure on banking fees and revenues. The 
latter effect is conversely an  upside for users of payment se rvices. From a consumer and 
micro-business point of view, SEPA  migration would mainly imply a change of habits, i.e. the 
use of IBAN (and BIC where necessary) instead  of somewhat shorter national bank account 
numbers as used by most national legacy systems47. In these cases, banks could, however, 
help to soften the impact of the require d change by developing user-friendly payment 
transaction templates and automatic, one-off c onversion facilities fo r existing beneficiary 
data. Furthermore, the burden of using the somewhat longer IBAN format should not be 
exaggerated since in an increasingly electronic banking environment the user will only need to introduce an IBAN beneficiary account number once. 
In relation to direct debits, co sts will be incurred in the ne w handling arrangements for direct 
debits, in particular as regards the flow and management of the direct debit mandate issued by 
the debtor. In some Member States, this mandate is kept by the creditor or  the creditor’s bank, 
in other Member States it is kept by the debt or’s bank. The current SEPA schemes are based 
on a creditor mandate flow; hence greater change is required mainly in countries where direct 
debits are handled throug h a debtor mandate flow. 
The issue of possible mandate re-signature coul d arise in the context of migrating to pan-
European schemes. All euro area Member Stat es except one have, however, confirmed in the 
meantime that a legal solution has been found to  avoid re-signature, an extremely burdensome 
and expensive operation. The authorities in th is Member State are monitoring the situation 
closely and the Commission is hopeful that a solu tion to the issue will be found independently 
of – or in conjunction with – the setting of a migration end-date. 
Annex 15 provides an analysis of costs and be nefits for the supply and demand sides of the 
payments market when full and rapid SEPA  migration is pursued. It also includes 
a calculation of potential SEPA benefits (as % of national GDP) at a Member State level (for 
the 16 Member States taken into account in the CapGemini study, representing 96 % of EU 
non-cash transaction volume). In this  context, it is important to em phasise that the majority of 
indicated expenditure on the suppl y side has either already made or is in the course of being 
finalised this year (as the 1 November 2010 deadline for reachability for direct debit 
transactions, set in Regulation 924/2009 approach es). On the demand side (in practice, 
corporates and public administrations) investme nt progress is lagging (see reasons for slow 
migration, Chapter 3.2.1). 
                                                
 
47 In some cases, PSPs ask for IBAN only and auto matically add BIC for routing purposes. Some 
Member States have recently decided to apply the IBAN for national transactions, thus making the first 
step towards Europe-w ide credit transfers. 
EN 32   EN 6.3. Comparison of baseline scenario versus setting an end-date 
On the basis of the above impact analysis, it is possible to compare the ba seline scenario with 
that of setting a migration end-date. 
Table 5:  Comparison in terms of ach ieving 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 compared to the situation today.  
+++ (Strong); ++ (Moderate); + (Weak) positive contribution  
– – – (Strong); – – (Moderate); – (Weak) negative contribution; 0 neutral contribution 
Table 6:  Comparison in terms of stakeholder impact 
Stakeholder Benefits Costs Overall effect 
Businesses Improved cash/treasury management 
Greater liquidity 
Minimise number of payment accounts 
Reduced banking fees and internal payments 
admin costs 
Straight-through-processing 
Creation of secure platform for development of 
added value services linked to payment chain such 
as e-invoicing Migration effort 
– new or 
upgraded 
payment 
systems and 
processes 
Staff training +++ 
SMEs Reduced banking fees and internal payments 
admin costs 
Straight-through-processing 
Creation of secure platform for development of 
added value services linked to payment chain such 
as e-invoicing Migration effort 
– new or 
upgraded 
payment 
systems and 
processes 
Change of 
habits – IBAN 
(and BIC where 
necessary) ++ 
Public 
administrations Reduced banking fees and internal payments 
admin costs 
Straight-through-processing 
Creation of secure platform for development of 
added value services linked to payment chain such 
as e-invoicing 
Increases the benefits of public tendering of 
payment services at European level, 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 
Facilitation of professio nal and private mobility 
between Member States 
More innovative, user-friendly, secure, and 
convenient payment instruments Change of 
habits – IBAN 
(and BIC where 
necessary) ++ 
EN 33   EN 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  
+++ (Strong); ++ (Moderate); + (Weak) positive effect  
– – – (Strong); – – (Moderate); – (Weak) negative effect; 0 neutral effect 
Based on this comparison and the preceding qua ntitative analysis, it is recommended to 
pursue the option of setting an end-date.  
6.4. Assessment of the instruments for setting an end-date 
6.4.1.  Self-regulation 
Due to the variety and complexity of stakehol der interests, as well as a highly fragmented 
demand side, a concerted effort by both sides of the market is difficult to achieve. 
Furthermore, the approach of industry setting a target date has not proven to be realistic. 
When the EPC was established, the original tim eline foresaw that a critical mass of credit 
transfers and direct debits w ould have migrated to SEPA in struments by the end of 2010. In 
January 2010, two years after its launch, the SC T rate has barely exceeded 6 % and SDD 
migration has yet to start. Therefore, curren t migration rates are ve ry far away from the 
original target. 
6.4.2.  Non-binding Community instrument  (Commission Communication or 
Recommendation) 
A Communication to stakeholders in  the payments market is unlikely to have a stronger effect 
than the self-regulation efforts which have al ready taken place during the last years (see 
above). While joint statements by the Commi ssion and ECB, as well as institutional support 
from the European Parliament and ECOFIN, ha ve called for a swift and comprehensive SEPA 
migration, the reality is that so far they do not seem to have had any significant effect on the 
stakeholders. 
Similarly, a Commission Recommendation to Me mber States for the setting of SEPA 
migration end-dates at national level is very unlikely to ac hieve rapid and comprehensive 
migration in all Member States due to its non-bi nding character. Moreover, and as pointed out 
above in Chapter 3.3., a concerted and synchroni sed effort by all stak eholders across all 
Member States is crucial for r eaping the full benefits of SEPA. 
6.4.3.  Binding ECB instrument 
In the area of payments, the European Central Bank (ECB) has been entr usted with legislative 
competence48. The ECB’s legislative competence is however limited when compared with 
that of the EU legislator and relates to ensu ring effective and sound payment systems in order 
for them to operate smoothly. This implies, in addition to oversight and operational 
                                                 
48 Article 127(2) of the Treaty on the Functioning of the European Union and Article 22 of the Statute of 
the European System of Central Banks and of the European Central Bank. 
EN 34   EN competences, a focus on the technical aspects of payment systems, i.e. the payment 
transaction domain between PSPs, and does in principle not extend to the payment service 
user space. In addition, the geographical scope of the ECB’s competence is generally limited to euro area Member States. Thus, any legisl ative action by the ECB regarding a binding 
migration end-date would be limited in comp arison to Community legislation. It would only 
apply to euro area Member States and it woul d not drive harmonisation on the demand side of 
the payments market where most of the benefi ts of SEPA are expected as shown above. In 
this context, the main advantage of an ECB Regulation, namely  the relatively straight forward 
adoption procedure by its Governing Council, plays a minor role only. 
6.4.4.  Binding Community instrument 
As described above, there is a strong invers e correlation between the economic effects of 
SEPA and the duration of migratio n. In fact, the substantial be nefits which can be achieved 
with a rapid migration can turn negative, if migration is protracte d. A binding end-date for 
SEPA migration is therefore the only instrument to ensure that the benefits of SEPA really 
materialise. 
The public consultation on SEPA showed broad support, among all stake holder categories on 
the supply and demand side, for se tting a deadline for the migra tion to SEPA credit transfers 
and direct debits (see Annex 3 for full consul tation results). Some re spondents on the demand 
side emphasised that an end-date should take  into account certain user requirements (see 
Section 6.5.1. below). A number of advantages for an end-date were put forward. An end-date 
was considered necessary to accelerate SEPA migration which is currently too slow. Some 
respondents felt that this would provide nece ssary incentives to th ose who are currently 
reluctant to migrate. By accelerating migrati on, many underlined that such deadlines would 
allow reaping the full benefits of the SEPA project. This would avoid that multiple systems for credit transfers and direct debits were manage d in parallel for too long a period of time. It 
would also provide certainty and allow for th e appropriate planning of  SEPA migration and 
the attribution of the n ecessary investment budgets. 
Furthermore, many market players themselves call for the establishment of an end-date by 
regulation at European level, as evidenced in statements
49 by the EPC, different clearing and 
settlement infrastructures, and the Europ ean Association of Corporate Treasurers. 
In general, the Commission has the choice between a Directive and a Regulation as a binding 
policy instrument. A Directive has the advantag e of allowing for a more flexible approach, 
taking into account the specifici ties of national markets. A Regulation, on the other hand, 
allows achieving the highest leve l of harmonisation and standardisation in a shorter timeframe 
without the need for national transposition measures. 
Setting an end-date for migration to pan-European  credit transfers and direct debits requires 
standardisation at technical level and as comple te a harmonisation as possible. This argues in 
favour of a Regulation rather than  a Directive. Furthermore, due  to the network character of 
                                                 
49 Recommendation on an end-date for migration to SEPA schemes , European Payments Council, 
31.3.2009.  
Public Statement of Infrastruc tures promoting the SEPA Progress , 14.4.2009.  
Press Release: European banks prepare for SEPA Direct Debit Services , EBA Clearing, 6.4.2009. 
Press Release: Single Euro Payments Area: EACT favours setting an end-date for SEPA credit 
transfers , European Association of Corp orate Treasurers, 15.10.2008. 
EN 35   EN the payment industry most benefits of SEPA will only materialise once the transition to 
pan-European payment instruments is completed at domestic level in all EU Member States. A Directive approach with potentially differing  national implementations has the risk of 
perpetuating the current payment market fragme ntation. Finally, it would delay migration due 
to the time necessary for national transposition. It is therefore recommended to use the legal instrument of a Regulation for se tting a SEPA migration end-date. 
6.5. Assessing technical sub-options for the implementation of a SEPA migration 
end-date 
The general case for establishing a SEPA migrat ion end-date by binding legislation was made 
above. However, in order to be effective the conditions for an end-date need to be clearly defined at technical level. A number of sub-options for the e nd-date implementation present 
themselves in seven relevant areas. These areas are not mutually exclusive, meaning that one 
sub-option has to be chosen in each area. The se ven relevant areas and the sub-options within 
each of these areas are described below. 
6.5.1.  Reference basis for pan-European cr edit transfers and direct debits 
Three possible approaches have been identified for defining what exactly constitutes 
pan-European credit transfers and direct debits in the cont ext of setting an end-date: 
An approach based on existing schemes, an ap proach based on standards, and an approach 
with general essential requirements. 
Sub-option 1 – approach based on existing schemes and rulebooks
 
The use of the schemes developed by the EPC could be made mandatory as of a defined date 
for all relevant payment transactions. The SCT and SDD schemes have been launched on 
28 January 2008 and 2 November 2009 respectivel y, and represent at this stage the only 
harmonised pan-European payment schemes for credit transfers and direct debits. These 
schemes are based on rulebooks and implementation guidelines for credit transfers and direct 
debits which contain a set of common rules, prac tices and standards. Reference of an end-date 
to these schemes would therefore provide a cl early defined technical basis and would avoid 
parallel streams of 'multi-harmonisation'. 
This approach would however imply the regul atory endorsement of payment schemes which 
have been developed under self -regulation by the banking industry as represented in the EPC. 
First, this de facto creates a private monopol y situation, privilegin g the EPC schemes and 
thereby preventing potential competition and innovation. This seems undesirable on general public policy grounds and raises the very important  and currently still open question as to how 
sufficient transparency and adequate stakehol der representation (in particular from the 
demand side) can be guaranteed during the futu re development process of the SCT and SDD 
schemes. Payment service users, and especial ly consumers, have remonstrated about not 
being able to actively participate in the deve lopment of EPC schemes and that inadequate 
regard was given to their views and preferences
50. In particular, in relation to the SDD, they 
highlighted the point that, although the CMF51 direct debit model is the majority approach in 
                                                 
50 See for example Press Release SEPA: Broad range of stakeholders beginning to see huge problems , 
European Consumers’ Organisation (BEUC), PR/001/2010, 23.2.2010,  
http://www.beuc.org/Conten t/Default.asp?PageID=835 . 
51 Creditor Mandate Flow, i.e. the direct debit mandate is held by the Creditor or Creditor Bank. 
EN 36   EN the EU and is the model used by the SDD, ne vertheless, direct debit products in some 
Member States are based on the DMF52 model. Consumers expre ssed a clear preference for 
this kind of approach and hence they argued th e debtor bank should be given a much greater 
role in direct debit collection53. As regards credit transfers,  payment users (especially 
businesses) criticised the current SCT scheme  for not providing sufficiently long remittance 
information fields in comparison to the existing legacy credit transfers in some 
Member States. 
Furthermore, as the EPC rulebooks underlying the SCT and SDD are subject to continuous 
development, legal adjustment mechanisms woul d have to be defined to take into account 
future rulebook changes. In conclusion, fixing an  approach for an end-date based on existing 
schemes hinders potential competition and innovation and limits the incentives for scheme improvements. 
Given these handicaps, the option of refere nce to an existing scheme is discarded. 
Sub-option 2 – approach base d on key existing standards
 
Technical standardisation is a cornerstone fo r the integration of networks, such as the 
European payments market. On this basis, the use of standards devel oped by international or 
European standardisation bodies could be mandatory as of a de fined date for all relevant 
transactions. In the payment context, these would be the international bank account numbers 
(IBAN), bank identifier codes (BIC), and a financial services messaging standard 
(ISO 20022). The implementation of these standard s by all PSPs is ther efore an essential 
prerequisite for full inter-operability throughout  the EU. This would at the same time leave 
greater room for the development and innovation of payment instrument s in comparison to 
an approach which is based on a specific  industry-developed scheme (Sub-option 1). 
However, complete integration of the European  payments market for credits transfers and 
direct debits goes beyond techni cal requirements. For example, some Member States (Italy, 
Greece, Luxembourg, Malta, Slovenia, Bulgaria, La tvia, Lithuania and Romania) already use 
the IBAN account identifier for do mestic credit transfers and direct debits. Nevertheless, 
national payment schemes still exist in these countries. Standards alone therefore do not fully address the problem of fragment ation and do not lead to a truly integrated payments market. 
Beyond standards, common business rules and practices  also need to be defined to ensure the 
benefits of SEPA in terms of harmonised user  experience, straight-t hrough-processing etc. 
Relying on technical standards alone therefor e leaves too much leeway for inconsistent 
implementations of SEPA credit transfers and direct debits. 
The public consultation on SEPA strongly c onfirmed this point. A vast majority of 
respondents (more than three out of four)
54 emphasised that an end-date should go beyond 
standards and should take into a ccount scheme characteristics. 
For these reasons, the option of exclusively referring to exis ting standards is discarded. 
                                                 
52 Debtor Mandate Flow, i.e. the direct debit mandate is held by the Debtor Bank. 
53 This point has been taken up by the European Commission and the European Central Bank which have 
sent a joint letter to the EPC, dated 10.3.2010. The EPC has responded positively, by approving the 
implementation of the possibility for a more explicit debtor bank role (i.e. the new mandate check option). 
54 No weighting applied. Individual respondents may have significantly different levels of 
representativeness for the payments market. 
EN 37   EN Sub-option 3 – approach based on 'g eneral essential requirements'  
Rather than referring to specific schemes or  to standards alone, a number of essential 
requirements could be defined. Under this option, as  of a defined date all relevant transactions 
would have to comply with these essent ial requirements. The requirements would 
unambiguously define the characteristics n eeded to be respected by inter-operable 
pan-European payment schemes without mandati ng the EPC schemes on a de jure basis. For 
inter-operability reasons, the essential requireme nts would however make reference to the use 
of the specific existing in ternational and non-proprieta ry standards mentioned under 
Sub-option 2. 
The essential requirements approach thereby prov ides a way to define pan-European payment 
instruments while avoiding a re gulatory endorsement of one specific scheme which was 
developed by the industry. For th is purpose, the esse ntial requirements w ould be defined in 
such a way that they allow fo r the application of the currently existing EPC schemes but do 
not restrict flexibility and i nnovation. In contrast to a scheme-based reference, this option 
would retain the possibility for new competing credit transfer or direct debit schemes to 
emerge under the condition that they are compliant with the essential requirements. Similarly, the essential requirements approach could easily address certain user requirements which are 
not or only insufficiently met by the existing schemes as mentioned above. It would thus 
achieve the goal of rapid and comprehensive mi gration to pan-European payment instruments 
while remaining open and neutral towards poten tial new developments and improvements in 
the payments market. Although the essential requirements approach would be a novel regulatory concept in the field of  payments, this approach has been applied in other fields by 
the Commission, for example in the cas e of the New Approach Directives
55 or the recently 
adopted Regulation on the phasing-ou t of non-efficient light bulbs.56 
The possible approaches to a migr ation end-date were also discu ssed in the last meeting of the 
Payments Committee on 10 March 2010. While there was full agreement that an end-date 
solely based on standards was not sufficient, si x out of eight Member States representatives 
making an intervention in this context favoured  the 'essential requirements' approach over 
a scheme-based approach. 
                                                 
55 Currently there are 22 New Approach Directives. For further information see 
http://www.newa pproach.org/  and http://ec.europa.eu/enterprise/policies/single-market-
goods/regulatory-policies-common-rules-for-products/new-approach/index_en.htm . 
56 Commission Regulation (EC) No 244/2009 of 18.3.2009 implementing Directive 2005/32/EC of the 
European Parliament and of the Council with regard to ecodesign requirements for non-directional 
household lamps. 
EN 38   EN Table 7:  Reference basis 
Effectiveness in terms of relevant criteria 
Sub-option 
Inter-operability Potential for 
competition Potential for 
innovation Efficiency 
0. Baseline scenario ('do nothing') 0 0 0 0 
1. EPC schemes and rulebooks  +++ – – – 0 
2. Existing standards + ++ ++ + 
3. General essential 
requirements +++ ++ ++ ++ 
Overall effect compared to  the baseline scenario  
+++ (Strong); ++ (Moderate); + (Weak) positive effect  
– – – (Strong); – – (Moderate); – (Weak) negative effect; 0 neutral effect 
The recommended option would therefore be to go forward on the basis of general essential 
requirements. Annex 16 provides a first, tent ative overview of the general essential 
requirements, which could be part of an EU regulation. 
6.5.2.  Transaction domain 
SEPA credit transfers and direct debits could be implemented in two different transaction 
domains. 
Sub-option 1  – Implementation in the PSP-to-PSP transaction space only. 
Sub-option 2  – Implementation across the whole paym ent transaction space end-to-end, i.e. 
for the customer-to-PSP and PSP-to-custome r domain on top of the PSP-to-PSP domain. 
Defining a SEPA end-date for the supply side on ly would limit the complexity of the required 
migration effort. Only one side of the market , notably the one with a significantly lower 
number of market participants in relative te rms, would have to comply with the regulatory 
requirements. Furthermore, PSPs are already more advanced in terms of actual migration to SEPA instruments than payment users. 
A one-sided approach has however substantial downsides. While it limits the cost of SEPA 
migration mostly to one side of the market, it does the same with the potential benefits of 
SEPA. As stated above, the bene fits of SEPA significantly outwe igh the cost and investments 
of SEPA, in particular for the demand side of the market. 
Important features of pan-European credit transf ers and direct debits, such as real straight-
through-processing, and a commo n launching platform for providing innovative payment 
services to users, only materialise if harm onisation takes place across the full transaction 
domain. Only in such a scenario will multi-natio nal businesses be able to standardise payment 
transactions sufficiently in order set up effi cient shared services centres and payment 
factories. Similarly, cross-border-competition of PSPs will intensify once pan-European 
standardisation extends to the payment user level. 
A restriction of a SEPA migra tion end-date to PSPs only woul d therefore directly impact the 
potential economic benefits of payment market integration. As pointed out in the beginning of 
this chapter, the CapGemini study estimates th e total gain of rapid SEPA migration on the 
demand side of the payments market at EUR 175 billion. Of this be nefit, EUR 91 billion 
EN 39   EN relate to lower bank fees due to more inte nse competition on the supply side which may 
partially still materialise if an end-date would only be set in the inter-bank space. However, 
an estimated EUR 84 billion of operational savings (net effect after investments) on the demand side depends entirely on payment mark et integration extending beyond the inter-bank 
space. If an end-date were to be set in th e inter-bank space only these savings would not 
occur. This would reduce the ov erall SEPA benefits for the ma rket as a whole (supply and 
demand side) from EUR 123 billion to EUR 39 billion, cutting it by more than two thirds. 
Moreover, limiting the mandatory use of SE PA instruments to the PSP-to-PSP space could 
require a payment format conversion between user s of payments and their PSPs which in turn 
increases complexity and could lead to increase d processing effort and to a higher number of 
erroneous payment transactions. 
Finally, the public consultation on SEPA s howed that a large ma jority of responding 
stakeholders (more than two out of three)
57 favour an end-to-end approach, covering the full 
transaction domain from payment user to payment user. 
Table 8:  Transaction domain 
Effectiveness in terms of relevant criteria 
Sub-option 
Inter-operability Degree of 
market 
integration Potential for 
innovation Efficiency 
0. Baseline scenario ('do nothing') 0 0 0 0 
1. PSP-to-PSP + + + ++ 
2. End-to-end +++ +++ ++ + 
It is therefore recommended to go forward w ith Sub-option 2, i.e. an approach where the 
requirements defined by an end-date would a pply throughout the whole transaction domain. 
6.5.3.  Product specification 
This Impact Assessment covers credit transfers and direct deb its. Card payments and cheques 
are out of scope of this analys is. In many Member States howe ver, there are certain legacy 
payment instruments which could be considered credit transfers or direct debits but which 
have very specific functionalitie s, often due to historical or  legal reasons. The transaction 
volume of such products is usually marginal; th ey could therefore be classified as niche 
products. 
For the purposes of this  analysis, niche products are defined as credit tran sfer or direct debit 
products which (1) Member States define as 'difficult to migrat e' from a technical point of 
view and which (2) at national level cumulatively account for less than 10 % of the total volume of credit transfers and direct debits  respectively. Th e rationale underlying these two 
criteria is twofold. First, a maximum threshol d of 10 % would mean that at least 90 % of 
existing national payment instruments would mi grate to the correspond ing SEPA instrument 
and hence that critical mass would be achie ved with the required volumes for operating 
efficiency and economies of scal e. Secondly, from a subsidiarity perspective, Member States 
are most familiar with their own payment instruments and therefore best placed to determine 
                                                
 
57 No weighting applied. Individual respondents may have significantly different levels of 
representativeness for the payments market. 
EN 40   EN whether migration is sufficiently difficult to ju stify derogation from th e general obl igation to 
migrate. Low-volume niche instruments are usua lly tailored for specific user groups or to 
provide specific functionalities.  In Spain, for example, there are credit transfers not using 
account numbers, or specific pension transfers requiring additional tax and financial 
information to be exchanged between the invol ved PSPs. The estimated volume share of these 
transfers is 1.3 % and 0.12 % resp ectively of all cred it transfers undertaken in Spain. As 
regards direct debits, the so-c alled 'TIP' and 'Télérèglements'  enable debtors in France to 
validate the amount of each transaction before it can be processed by their creditors, for 
example when paying taxes. Estimated volume sh ares are 4.3 % and 0.4 % respectively of all 
direct debits undertaken  at national level. 
The definition of an end-date n eeds to specify whether such ni che products shall also migrate 
to pan-European credit transfers and direct de bits. Three possible options present themselves: 
an all-inclusive approach, a permanent ex ception approach, and a staggered approach. 
Sub-option 1 – all inclusive:  all legacy products falling under the definition of a credit transfer 
or direct debit have to be pha sed out as of a defined date. 
An all inclusive approach would achieve th e maximum degree of harmonisation for credit 
transfers and direct debits in the EU. Ultimatel y, this would allow the complete elimination of 
national legacy payment platforms. It would th erefore maximise the economies of scale for 
both sides of the market and minimise the complexity of the European payment landscape. However, the immediate elimination of these ni che products for the sake of an all inclusive 
SEPA migration might require significant res ources, often for relatively marginal payment 
transaction volumes. Migration of 'regular' credit transfers and di rect debits would risk being 
slowed down if it is to coincide  with that of niche products. 
For the above reasons, an all inclusiv e migration approach is discarded. 
Sub-option 2 – permanent exception for niche products
: niche products as defined above are 
exempted of an end-date. 
Some of the existing legacy niche products pr ovide specific functionalities which are not 
available under the currently exis ting pan-European credit transfer  and direct debits schemes. 
In many cases these functionalities concern a pa rticular minority category of payment users 
which for historic or legal reasons only exis ts in one or a few given Member States. 
An 'exception' approach would ensure that th ese payment instruments could continue to be 
used beyond a SEPA migration end-date. On the downside, such an appr oach may require that 
national payment platforms need to be infinitely  maintained in certain Member States. This 
could significantly reduce economies of scale and cause duplicate cost for the running of 
multiple payment platforms on both the supply and demand side of the market. 
For the above reasons, a permanent 'exception' approach is discarded. Sub-option 3 – staggered approach
: niche products are exempted for a transitional period after 
which all legacy products have to be phased out. 
A staggered approach would allo w an appropriate balancing of the respective advantages and 
disadvantages of the two options described a bove. An additional sunset period for niche 
products would help both sides of the market to  focus on 'regular' credit transfer and direct 
debit migration first, thereby generating the majo rity of the potential SEPA benefits to be 
reaped in a shorter time frame. The duration of this sunset period should be sufficiently long, 
EN 41   EN to minimise the impact of the migration on consumers, in particular when these niche 
products are competitively-priced and easy to use.  The additional sunset period could also be 
used to adjust existing SEPA schemes according to  the characteristics of the most relevant of 
these niche products, so that they could be used within the framework of a harmonised 
payments market. 
Table 9:  Product specification 
Effectiveness in terms of relevant criteria 
Sub-option Degree of 
market 
integration Meeting 
payment user 
requirements Speed of 
migration process Efficiency 
0. Baseline scenario ('do nothing') 0 0 0 0 
1. All-inclusive +++ – + 0 
2. Permanent exception + ++ +++ + 
3. Staggered approach +++ ++ ++ ++ 
On this basis, it is recommended to go forward with a staggered approach for niche products 
with a transitional period in the range of 3–5 years. 
6.5.4.  Member States scope 
Actual progress of SEPA migration varies between Member States. By definition, SEPA 
applies to payments in euro only and therefore euro area Member States are generally more 
advanced in terms of migration. This raises th e question whether concrete end-dates should be 
set individually for each Member State and wh ether the same end-date approach should be 
taken in the euro and in the non-eu ro area. Options are as follows: 
Sub-option 1 – individual end-dates by Member State 
Sub-option 2 – one common end-date for the EU Sub-option 3 – two end-dates; one for the euro area, and one for the non-euro area 
As discussed in the problem de finition and further elaborated in Annex 9, target dates for 
replacing national credit transfer s and direct debits with pan- European payment instruments 
have so far only been set in three Member St ates. Four countries established a deadline for 
one of the instruments and three defined 'cri tical mass' criteria which should be fulfilled 
before a target data is to be set. Most impor tantly however, in nine Member States, including 
three euro area countries, no target dates have been cons idered at all and in eight 
Member States the subject is still under discussions. 
This indicates that the option of setting individu al end-dates at national level is not a viable 
solution for a quick and full migration to SCT a nd SDD. It is also ve ry challenging from 
a technical point of view. Setti ng different end-dates for EU Member States would be costly 
and difficult to manage for banks, multi-national corporates, and for those SMEs and consumers active in cross-border transactions . Since general SEPA migration would be 
dependent upon the slowest Member State, it w ould increase the cost of SEPA migration for 
the EU economy and diminish the benefits prom ised by the quick integration of the payments 
market in the Community. 
EN 42   EN An integrated European payments market requ ires a network of inte r-operable PSPs, ensuring 
full reachability of all payment accounts throughout  the EU for pan-European credit transfers 
and direct debits. Only such an environm ent provides a level playing field across 
Member States and allows companies to develop a true European approach for their payments. A common end-date w ould lend a stronger political impa ct to a project of such 
importance, providing more visibility to the inte gration of European payments market from a 
communication point of view. Furthermore,  the option of a common end-date set by 
regulation was strongly supporte d by the stakeholders in the public consultation on SEPA. 
One common end-date for the whole EU would ultimately maximise the benefits for the EU 
economy and all stakeholders. However, in the case of an early end-da te it would require 
a major and swift migration effort in non-euro  area Member States. Alternatively, a later 
common end-date for the whole EU  could be set in order to a ccommodate the lower migration 
priority for non-euro area Member States. Euro  payments represent relatively small volumes 
within non-euro area countries as well as in comparison with the total volumes of euro 
payments in the EU. Broad estimates by the ECB on the basis of a sample of non-euro area Member States suggest that euro payment volum e shares in these countries are around 2 % of 
all payments. Therefore, a quick and full migration of euro payments in non-euro 
Member States would not be essential for th e success of SEPA. The resources required for 
rapid and full migration in non-euro Member States would not be proportional with the 
achieved benefits. 
Moreover, the approach of a deferred applicati on in non-euro Member States has previously 
been used in the payments policy area . For example, Article 8 of Regulation 
(EC) No 924/2009 on cross-border payments in the Community grants a temporary 
derogation period for non-euro Member States in terms of reachability for direct debit 
transactions in euro. This derogation period ha s been fixed at the lesser of (a) 4 years or 
(b) 1 year after accession to the euro currency if applicable. A comparable approach could be 
followed for a SEPA migration end-date. 
Table 10:  Member States scope 
Effectiveness in terms of relevant criteria 
Sub-option Degree of 
market 
integration Speed of 
migration 
process Proportionality Efficiency 
0. Baseline scenario ('do nothing') 0 0 0 0 
1. Individual end-dates + + ++ 0 
2. One common EU end-date +++ + + + 
3. Two end-dates; one for 
euro area and one for non-euro area ++ ++ +++ ++ 
It is therefore recommended to pursue th e sub-option with a common end-date for the 
euro area and a later common end-date for the non-euro area. Under the option of common 
end-dates, individual Member Stat es would in principle still be free to establish an earlier 
end-date for migration. This w ould allow for a quicker migra tion in those Member States 
whose migration is already well advanced. 
EN 43   EN 6.5.5.  Deadlines 
Different approaches could be ta ken into account when setting (a) concrete end-date(s). There 
could be separate end-dates for credit transfer s and direct debits or there could be a common 
end-date. Furthermore, (an) end-date(s) could be  set in the short term (one year after entry 
into force of the Regulation at the latest), the mi d term (two years after entry into force of the 
Regulation at the latest), or th e long term (three years after entry into forc e of the Regulation). 
This results in the following timing options: 
Sub-option 1 – common end-date for cr edit transfers and direct debit 
Sub-option 2 – separate end-dates fo r credit transfers and direct debit 
A common end-date for both payment instruments has the advantages of clearer and simpler 
communication to payment service users. This  approach would also encourage those PSPs 
and users which have not yet started migration to  move to SEPA instruments in a single step. 
All necessary system and process changes could be implemented at the same time, thereby avoiding a protracted period of running para llel payment systems causing duplicate cost. 
On the other hand, an approach of two separate  deadlines also has a number of important 
advantages. First of all, SEPA credit transfers and SEPA direct debits do not have the same 
level of maturity, since the existing SDD scheme  was launched almost two years later than the 
SCT scheme. Furthermore, a direct debit is a mo re complex instrument than a credit transfer. 
Migration to SEPA direct debits consequently  requires more resources than migration to 
SEPA credit transfers. This point has been  confirmed, both on the supply and demand sides, 
by replies to the questionnaires sent out by the Commission serv ices. The estimated financial 
resources required for direct de bit migration exceed that for cr edit transfers by a factor of 
between 2 and 12, depending on industry sector. One common end-date would therefore entail 
the risk of delaying migration to SCT more than  necessary. It would also penalise all market 
players which have already undertaken migration efforts to SCT. 
Secondly, separate end-dates would allow for a concentration of mi gration efforts on one 
product only and better management of each migr ation. Migration to the SDD scheme would 
fully build on the requirements which have b een fulfilled through migration to the SCT – the 
use of IBAN (and BIC) and of the ISO 20022 standa rds, as discussed earlier. The SCT and the 
SDD are two instruments which are clearly di stinct in the mind of  payment users. In 
particular, two separate deadlines were also  supported by the majo rity of stakeholders
58 in the 
public consultation on SEPA. It is therefore recommended to set individual deadlines for 
credit transfers and dire ct debits respectively. 
                                                 
58 Cf. footnote 47. 
EN 44   EN Table 11:  Deadlines 
Effectiveness in terms of relevant criteria 
Sub-option Degree of 
market 
integration Speed of 
migration 
process Proportionality Efficiency 
0. Baseline scenario ('do nothing') 0 0 0 0 
1. Common deadline +++ + + + 
2. Separate deadlines ++ +++ ++ ++ 
In terms of concrete deadlines, several fact ors should be taken into account. From an EU 
economy perspective, quick and full migration is a priority, as it reduces transition costs and 
increases benefits for all involved stakeholde rs as shown in the CapGemini study. On the 
other hand, SEPA migration requi res the changing of payment systems and processes within 
an organisation. The usual IT investment cycl e for PSPs, payment processors, businesses and 
public administration is around 3–5 years. This implies that, at any point in time, market 
participants will on average make their next investment 1.5 to 2.5 years later. 
Another factor which has to be taken into account when setting migration deadlines is the 
length of the procedure for adoption of a migr ation end-date EU Re gulation. Based on past 
experience, it is reasonable to assume that one  year as a minimum will pass between adoption 
of the Commission proposal and the entry into force of an adopted Regulation59. In fact a 
longer period e.g. 18 months seems more likely.  
In this context, a short term e nd-date for SCT migration (e.g. one year after entry into force of 
the Regulation) and a slightly longer, mid-te rm approach for setting an end-date for SDD 
migration (e.g. two years after the entry into force of the Regulation) is the recommended 
option. However, the publication of a formal Commission proposal would in itself provide the 
market with a strong signal and incentive to st art or accelerate the migration efforts. All 
relevant stakeholders will gain the necessary certainty about the irrevocability and deadlines of the migration process at this point of time.  In practical terms the delay in adoption means 
that the stakeholders will have approximately  30 months to prepare their migration to SCT 
and 42 months for SDD. Given that SCT migra tion is, as discussed above, less problematic 
for both supply and demand side of the market, this should provide stakeholders with ample 
time to migrate to SCT and adequately prepar e and concentrate on S DD migration. At the 
same time it would appear unnecessary a nd counterproductive to prolong SCT and SDD 
migration beyond the time-lines discussed ab ove. Longer migration deadlines could, in 
theory, allow some reduction of the financial and organisational impact of the changeover, as 
the necessary investments and organisationa l changes could be budgeted and spread over 
additional years. It is, however, much more li kely that those investments will simply be 
postponed until the end of the migration process (s ee investment cycles), while the benefits of 
quick, full migration will be lost. 
The short term end-date approach found also  most support in the public consultation on 
SEPA. A majority of respondents favoured a qui ck end-date for SCT migration, which could 
be achieved by end-2012 in their opinion. As rega rds the SDD, a mid term approach seemed 
                                                
 
59 For example, for the cross-border Payments Regulation (924/2009) this time period was 13 months, and 
for the PSD (2007/64/EC) it was two years. 
EN 45   EN to be the most accepted possibility, i.e. to allow for a delay of one additional year in launching 
the SDD scheme. 
It is therefore recommended to pursue the s ub-option of separate end-dates, with more 
specifically a short term deadline for credit tran sfers (for instance, one year after entry into 
force of the Regulation at the latest) and a mi d term deadline (for in stance, two years after 
entry into force of the Regulation at the latest) for direct debits. 
6.5.6.  Cross-border opening of bank accounts for pan-European credit transfers and direct 
debits 
As discussed above, establishing a SEPA mi gration end-date aims  at creating a fully 
integrated payments market with effective comp etition for credit transfers and direct debits. 
An end-date establishing the necessary technica l standardisation will greatly facilitate this 
objective, but needs to be complemented by a flanking measure to fully address market integration. Therefore, as from the end-date for SEPA migrati on, discriminatory requirements 
based on nationality or place of residence to open a payment account should be prohibited. It is acknowledged that in some cases there may be  reasons for differences in the conditions of 
cross-border payment account access. However, thes e differences must be directly justified by 
objective criteria. Such an approach has al so been taken in the Services Directive
60. 
There is a strong economic logic in placing cr oss-border opening of bank accounts within the 
context of an EU legislative proposal fac ilitating SEPA. On the one hand, SEPA and the 
passporting rights for payment institutions establ ished by the Payment Services Directive are 
designed to strengthen competition and allow payment institutions (in addition to existing credit and electronic money institutions) to pr ovide payment services on a cross-border basis. 
However, if the reality is that a European citi zen is unable to benefit from this possibility, 
specifically established by the European co-leg islators, because of restrictive commercial 
practices which unnecessarily foreclose cro ss-border access to a payment account, it is 
entirely logical that this deficiency be reme died by the European co-legislators within a 
legislative proposal establishing an  end-date for SEPA migration. 
The prohibition of discrimination on grounds of  nationality and residence by cross-border 
bank account opening also passes subsidiarity, propor tionality and necessity tests. In terms of 
necessity and proportionality the prohibition is cl early connected to the right of establishment 
and the cross-border mobility of the EU citizens (Art. 49 of th e Treaty on the Functioning of 
the EU) and the operation of the internal market  (Art. 3 of the Treaty on the Functioning of 
the EU). At the same time, due to the clearly cross-border dimension of  this issue, the EU 
legislator is better suited to  address it effectively at the EU level than national law. 
There are two main options: Sub-option 1 – Continuation of current practice. Sub-option 2 – Prohibit customer refusal on the grounds of nationality or place of residence 
for the opening of a payment account as of  the end-date for migration to SCT. 
As described in the problem definition, payment user  mobility in terms of being able to freely 
choose a PSP for making credit transfers and dire ct debits is often re stricted or simply 
                                                
 
60 See Article 20(2) of the Directive on serv ices in the internal market (2006/123/EC). 
EN 46   EN impossible in a cross-border environment. The current practice of many PSPs limits the 
opening of a payment account only to those citizens resident in or having the same nationality 
as the Member State of the PSP. Full freedom of choice of PSPs and hence true competition 
in payment services at European level will only be complete once customer refusal is prohibited on the grounds of place of residence or nationality. Continui ng the current practice 
(Sub-option 1) would restrict effective competition and hinder the attainment of the full economic benefits of SEPA. In the CapGem ini study, downward price convergence caused by 
more intense competition was estimated to provide a benefit of EUR 91 billion to payment service users over six years. Competitive pres sure on bank fees basically stems from two 
drivers to market integration: increased cro ss-border mobility firstly by PSPs and secondly by 
customers. The CapGemini study did not quan tify separately how mu ch of the overall 
economic gain from more competition specifica lly relates to the se cond effect, i.e. the 
possibility for customers to access payment servi ces on a cross-border basis as compared to 
PSP market entry. On general grounds, it seems r easonable to assume that the first aspect 
(PSP mobility) produces the greater economic benefits in quantitative terms. Nevertheless, in 
social and political terms, and with the new emphasis on the social dimension in the Lisbon 
Treaty and the political wish to make the Singl e Market work for the benefit of European 
citizens, it is important not to neglect the second  aspect (customer mobility). This is in line 
with the spirit of the In ternal Market and necessary for full competition. 
In contrast, Sub-option 2 would en sure that the full benefits of SEPA in terms of increased 
competition could be reaped, particularly for online payment accounts. Other than the 
competitive effects, the impact of Sub-option 2 on  PSPs is expected to be limited as they can 
continue to refuse to open payment accounts on  other grounds than the customer’s residence 
or nationality, in line with the principle of commercial freedo m. The reasons which are most 
often mentioned as justifications by PSPs dec lining the opening of payment accounts by non-
residents relate to preventing fraud and m oney laundering, and to not  having access to credit 
histories of non-residents. 
In this context however, two aspects have to be  noted. First, differences in the conditions of 
cross-border payment account access would conti nue to be allowed provided these differences 
are directly justified by object ive criteria as mentioned a bove. For example, PSPs could 
decide not to allow overdrafts for non-resident  account holders. Second, the abolition of the 
current general discrimination would not affect  a PSP’s capability to e ither conduct customer 
due diligence upon the opening of an account on a case-by-case basis as regards preventive 
measures against potential money laundering or th e financing of terrorism . In addition, as the 
burden of proof is placed on the consumer, the costs of such additional checks would largely be on the consumer side. PSPs could obviously  also continue to monitor customer 
transactions through payment accounts on an ongoing basis. 
The expected impact of this measure on the inte gration of the EU payments market should be 
positive, as consumers from both euro and (in pa rticular) non euro-area Member States will 
have the opportunity to benef it from more comprehensive or better priced payment services 
on a cross-border basis. This will in turn place an indirect pressure on the PSPs to develop and 
improve their SEPA payments services. It will also work as an incentive towards dismantling 
artificial fragmentation of payments markets along the national lines. 
EN 47   EN Table 12:  Cross-border bank account opening 
Effectiveness in terms of relevant criteria 
Sub-option Degree of 
market 
integration Potential for 
competition Meeting user 
requirements Efficiency 
1. Baseline scenario ('do nothing') 0 0 0 0 
2. Non-discriminatory opening 
of bank accounts + + +++ + 
Given the benefits for the competitive environment mentioned above and the limited impact 
on PSPs, it is therefore recommended to pursu e Sub-option 2, namely the abolition of 
discriminatory treatment of non-residents and non-nationals as regards the opening of 
payment accounts, as from the end-date fo r migration to SEPA  credit transfers. 
6.5.7.  Clarity on the long term business mo del for pan-European direct debits 
As discussed in the problem definition the perc eived lack of clarity on the long term business 
model is one of the factors holding up mi gration to pan-European direct debits. 
It turned out impossible to solve this percei ved lack of clarity by the development by the 
industry of a system entailing MIFs per transaction  and/or MIFs for R-transactions that could 
be assessed positively under the EU competitio n rules. During most of 2008, a dialogue took 
place with the banking industry (represented by the European Payment Council or EPC) on 
the need of/ the justification of a Multilateral Interchange Fee (MIF) per transaction  under 
EU competition rules, as identified in an an alysis of SEPA undertaken by DG Competition 
and the National Competition Authorities in 2007. As a result, it was signalled to the industry 
that it had not succeeded in providing the necessary justifi cations for the proposed MIF. 
Further to this, to encourage migration to S DD a transitional regime for national and cross 
border MIFs per transaction for SDD was introduced in Regulation 924/2009. The Joint 
Statement of the ECB and Commission of 24 Ma rch 2009 clarified that MIFs per transaction 
were not acceptable but opened the door to th e exploration of a MI F for R transactions 
compatible with competition rules. However, th e industry was unable to agree on the mandate 
and composition of a working group of the EPC de dicated to this at the EPC Plenary of 24 
June 2009. The EPC decided however that EPC sche me’s participants can agree on bilateral 
agreements. In the framework of the SEPA Roadmap61, the industry was again encouraged to 
undertake "the design and implem entation of long-term business models for SDD in line with 
competition rules", however, this did not bring a change in the EPC’s position. 
On the basis of the relevant facts (as set out in  detail in Annex 4), th ree possible approaches 
have been identified for prov iding clarity on a business mode l. One is an approach under 
which MIFs per transaction62 will continue to be analysed under competition rules ('current 
practice') (1). A second approach would be to impose a MIF or set a cap for MIFs per 
transaction and/or for R- transactions at a certain level as of  an end date for migration to SDD 
(2). The third approach would prohibit per tran saction MIFs (or measures of an equivalent 
object of effect), whereas R-transaction MIFs could be allowed under ce rtain conditions (3). 
                                                 
61 Communication from the Commission, Completing SEPA: a Roadmap for 2009-2012 , 
COM(2009) 471, 10.9.2009. 
62 'R-transactions' are direct debit transac tions that cannot be properly executed or are being reclaimed  by 
a payment service provider because the payment orde r is rejected, refused, returned or reversed 
EN 48   EN Sub-option 1 – Continuation of current prac tice (absence of regulatory intervention) 
If current practice will be continued, MIFs for di rect debit transactions will continue to be 
analysed only under competition ru les, without prejudice to thei r being banned or reduced as a 
result. This would mean in particular that pro ceedings at national and/or European level could 
be launched or would be pursued when they are ongoing, on the basis in particular of the 
guidance already provided. Further guidance on the compatibility of interchange fees for pan-
European direct debits with compe tition rules could also be provided. 
MIFs per transaction are curr ently in place only in a handful of Member States.63 In addition, 
MIFs for R-transactions (i.e. direct debit transa ctions that cannot be properly executed or are 
being reclaimed by a payment service provider – depending of the country considered, R-
transactions cover between 0.1 % and 3 % of a ll transactions) are in place in five Member 
States, three of which also have  a MIF per transaction in place64. 
Country MIF per transaction R-transaction MIFs 
France 12 cents 72 cents 
Spain 3 cents 065 
Italy 25 cents 0 
Portugal 23 cents n.a. 
Belgium 2 cents n.a. 
Germany 0 300 cents 
Austria 0 500 cents 
However, it has to be underlined that busines s models with MIFs fo r R-transactions which 
have been set up as a financing mechanism te nd to have equivalent effects to MIFs per 
transaction business models66. It could be expected that in the absence of regulatory 
intervention, the current business models  based on MIFs would be gradually 
eliminated/phased out as a result of national and/or European proceedings, although at an uneven pace, and with the risk of an unlevel playing field. This elimination would seem 
unlikely to upset the fundamental equilibrium of  the banking sector. In all the Member States 
with MIFs (per transaction and for R tran sactions) in place, the accruing revenues are 
significant in absolute value but represent less than 1 % of total retail banking revenues. Also, 
when compared to the fees char ged directly to consumers or co mpanies for direct debits in 
addition to the MIFs that are charged to the payee’s banks for direct debits, the MIFs 
represent only about 12 %.
67 
                                                 
63 At present the direct debit schemes of only 6 EU Member States - 25% of the market - operate with a 
per transaction  MIF. Currently, per transaction  MIFs exist in Belgium (2 cents per transaction ), Spain 
(less than 3 cents), Sweden (11 cent s), France (12 cents), Portugal (23 ce nts), and Italy (25 cents) with a 
clear trend towards a d ecreasing or zero MIF. 
64 R-transaction MIFs of varying sizes exist in Aust ria, France, Germany, Portugal. In Spain, such 
R-transaction MIFs only apply to non STP direct debit transactions. 
65 R-transaction MIFs are only of application for manual transactions. 
66 See the Commission Working Document on the Applicability of Article 81 of the EC Treaty to 
multilateral interbank-payment s in SEPA Direct Debit , published 3.11.2009, p. 11. 
67 On the basis of World Retail Banking Report figures, retail banking revenues for 2006 amounted to 
EUR 61 billion for France, 60 for Germany  56 for Italy, 33 for Spain, 12 for Austria, and 9 for Portugal. 
Multiplying the number of direct debit transactions per Member State (ECB Blue Book figures) by the 
MIFs amounts, MIF revenues can then be calculated. These MIF revenues are overestimated as for 
instance they include 'on-us' trans actions, or transactions between acc ounts at the same bank. Even in 
EN 49   EN In terms of impact, consumers, companies a nd public authorities can continue to rely on 
competition law enforcement to ensure that per transaction MIFs are no longer applied for the 
reasons mentioned above. In this case it ne eds however to be take n into account that 
competition rules are applied on a case-by-case ba sis. This means that groups of payment 
services providers may chose to 'sail close to the wind' and apply systems that raise attractive 
revenues but risk ultimately being prohibited by  competition authorities or national courts. 
Consequently, the SEPA direct de bit market may consist of a vari ety of different systems with 
different levels of sustainabil ity under the competition rules. 
The same applies if (more) guidance is provided under the competition rules: the fact that 
groups of players may decide to 'test' the sustainability of certain arrangements under 
competition rules, even taking into account the guidance, may substan tially delay the true 
achievement of a level playing field. The clarif ication on the compatibility of business models 
for SDD through the Regulation is necessary for its effective rolling out as some Communities have made this a prerequisite for their investing in SDD
68. Failing this, the 
emergence of different groups of banks agre eing in different markets on different MIFs, 
which may or (most probably will) not be in  line with competition rules and the guidance 
already provided, is likely. This would resu lt in market fragmentation and uneven and 
incomplete migration to SDD.  
The direct debit market is a market with netw ork effects. Only a mass transition to one or a 
small number of comprehensive new systems will generate true efficiencies. The existence of a variety of financing arrangements, some of which are under threat of  being prohibited, may 
be a factor unnecessarily jeopard izing effective migration. It ha s to be underlined in this 
respect that whilst both at the public consul tation on the working do cument of November 
2009 and at the Hearing of 17 November, stake holders concentrated their comments on the 
substance of the issue (i.e. on whether interchange fees should be allo wed and if so under 
which conditions), it can be inferred from the re peated calls for further guidance, from some 
banks and banking communities, but also from user s, that a status quo situation would not be 
satisfactory from this perspective. 
Sub-option 2 – Imposing a MIF/Setting a cap for MI Fs per transaction at a certain level as of 
an end-date for migration to SDD 
Under sub-option 2, a positive MIF per tran saction would be imposed (a MIF for R-
transactions with the aim of financing the whole system , although not a sub-option per se, 
would have similar restrictive effects as the ones of a positiv e MIF per transaction, hence the 
analysis below would apply mutatis mutandi s). Alternatively, a cap would be defined, 
allowing MIFs per transaction provided they stay below a certain maximum fee ('capping 
MIFs'). In terms of impact, regul ating MIFs in such ways would address the perceived lack of 
clarity on a long term business model. 
However, imposing a MIF for all transactions would go against the prac tice applied regarding 
the majority of current domestic  direct debit transactions and not seem to be called for by a 
large number of payment service providers. The views from stakeholders, especially 
                                                                                                                                                        
 
this case, the MIF revenues in all these market s constitute less than 0.7 % of the retail banking 
revenues. According to the Capgemini study referred to in footnote 76, direct banking fee income for 
payments was estimated at approximately EUR 46 billion in 2006, of which approximately EUR 8 billion would come from direct debit. Total MI F revenues would then amount to about 12 % of 
direct banking fee income for direct debit. 
68 Cf. footnote 21. 
EN 50   EN consumers and corporates, as expressed in th e public consultation on the working document 
of November 2009 and at the Hearing of 17 No vember are generally supportive of a ban on 
MIF per transaction. However, specific banki ng communities currently benefiting from high 
MIFs per transaction firmly supported their being maintained – and therefore opposed a 
binding legal prohibition. Also, in the absence of intervention, the current business models 
based on MIFs would be gradually eliminated /phased out, although at an uneven pace, and 
with the risk of an unlevel playing field. Moreover, imposing a MIF would have the same 
anticompetitive effects as those identified for per transaction MIFs based on multi-lateral 
arrangements, i.e. impose a system of hidden f ees that cannot be influenced by consumers and 
companies and thereby prevents them from maki ng choices that lead to an efficient use of 
direct debits. 
Imposing a maximum MIF per transaction through a cap would be likely to also have the 
effect of imposing a MIF; in practice no bank relying on MIFs will have an interest to impose a lower MIF than its competitors, especially since these lower MIFs will not be visible for its own clients, the consumers. As this bank ha s no direct contractual relationship with the 
payee’s bank, it is in a position to request the maximum MIF. Therefore, due to the two sided nature of this market, a capped MIF is likely  to become the rule. The negative impact 
identified above for imposing a MIF would be similar for capping MIFs. 
As concluded in the Commission Working Docu ment of November 2009 – which articulates 
the principles underpinning the relevant pr ovisions of Regulation 924/2009 and the Joint 
Statement of the European Commission and th e ECB on the compatibility of business model 
for SDD with competition rules – the current ma rket information therefore does not suggest 
that a per-transaction MIF would be necessary or  indispensible for the e fficient use of direct 
debit schemes
69. On top of the reasons mentioned above , the option of set ting a cap for MIFs 
per transaction and/or R-transa ction at a certain level would therefore be contrary to the 
guidance already provided by the Commi ssion and the ECB on this topic. 
Sub-option 3 – Prohibiting per tran saction MIFs (and measures of equivalent object or effect) 
and allowing R-transactions MIFs only under certain conditions as of an end-date for 
migration to SDD 
Under Sub-option 3, MIFs per transaction woul d be prohibited for na tional and cross-border 
direct debits after the end date for migration to SDD. As to R-transactions (transactions which cannot be executed correctly or which have b een reclaimed by a payment service provider), 
MIFs could be allowed, if indi spensable for the efficient hand ling of R-transactions and if 
appropriately designed. In part icular, these fees should be strictly and une quivocally cost-
based, and should not exceed the actual costs of  the most efficient comparable operator. 
Failing this, incentives for providers to improve the efficiency of thei r operations would be 
limited, as they could align fully or at least part ly – in the case of average costs being used – 
on the costs of less efficient providers. Thes e MIFs should be aimed at incentivizing an 
efficient use of the scheme and not at financing its operation. 
Their level should not exceed th e actual costs of an R-trans action to avoid that scheme 
participants are overcharged relative to the ac tual costs they have imposed on the system by 
causing an R-transaction. Appropriate measures to avoid R-transactions  should therefore be 
implemented, for instance with respect to cont rols before settlement and pre-checks of 
                                                
 
69 Commission Working Document, p. 9. 
EN 51   EN mandates, to avoid in particular R-transactions  due to lack of sufficient funds on the account 
and absence of mandates. 
Moreover, a collective arrangement on MIFs for R-transactions should efficiently allocate 
costs to the entity responsible for the R-transaction. Also, it should not allow for payment service users to be charged additionally for the costs covered already by the interchange fees. Besides, in order to preserve a level play ing field between payment providers across the 
Internal Market, other forms of interchange fees for R-transactions (bilateral and unilateral) should also be included in the scope of this provision. These should also be cost-based and 
aim at an efficient allocation of costs to the entity having caused the R-transactions. 
Such conditions for R-transaction MIFs woul d constrain the partie s to the collective 
agreement on R-transaction MIFs on the basis of objective criteria. The implementation of 
these would be subject to the monitoring and sanctions of the authorities in charge of 
monitoring the implementation of this provision at national a nd European level and to the 
relevant courts and judicial bodies. Therefore, th ese would contribute to the creation of a level 
playing field through a regulation setting clear rules for financi ng models for SDD compatible 
with competition rules, hence avoiding circ umvention of the prohibition of MIFs per 
transaction e.g. through MIFs for R transactio ns financing the whole system. Allowing MIFs 
for R-transactions in such context would not cause appreciable negative effects on 
competition or fragmentation of approach, whilst  responding to the call from parts of the 
industry for more 'clarity'. This approach  can be compared to the one taken by the 
Commission in other network indus tries: faced with enduring inconsistencies in the telecoms 
sector the Commission adopted a Recommenda tion on fixed and mobile termination rates 
recommending a specific cost methodology to be applied by telecomm unication regulators. 
"Ex ante" regulatory tools can sometimes provide an efficient solution compared to traditional 
"ex post" antitrust enforcement action – wh ich can always be activated if needed. 
Regarding the impact of the conditions related to  R-transaction MIFs, they would be aimed at 
ensuring an efficient and smooth functioning of th e direct debit scheme, in particular through 
the incentives on banks and payment service pr oviders to improve the functioning of their 
systems as they would no longer be in a position to pass on their ineffici encies or irrelevant 
costs to other players through MI Fs. This should lead to a leve l playing field between market 
players and to an improvement of the compe titive conditions under which they operate. It can 
be expected that these benefits will be passed on to users, corporates and consumers 
respectively. 
Similarly, the efficient allocation of costs to the party responsible for the R-transaction is 
expected to impact positively the use of direct debit and of payment inst ruments to the benefit 
of society as it will incentivise parties to the direct debit transactions to minimise the 
occurrence of R-transactions as th ey will be directly faced with the costs attributable to them. 
This should enhance the transparen cy of costs. It would mean fo r instance that the costs for R-
transactions due to lack of  funds on the payer’s account cannot be passed on by the payer 
bank to the payee bank, which has an inflationa ry impact on the fee the payer will have to 
face as a result from the payee, as compared to  direct reconciliation between the payer and the 
payee. Due to the asymmetry of negotiating power between the consumer and his payment 
service provider and for consumer protection re asons, it is necessary to  set a principle of no 
double charging i.e. payment service users should not be charged additionally for the costs covered by the interchange fees to avoi d such behaviour from the payer banks. 
It is to be expected that under Sub-option 3, companies’ move to SEPA  DD will be facilitated 
as the uncertainties regarding business models and the charging structure resulting from these 
EN 52   EN would be clarified. As a result, they could en joy stronger bargaining pow er and the possibility 
to seek tender offers to integrate their payments on a cross-border basis. This will result in economies of scale and a reduction in the proce ssing costs. As regards the overall impact of 
prohibiting MIFs per transacti on and allowing MIFs for R-tran sactions, since pan-European 
direct debit transactions are or  will be carried out through (an) entirely new system(s) that will 
replace a variety of presently existing domestic systems the likely impact of prohibiting per 
transaction MIFs and conditionally allowing MIFs for R-transactions can only be assessed on the basis of certain qualitative and quantitat ive impacts which can be expected. A more 
elaborate qualitative assessment is c ontained in Section 1 of Annex 11a. 
First, if hidden fees are abolished payment se rvice providers will compete with each other in 
a transparent way. Therefore, even if payers’ banks will start charging consumers directly (through an increase in direct de bit usage fees or an increase in  current account fees) they will 
do so under conditions of competition. 
Also, lower costs to creditor companies should in  principle lead to lo wer bills and/or higher 
discounts to consumers. 
With an integrated European market there wi ll also be more choice for consumers and 
companies. 
As already stated payees should in principle be able to make good any increase in fees for 
payers by direct rebates and di scounts to stimulate the use of  direct debit and so ensure 
an appropriate take-up. 
Also, in the framework of the SEPA direct debit system the mandate given by the payer will 
no longer be managed by the payer’s bank but by the payee (the creditor company) itself. This 
is likely to have a downward impact on costs presently incurred by payers’ banks as SEPA 
DD thus shifts a share of these from the banking side to the payee. 
Sometimes, the fear is expressed that abolishi ng MIFs per transaction in the countries where 
they are still in place would lead to a lower us e of direct debits as a payment instrument by 
consumers and companies. However, this is  not corroborated by figures on the present 
number of transactions in 'MIF' – countries and 'no-MIF-countries': These do not suggest the 
existence of a clear link between the number of transactions in a country and the existence of 
a MIF (see Section 2 of Annex 11a). 
It is sometimes argued that if banks lose thei r revenues from interchange fees they will move 
to charging these fees directly to consumers. However, currently available public data do not 
show a correlation between the existence of (high)  MIFs and (no or low) consumers’ fees for 
using direct debit. In the vast majority of c ountries where high MIFs are in place, banks still 
tend to charge consumers directly on top of  collecting these MIFs. Similarly, in many 
countries with no MIFs, consumers are not  charged (see Section 3 of Annex 11a). 
When consumer fees for using direct debit are low (or no fees are of a pplication), it could be 
the case that on the consumer side the costs of di rect debit transactions are cross subsidized by 
revenues from current account fees. It has sometimes been argued that this cross subsidisation, resulting in comparatively higher current account fees, could be a possible 
counterbalance for the existence of low or no consumer fees, in particular in no MIF 
countries. However, there does not appear to be  a clear link, either, between the existence 
(and level) of a MIF per transaction and gene ral bank account fees for consumers (that may 
include consumer fees for direct debit tr ansactions) (see Sectio n 4 of Annex 11a). 
EN 53   EN A distinction might therefore n eed to be made between the short term and the long term 
impact related to the currently hidden charges to consumers being made more transparent to 
them. In the short term, it could be expected that (some) banks, especially in the Member 
States where high MIFs per transaction – or m easures of equivalent object or effect – are 
currently in place, may not take into consideration the competitive constraints created by higher transparency and choice for consumers, which might result in increased charges to 
consumers. The absolute impact is however exp ected to be a transitional one as competition 
between payment service providers would keep these increases in check. In terms of the 
relative impact on payers (as compared to ot her payment instruments), competition between 
payment instruments would also act as an ince ntive for merchants to provide payers with 
rebates more than compensating for the (possible) increase in consumer charges, to encourage them to use direct debit instead of alternative payment methods. 
In this context, the Commission intends to monito r the effects of SEPA on fees to see whether 
payment services providers are using SEPA as a pretext to increase fees – perhaps even to 
levels that are higher than what they received through interc hange fees before. 
It has to be noted that sub-op tion 3 would not result in an in creased administrative burden or 
in the creation of additional administrative cost s to payment service providers as no formal 
notification, information or reporting requirement s to public authorities regarding the business 
model chosen are being introduced. In case a business model based on interchange fees for 
R-transactions is envisaged, th e resulting obligations and costs would be similar to the ones 
resulting from self-assessment of compliance with competiti on rules (the 'status quo' or 
baseline scenario). The requirement that interc hange fees applied for R- transactions shall be 
aimed at efficiently allocating costs to the pa rty that has caused the R-transaction does not 
necessarily mean that in such a system, in case the error is made by one of the banks involved, 
there should always the possibility of inter ba nk fees going in two di rections, dependent on 
which bank made the error. Provided they ta ke into account the key requirement that the 
arrangement must be aimed at efficiently allocating costs to the party causing the 
R-transaction the parties have the possibility to arrange the system in the way they deem 
suitable. Obviously, in such a system if an erro r is made by the payer or the payer’s bank the 
payee bank should not pay an interchange fee to  the payer bank. However, the allocation of 
costs for errors may also be re alised by practical so lutions, taking into ac count the functioning 
of the arrangement, the possibilities for par ties to obtain compensation for damages and the 
stream of costs and reve nues between the parties. 
In the framework of the public consultation on the working document of November 2009 and 
at the Hearing of 17 November, most stakeh olders, and in partic ular consumers and 
companies supported the approach in terms of a ban on MIF per transaction and of allowing 
interchange fees for R-transac tions under certain conditions. However, in particular the 
banking communities currently benefiting from hi gh MIFs per transaction took a firm stance 
in favour of MIFs per transaction being mainta ined. In addition, the approach in favour of 
a MIF for 'R' or error transactions provided certain conditions were met was supported by 
some banks. In this context, the fact that it was difficult to determine who was responsible for 
an error was underlined in particular. 
On the basis of this analysis (the details of wh ich are set out in Annex 14 a), there is indeed no 
evidence that MIFs per transaction (or measures  of equivalent object of  effect) are likely to 
achieve the goals of efficient use of direct debit payments. Alternative business models to 
MIF per transaction, in which customers are dire ctly confronted with costs, such as for 
EN 54   EN R-transactions, are likely to lead to more effici encies in terms of the means of payment used 
and their costs to companies, consumers and the economy a whole. 
Table 13:  Legal certainty on the business model 
Effectiveness in terms of relevant criteria 
Sub-option 
Legal certainty/clarity Potential for 
competition/ 
level playing 
field Speed of 
migration 
process Efficiency 
1. Continuation of current 
practice 0 0 0 0 
2. Impose a MIF/ Set capped 
MIFs + – – – 
3. Partial prohibition of MIFs 
/ Regulation ++ ++ ++ ++ 
On the basis of this analysis it can be concluded that any form of competition enforcement 
action or competition guidance is likely to prov ide less certainty to the market and a more 
fragmented level playing field than a bindi ng community instrument. It is therefore 
recommended to go forward with the legal inst rument of the regulation, that would at the 
same time provide clarity on MIFs and other in terchange fees prohibitin g per transaction fees 
(and measures of equivalent object or effect ) and allowing R-transaction MIFs under certain 
conditions. 
6.5.8.  Overview of the chosen sub-options 
Table 13:  Summary of the chosen sub-options 
Area Chosen sub-option Remarks 
1. Reference basis for setting an 
end-date Essential requirements approach Existing international standards + 
defined requirements for pan-
European payment instruments 
2. Transaction domain End-to-end Full SEPA migration: customer-to-
PSP, PSP-to-PSP and PSP-to-
customer domain 
3. Product specification Staggered approach Niche products to be phased out 
after 3–5 years 
4. Member State scope Two end-dates; one for euro area 
and one for non-euro area Deferred migration for non-
euro area Member States 
5. Deadlines for migration Separate deadlines for SCT and 
SDD migration SCT: one year after entry into force
SDD: two years after entry into 
force 
6. Cross-border account opening Non-discriminatory access No payment account opening 
refusal on grounds of nationality or 
place of residence 
7. MIFs Providing certainty on per 
transaction MIFs and R-transaction 
MIFs in a Regulation Prohibition of per transaction MIFs 
Allowing R-transaction MIFs only 
under certain conditions 
EN 55   EN 6.6. Other impacts 
The recommended option of setting a SEPA migr ation end-date does not have any perceived 
impacts on European Community resources. None theless, it should be noted that once the 
SEPA migration is achieved the Community institutions should be nefit from the same, 
positive effects as indicated for relevant stakeholders, notably public administrations, in the Chapter 6.3 of this document. 
As already described above, only limited social impacts are expe cted in Member States. On 
the positive side, an integrated payments market  will help to increase the competitiveness of 
small and large businesses across the EU. A poten tially more affordable and broader choice of 
basic payment services through different paym ent initiation channels could also positively 
contribute to financial inclusi on of under-banked consumers. On  the other side, the economic 
benefits from centralisation and automati on of payments under SEPA may lead to 
consolidation, especially on the payment processing side. 
As regards the environment, only positive impacts are expected. A harmonised payments 
market will further increase the attractiven ess of electronic payment instruments in 
comparison to paper-based instruments. In the same vein, SEPA can help to dematerialise 
processes which are directly linked to payments , such as e-Invoicing. Numerous studies show 
that replacing paper invoices by  electronic invoices reduces paper consumption (thereby 
saving trees) and also leads to a more favourab le carbon footprint by eliminating the required 
transport of paper documents. For example, th e Department of Environmental Strategies 
Research at the Royal Institute of Technology in Sweden estima tes that the total effect of 
replacing paper with electronic invoices  would lead to annual carbon reductions 
corresponding to 39 000 to 41 000 tons of CO
2-equivalents in Sweden alone, depending on 
the electricity mix used.70 If this number is extrapolated ba sed on invoice volumes, the carbon 
reduction potential for the EU w ould be around 1 million tons of CO 2-equivalents annually. 
An impact on third countries is possible, if the proposed binding law is extended to the three 
European Economic Area countries which are no t members of the EU. The decision on such 
extension would need to be taken by th e EEA Joint Committee and would require 
an amendment to the Annex XII of EEA Agreem ent. In such a case the same impacts as 
described in Chapter 6 would affect the releva nt stakeholders in Iceland, Liechtenstein and 
Norway. No direct impact on ot her countries is to be expected. While banks in two other 
countries participate voluntarily in SEPA under its current geographic sc ope (i.e. Switzerland 
and Monaco) these sovereign states have freedom  to choose whether or not to incorporate the 
proposed provisions into their national law. 
                                                 
70 Effects of a total change from paper invoicing to electronic invoicing in Sweden , Å Moberg, C Borggren, 
G Finnveden & S Tyskeng, KTH, 2008,  
http://www.infra.kth.se/fms/pdf/Moberg%20et%20al%202008.pdf . 
EN 56   EN 7. CONCLUSIONS  
This impact analysis concludes that only a ra pid and comprehensive migration to SEPA credit 
transfers and direct debits will generate the fu ll benefits of an integrated payments market. 
Market forces and self regulatory efforts have proven not to be sufficient to drive concerted 
migration to SEPA on both the supply and dema nd side. In this context, it is strongly 
recommended to set mandatory end-dates for both payment instruments by binding legislation at EU level. 
A general essential requirements approach is co nsidered to be most appropriate for defining 
pan-European payment instruments. Furthermor e, these essential re quirements should apply 
to the whole payment service transaction domain, from payment user to payment user through their respective PSPs. This ensure s the reaping of the full potent ial SEPA benefits which are 
primarily generated on the demand side of the market. An end-da te should apply to 'regular' 
credit transfers and direct debits in a first stage, but so-called legacy niche products should 
also be phased out after a tran sitional period, whos e duration should be sufficiently long to 
minimise the impact on users. The impact analys is also shows that separate end-dates should 
be set for credit transfers and direct debits respectively. Based on the necessary migration 
efforts and the usual investment cycles for paym ent systems, an end-da te for credit transfers 
should be defined in the short term (e.g. one year  after entry into force of the Regulation) and 
for direct debits in the mid-term (e.g. two ye ars after entry into fo rce of the Regulation). 
These end-dates should apply to euro area Member States, while non-euro area 
Member States would be granted a longer tran sitional period, based on their limited euro 
payment transaction volumes. Discriminatory tr eatment of non-resident s and non-nationals as 
regards the opening of payment accounts in other Me mber States should also be abolished. In 
order to facilitate the im plementation of SEPA DD clar ity should be provided on the 
multilateral interchange fees. 
8. M
ONITORING AND EVALUATION  
The proposed Regulation would enter into force 20 days after its publication in the Official 
Journal of the European Union. However, the op erative part of the Re gulation would clearly 
depend on the concrete end-date chosen. In  accordance with the implementing options, 
discussed in Chapter 6.5, different end-date s for migration to pan-European payment 
instruments will apply for euro area and non-euro  area Member States as well as for credit 
transfers and direct debits. 
An evaluation is planned three years after th e entry into force of the SDD end-date for 
euro area Member States. Thus, the forthcoming legislation will be subject to a complete 
evaluation in order to assess, am ong other things, how effective and efficient it has been in 
terms of achieving the objectives presented in this impact assessment and to decide whether new measures or amendments are needed. The evaluation report will also examine whether an 
end-date for migration to SEPA card payments is feasible and necessary. 
The SCT and SDD migration indicators, publi shed monthly by the ECB, are very good 
candidates for measuring migration during the evaluation period. The yearly reports on price 
changes of bank account services in relati on to SEPA developments, published by the 
Commission, are another potential source of data which could be  helpful in assessing the 
impact on pricing achieved through establ ishing an end-date for SEPA migration. 
EN 57   EN 9. GLOSSARY  
'credit transfer'  means a payment service for crediting a payee’s payment account, where 
a payment transaction or a series of payment tr ansactions is initiated by the payer on the basis 
of the consent given to his payment service provider 
'direct debit'  means a payment service for debi ting a payer’s payment account, where 
a payment transaction is initiated by the payee on the basis of the payer’s consent 
'payer'  means a natural or legal person who holds a payment account and allows a payment 
order from that payment account, or, where there is no payment account, a natural or legal person who gives a payment order 
'payee'  means a natural or legal person who is th e intended recipient of funds which have 
been the subject of a payment transaction 
'payment account'  means an account held in the name of one or more payment service users 
which is used for the execution of payment transactions 
'payment system'  means a funds transfer system with formal and standardised arrangements 
and common rules for the processing, clearing a nd/or settlement of payment transactions 
'payment scheme'  means a set of rules, practices and standards, which is separated from any 
infrastructure or payment system that supports  its operation between the scheme participants 
across the EU 
'payment service provider'  means any of the categories referred to in Article 1(1) of 
Directive 2007/64/EC and the lega l and natural persons referred to in Article 26 of that 
Directive, but excludes those in stitutions listed in Article 2 of Directive 2006/48/EC of the 
European Parliament and of the Council of 14 June 2006 relating to th e taking up and pursuit 
of the business of credit inst itutions benefiting from a Member  State waiver exercised under 
Article 2(3) of Directive 2007/64/EC 
'payment service user'  means a natural or legal person ma king use of a payment service in 
the capacity of either payer or payee, or both 
'payment transaction'  means an act, initiated by the pa yer or by the payee of transferring 
funds, irrespective of any unde rlying obligations between  the payer and the payee 
'payment order'  means any instruction by a payer or payee to his payment service provider 
requesting the execution of  a payment transaction 
'R-transactions'  means direct debit transactions that cannot be properly executed or are being  
reclaimed by a payment service provider becaus e the payment order is rejected, refused, 
returned or reversed 
'interchange fee'  means a fee paid between the payment service providers of the payer and of 
the payee for each direct debit transaction 
'multilateral interchange fee'  means an interchange fee which is subject to a collective 
agreement between payment service providers 
EN 58   EN 'IBAN'  means an international payment account num ber identifier, which uniquely identifies 
an individual account with a unique payment service provider in a Member State, the 
elements of which are specified by ISO 13616 , set by the International Organization for 
Standardisation (ISO) 
'BIC'  means a code that unambiguously identifies a payment service provider, the elements 
of which are specified by ISO 13616, set by the International Or ganization for Standardisation 
(ISO) 
'ISO 20022'  means a standardised process for electronic finance messages set by the 
International Organization for Standardisation (ISO) 
EN 59   EN 10. ANNEXES  
Annex 1: Key statements by Europe an Institutions and stakeholders 
supporting the establishment of an  end-date for SEPA migration 
To encourage migration to SEPA the European  institutions have all endorsed the idea of 
a migration end-date in order to fully and rapidly reap the benefits of SEPA. 
European Parliament resolution on the implem entation of the Single Euro Payments Area 
(SEPA) of 12 March 2009 
The European Parliament (1) Emphasises its continued su pport for the creation of S EPA, which is subject to 
effective competition and where there is no distinction between cross-border and national payments in euro 
(2) Calls on the Commission to set a clear, appropriate and binding end-date, which date should not be later 
than 31 December 201 2, for migrating to SEPA products, after wh ich date all payments in euro would have 
to be made using the SEPA standards…" 
http://www.europarl.europa.eu/sides/getDoc .do?pubRef=-//EP//TEXT+MOTION+B6-2009-
0111+0+DOC+XML+V0//EN   
European Parliament resolution on the implem entation of the Single Euro Payments Area 
(SEPA) of 10 March 2010 
The European Parliament…regrets that hardly any progress has been made as regards the issues mentioned in 
Parliament’s resolution on the impl ementation of SEPA of 12 March 2009 since its adoption; …and calls again 
on the Commission to set a clear, appr opriate and binding end-date, which sh ould be no later than 31 December 
2012, for migrating to SEPA instruments, after which all payments in euros must be made using the SEPA 
standards;" 
http://www.europarl.europa.eu/sides/getDoc .do?pubRef=-//EP// TEXT+TA+P7-TA-2010-
0057+0+DOC+XML+V0//EN  
Economic and Financial Affairs Council conclusions on SEPA, press release, 2981st Council 
meeting of 2 December 2009 
"The Council (…) CONSIDERS that establishing definitive end-dates for SDD and SCT migration would provide 
the clarity and the incentive needed by the market, ensuring that the substantial benefits of SEPA are rapidly 
achieved and that the high costs of running both legacy and SEPA products in parallel can be eliminated (…) 
INVITES therefore the Commission, in collaboration with the ECB and in close cooperation with all actors 
concerned, to carry out a thorough assessment of whether legislation is needed to set binding end-dates for SDD 
and SCT and to come up with a legislative proposal should this assessment confirm the need for binding end-dates."
 
http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ecofin/111670.pdf  
Communication of the European Commi ssion on completing SEPA: a Roadmap for 
2009-2012 of 10 September 2009 
The Communication identifies six priority areas for action, wher e greater involvement of all 
relevant actors is required in order to achieve the full implementation of the SEPA. The first priority is the rapid migration to SEPA instru ments. In particular, priority 1C calls for 
an agreement on the migration end-date: 
EN 60   EN "As for the euro changeover, fixing an end-date for SCT and SDD migration provides certainty and 
predictability and acts as a strong incentive for both industry and users to speed-up migration. Migration should 
be as short as possible to minimise the costs of running national and SEPA systems in parallel, but as long as 
necessary to allow customers and bank s to change their proce sses smoothly. This requires a sound analysis of 
the impact of setting, as well as the negative effects of not setting, an end-date." 
http://ec.europa.eu/internal_market/pay ments/docs/sepa/com_2009_471_en.pdf  
Eurosystem’s 6th Progress Report on the Single Euro  Payments Area, November 2008 
"Setting a realistic but ambitious end-date for the migration to SCT and SDD is a necessary step in order to reap 
the benefits of SEPA…" 
http://www.ecb.int/pub/pdf/other/s ingleeuropaymentsarea200811en.pdf  
The idea of a binding SEPA mi gration end-date has also been  supported by the vast majority 
of the Member States in the Payments Committee in its meeting of 10 March 2010. Representatives from 17 Member States were  in favour of a binding end-date while two 
Member States clearly and a third par tly preferred a market-driven approach. 
The need for an end-date was however not only ra ised at political level. Stakeholders of the 
payments market have repeatedly  called for end-date to be set by regulation at EU level. For 
example, in its recommendations of 31 March 2009, the EPC plenary stated that 
"…mandating the end-date requires EU re gulation…". A public statement by payment 
infrastructures on 14 April 2009 stated that "… not only a self-regulate d migration date but 
also a regulated one, based on c onsideration of market feedb ack, could be a way forward". 
Furthermore, in its meeting of 23 March 2010,  a great majority in the Payment Systems 
Market Expert Group (PSMEG), composed of payment market stakeholders, expressed the 
need for a binding SEPA migration end-date. 
EN 61   EN Annex 1a: Key statements by European In stitutions requesting clarification for 
Multilateral Interchange Fee (MIF) for SEPA Direct Debit 
The main 'calls for clarity' were the following: 
– A demand for guidance/clarification regarding the compatibility of collective 
agreements relative to MIFs with comp etition rules was made by the European 
Parliament for both payment instruments in the Gianni Pittella report  on 
Competition Sector Inquiry on retail banking, adopted on 4 June 200871. 
– The ECOFIN Council  conclusions adopted on 10 February 2009 "UNDERLINE(D) 
the need for clarity on long te rm pricing issues" for SDD. 
– As regards SDD, calls for guidance to be provided  by the European Commission 
were also reflected in the Regulation 924/2009  on cross border payments adopted on 
September 2009. Recital 9 of the Regulation st ates that: "within the framework of a 
sustained dialogue with the banking industr y and on the basis of contributions made 
by the relevant market act ors, (the Commission) intends to  provide, as a matter of 
urgency, guidance as to the objective and meas urable criteria for the compatibility of 
such multilateral inter- bank remuneration, which could include among others 
multilateral interchange fees, with compe tition rules and the community regulatory 
framework." 
– This Recital has to be read in conj unction with the last paragraph of the Joint 
statement of the European Commission and the ECB of 24 March 2009 on SDD : 
"Provided that the Commission will have re ceived the necessary contributions by 
relevant market actors, the Commission expects to be in a position to provide further guidance by November 2009, which would clarify the eventu al case-by-case 
assessment under Article 81(3) EC Treaty." 
– On 10 March 2010, i.e. after the entry into force of Regulation 924/2009 the 
European Parliament  adopted a Resolution , inter alia calling for guidance on 
Multilateral Interchange Fees (MIFs) fo r SDD to be provided by the European 
Commission. In §7 of the Resolution, it "calls on the Commission to clarify 
definitely and no later than 30 Sept ember 2010, based on the outcome of the 
respective consultation, including all the stakeholders, the i ssue of a harmonised 
                                                
 
71 European Parliament resolution of 5 June 2008 on Competition: Sector inquiry on retail banking:  
§28. Notes that the Commission and many national competition authorities have stated on numerous occasions that multilateral interchange fees (MIFs) are not prohibited per se under Article 81 of the EC 
Treaty; notes, nevertheless, that the Commission recen tly focused on the compatibility of a MIF system 
with Community competition law; recommends that the Commission propose clear guidelines and indications to correct market imperfections; reminds the Commission of the importance of legal 
certainty for market participants as well as new mark et entrants to develop and innovate their services; 
§29. Believes in a strong need for better clarification concerning the methodology and rules for the management of MIFs for card payments and for the mechanism to calculate interbanking fees for 
automated teller machines and non-card payments; recalls that dir ect debit and credit transfer schemes, 
such as those under the SEPA, support services that are jointly offered by two payment service 
providers and jointly requested by two consumers, creating economic benefits thanks to so-called 
network effects; suggests that the Commission es tablish and communicate to  all stakeholders the 
criteria for the definition by market operators of a the methodology to be  used to calculate all MIFs, to 
which the Commission should have regard in order to ensure a real level playing field and the 
enforcement of all competition rules. 
EN 62   EN long-term economic model for SEPA direct de bits […]; insists on the need for this 
model to be developed in close coopera tion between the payment sector and the 
Commission and in line with EC compe tition law and the Community regulatory 
framework." 
– On October 2010, the European Central Bank published its 7th progress report72 
regarding SEPA. It indicates "that for the time being, the intricate debate on MIF has 
been resolved by Regulation (EC) No 924/ 2009 on cross-border payments" but only 
till 1 November 2012. Therefore "the fina ncial industry expects the European 
Commission, …, to provide guid ance on the long-term chargi ng principle for SDD in 
order to avoid concerns over competition." 
                                                 
72 http://www.ecb.int/pub/pdf/other/s ingleeuropaymentsarea201010en.pdf  
EN 63   EN Annex 2: Chronology of key consultations and events 
regarding the establishment of an  end-date for SEPA migration 
Date  Item 
February 2006 Commission publishes cons ultative paper on SEPA Next Steps73 
April 2006 A tender for SEPA study is launched 
May 2006 Joint Statement from the Europea n Commission and the European Central Bank 
A common vision for the Sing le Euro Payments Area (SEPA)  
April 2007 First agreement reached on Directive  2007/64/EC on payment services in the 
internal market (PSD) in first reading in Parliament (the Directive is published in 
December 2007) 
August 2007 The ECB publishes a study on the economic impact of the Single euro area74 
November 2007 A feedback statement to the consultative paper on SEPA Next Steps is 
published75 
January 2008 SEPA: Implem entation and deployment, launch  of SEPA Credit Transfer Scheme 
on 28 January 2008 
January 2008 A study on benefits, opportunities  and costs of migration to SEPA is published 
(Cap Gemini study)76 
November 2008 Eurosystem’s 6th Progress Report on SEPA, calling for a realistic but ambitious 
end-date for the migration to SCT and SDD77 
April 2009 Parliament adopts Regulation (EC)  No 924/2009 on cross-border payments in 
the Community in first reading (Regulation is published in October 2009) 
June-August 2009 Public consultation on setting an end-date for migration to the SEPA payment 
instruments78 
September 2009 A roadmap for completion of the SEPA is published by the Commission. It 
envisages a possibility of setting a legislative end-date for migration to SEPA 
instruments79 
September 2009 The Steering Group on t he Impact Assessment is established 
October 2009-March 
2010 Meetings of Payments Committee, Pa yment Systems Market Expert Group and 
of EU Forum of national SEPA commi ttees – end-date for SEPA migration 
discussed 
November 2009 Deadline for implementation of Directive 2007/64/EC and Regulation 924/2009 
enter into force in the Member States 
November 2009 SEPA: Implementat ion and deployment, launch of  SEPA Direct Debit Scheme on 
2 November 2009 
November–December 
2009 Survey of the European Business Test Panel on SEPA migration80 
December 2009–
February 2010 Questionnaire sent to selected banks on  the costs of running in parallel of 
national and pan-European payment systems 
December 2009–March 
2010 Meetings of the Steering Gr oup on the Impact Assessment 
 
                                                 
73 http://ec.europa.eu/internal_market/payments/docs/sepa/sepa-2006_02_13_en.pdf  
74 http://www.ecb.int/pub/pdf/scpops/ecbocp71.pdf  
75 http://ec.europa.eu/internal_market/payments/do cs/sepa/feedback_statement-2007_11_30_en.pdf  
76 http://ec.europa.eu/internal_market/payments/docs /sepa/sepa-capgemini_study-final_report_en.pdf  
77 http://www.ecb.int/pub/pdf/other/s ingleeuropaymentsarea200811en.pdf  
78 http://ec.europa.eu/internal_market/payments/docs/sepa/feedback_migration-2009_09_29_en.pdf  
79 http://ec.europa.eu/internal_market/pay ments/docs/sepa/com_2009_471_en.pdf  
80 http://ec.europa.eu/yourvoice/ebtp/consultations/sepa3/statistics_en.pdf  
EN 64   EN Annex 3: Summary of the public co nsultation on SEPA migration 
(September 2009) 
1. INTRODUCTION  
On 8 June 2009, the European Commission published a consultation document on possible 
end-date(s) for SEPA migrati on and invited stakeholders to  comment by 3 August 2009. The 
purpose of this consultation was to collect stak eholders’ views on this important issue and to 
identify general trends for the possible way forward. 
This document is a summary of the contribut ions received. Its obje ctive is to present 
an overview of the opinions expressed and ar guments presented by stakeholders in their 
contributions. The views expressed in this doc ument do not prejudge in any respect the policy 
orientation which may be developed by the Commission at a later stage. 
2. METHODOLOGY  
This report is structured as the consultation doc ument. 11 specific sets of issues were raised. 
Not all contributors answered all questions. Fo r instance, those who di d not support the idea 
of setting some deadlines for SEPA migration in  Question 1 in particular did not answer the 
other questions. Some more technical que stions were sometimes not answered by 
respondents. 
The responses to the individual  questions will not be pres ented in quantitative terms. 
A qualitative analysis of the responses and of the main arguments put forward will be presented. 
3. N
UMBER OF RESPONSES  
136 written responses have been received by the Commission81. A number of answers were 
however identical, as well as identical to their trade association. We have  therefore chosen to 
treat these answers as one answer each time, for the sake of the analysis. In total, 105 written 
responses have thus been analysed. 
More than a third of the respons es came from payment service providers, as well as technical 
providers, such as card processors or IT pr oviders. On the demand side of the payment 
market, businesses represented a quarter of the responses (among which four came from 
organisations representing SMEs). A few respons es also came from consumer organisations 
and individual consumers. Merchants did not respond much. Finance ministries, central banks 
and other public sector entities accounted for one fifth of the answers. Several of the national 
SEPA coordination committees in charge of impl ementing the SEPA project  at national level, 
also replied to the consultation. The compos ition of these SEPA Committees varies from 
Member States to Member States, but they nor mally bring together the national Central Bank, 
the banking community, and sometimes users’ representatives. 
                                                 
81 The complete list of responses can be found in Annex 1 of this document and the detailed answers via: 
http://ec.europa.eu/internal_market/payments/sepa/ec_en.htm . 
EN 65   EN Graph 1:  Number of contributions by stakeholder category (sta keholders or organisations 
representing them) 
Public sector
4%Finance ministries
9%Other
3%Consultants
4%
Central banks
5%Businesses
26%Merchants
2%Consumers
6%National SEPA 
coordination committee
6%Payment service 
providers
27%
Technical providers
8%Total
105 answers
 
In total, contributions were received from contri butors in 22 of the 27 Member States as well 
as from EU representative groups or bodies. Two thirds of the responses came from the euro area Member States, 19 % from the non-eu ro area Member States. The following graph 
gives a breakdown of the number of submissions r eceived by territory. 
Graph 2:  Number of contributions  by territorial origin 
EU
11%
AT
3%
BE
4%
DE
28%
ES
5%FI
2%FR
9%IE
2%IT
6%NL
8%PT
1%SK
2%LV
1%UK
8% SE
3%
HU
2%DK
1%
SI
1%CZ
2%EE
1%LT
1%RO
1% Total
105 answers
 
EN 66   EN 4. CONTENT OF THE RESPONSES  
The consultation document set out 11 specific ques tions pertaining to the end-date issue. The 
responses to these questions are an alysed in turn in this section. 
4.1. Assessment of the need for (a) SEPA migration end-date(s) 
Question 1:  Do you think that under current circumst ances there is a ne ed to support SEPA 
migration by setting (a) deadline(s) for migrat ion to SCT and SDD? Do you consider that 
certain preconditions should be met for setting such (a) deadline(s)? 
A large majority of respondents, among all categories, emphasised the need to set 
(a) deadline(s) for the migrati on to SCT and SDD. A number of reasons were put forward. 
Setting (a) deadline(s) is considered necessa ry to accelerate SEPA migration which is 
currently too slow. Some res pondents felt that it would provi de incentives or even put 
pressure on those who were reluctant to mi grate today. By accelerating SEPA migration, 
many underlined that such deadlines would thus allow to reap the full benefits of the SEPA 
project. This would indeed avoid that two syst ems for credit transfers and direct debits are 
managed in parallel for too long a period of time . This would also prov ide certainty and allow 
for the appropriate planning of SEPA migration and the attri bution of the necessary budgets. 
Such deadlines were also felt necessary in order to raise awareness regarding the SEPA 
project. Some indeed considered that SEPA wa s a political initiative that should be pushed 
forward like the euro changeover,  in order to achieve a true single market for payments in 
Europe. 
Among the majority of respondents which agreed on the need to set (an) end-date for the 
migration to SCT and SDD, approximately half  of them however considered that some 
preconditions should be met before  an end-date could be set. 
– The first set of preconditions is legal. Some indeed point out that the Payment 
Services Directive should be fully trans posed in all Member States before (an) 
end-date(s) could be set. Other had con cerns regarding the legal continuity of 
existing direct debit mandates during the migration to the SDD and required legal 
solutions to smoothen such migration. Se veral respondents also considered that 
balance of payment reporting requirements  should be entirely removed so that 
national and cross-border payments could be treated equally. 
– The second set of preconditions related to the quality of the SCT and SDD schemes. 
Some respondents indeed pointed out that th ese schemes should first be enhanced to 
fully meet users’ needs before (an) e nd-date(s) could be set. Regarding SCT, 
improvements mostly related to message format s, in particular to the possibility to 
have an enlarged remittance information field. Regarding SDD, improvements concerned more fundamental schemes’ rule s, such as the management and checking 
of the mandate, in order to ensure a higher level of security for this new pan-European instrument. 
– Third, some respondents considered that the financial conditions of these new 
payments should be clarified. For several payment service providers, there was thus 
a need for stable business models, especia lly regarding SDD. On the users’ side, 
several respondents also  underlined the need for more cl arity regarding the fees that 
would be charged for these new payments. 
EN 67   EN – Fourth, many respondents underlined that users should be given some time to use the 
new SEPA products. Some therefore consider ed that deadlines for SEPA migration 
should not be set before SDD products are made available by payment services providers in the different Me mber States and before user s had the opportunity to use 
them during a reasonable period of time. Se veral respondents also underlined the 
critical role public administrations would ha ve in the migration to SEPA instruments, 
given the volume of payments they represented in each Member State. 
While a sizeable majority of respondents expr essed support for (an) end-date(s), a number on 
the contrary considered that there was no need  for such end-date(s). These responses came 
from a particular category of payment servi ce providers on the supply side. On the demand 
side, some corporate, public administrations  from three Member States and two national 
consumer organisations also expressed reserv ations. The reasons mentioned concerned the 
legal issues already mentioned previously (P SD transposition, mandate migration) and the 
necessity to improve the quality of the pr oducts. But respondents mainly emphasised that 
SEPA migration should not be imposed on the market. It should rather be and remain 
a market-driven process, respecting payment se rvice providers’ freedom of business, as well 
as users’ choices. Users should thus be given the time and possibility to use SEPA products 
and to choose between legacy and SEPA prod ucts, depending on which ones are better in 
terms of level of service and pricing. 
Question 2:  How much time would be needed to budget and implement technically SEPA 
migration?  What is the anticipated impact of SEPA  migration on your or ganisation/business 
(e.g. on your IT systems, organisation, human  resources, communication, or any other 
area)? Please provide quantitative an d financial analysis if available. 
Question 3:  What deadline(s) would you see as feasib le for the replacement of legacy euro 
credit transfers and direct debits by SCT and SDD? 
Not all respondents provided answers to thes e two questions. Consumer organisations in 
particular did not reply, sinc e SEPA migration does not imply  changes of organisation for 
them. Some other respondents di d not reply because they were not in favour of an end-date. 
The answers were moreover difficult to compare as some were heterogeneous or not complete. The following analysis shou ld therefore be taken with caution. 
The period of time necessary to allow for a smooth migration to SEPA was very diverse from 
one stakeholder to another. Most of the answer s referred to 3 years or 3 to 5 years as an 
adequate period of time. Some respondents, mostly  corporate representatives, considered that 
migration was possible within a shorter timeframe. On the cont rary, a few others expressed 
the need for a longer pe riod of time, up to 15 years for one respondent. Some respondents also 
made a difference between the period of time needed for SCT migration and for SDD migration, the latter being longer gi ven the number of changes involved. 
In terms of impact on their organisation, only a very limited number of respondents were able 
to provide quantitative analysis of this impact . Some emphasised that the impact could be 
significant, in the event where existing direct  debit mandates could not migrate to the new 
SEPA direct debit mandates. In qualitative te rms, respondents underlined the impact SEPA 
migration would have on their IT systems and a pplications, as well as on their communication 
to clients. A few also menti oned organisational impact as well as a human resources impact. 
EN 68   EN Among the deadlines mentioned as  feasible for the migration to SCT and SDD, a majority 
favoured either end-2012 or end-2013 when bot h SCT and SDD migration were considered 
together. A large number of respondents however  made a difference between SCT migration, 
which could be achieved by end-2011 or end-2012 for most of them, and SDD migration, for 
which a later deadline was mentioned or for which no deadline was envisaged yet. 
4.2. What would an 'end-date' for SEPA migration mean? 
Question 4:  Do you think (a) migration end-date(s ) should cover only standards (i.e. the 
account identifiers and the payment format to be used) or the sc hemes’ rules as well? Please 
explain why. 
Almost all respondents indicated their preference  for an end-date cove ring both the standards 
to be used and the schemes’ rules associated to these. Most underlined  that this would be 
clearer for users and easier to handle as a proc ess. This would moreover fit better with the 
overall objective of the SEPA project to ach ieve a true harmonisation of the European 
payment market and would therefor e trigger more benefits for all. There was indeed a risk of 
different implementation of the SCT and SDD sc hemes within the area if only standards were 
made mandatory. Some also point ed out that some of these st andards were already in use 
within legacy systems. If only the SEPA standards were made mandatory, this would 
therefore not guarantee that existing payments would migrate to SEPA. One respondent 
therefore suggested mandating the use of the SEPA subset of ISO 20022, since this was the 
technical definition of  the SEPA messages. 
A few respondents however mentioned that onl y the SEPA standard s should be made 
mandatory, in order to allow for change and innovation on the payment market, which would 
not be possible if the end-date al so fixed the scheme’s conditions. 
Three stakeholders also suggested a phased approach as a compromise solution, whereby 
standards could first be made mandatory, a llowing for a quicker migration, and would be 
followed by mandatory schemes’ rules as soon as possible afterwards. 
Question 5 : Do you think (a) migration end-date(s) should cover only interbank space (i.e. 
bank/bank and bank/infrastructure communicati on) or the complete end-to-end payment 
chain (including customer/bank co mmunication)? Please explain why. 
A large majority of respondents expressed their support for an end-date covering not only the 
interbank (or payment service provider) space, but also the customer to bank and bank to 
customer spaces. In terms of communication, this  was seen as providing more clarity for all 
stakeholders. This would also allow for full st raight through processi ng of the payments and 
would avoid costs and risks of errors linked to conversion services that payment service 
providers would have to set up if only the interbank space was covered. A few respondents 
also underlined that it would be  very difficult to make SEPA mandatory only in the interbank 
space as payment service providers were partly dependent on their clients for the provision of the necessary information to the processing of payments. Some would however like payment service providers to be able to provide conver sion services on a tempor ary basis in order to 
allow for a smooth SEPA migration at the beginning. 
On the contrary, some respondents expressed a preference for a possi ble end-date covering 
only the interbank space. This was the case for some payment service providers’ and technical 
providers’ organisations, a few public auth orities and two nationa l SEPA coordination 
EN 69   EN committees. Two main reasons were mentioned: first, to leave room for competition and 
innovation in the relationships between the paym ent service providers and their users; second 
to let users choose whether and at wh at pace they wanted to migrate. 
A few respondents suggested some intermediary solutions. One pointed out that the end-date 
could cover the interbank space, as well as public administrations given their critical role for 
SEPA take up. Another considered that the en d-date should cover the complete payment 
chain, except for the formats in the customer-to-bank communication space for SCT, as it was one of the most difficult parts of SEPA migration. A few othe rs suggested a phased approach, 
whereby the end-date could apply to the interban k space in a first step and to the customer-to-
bank and bank-to-customer spaces in a second step. 
Question 6:  Do you consider that setting (a) migr ation end-date(s) should imply that all  
legacy payments migrate to SEPA pa yments or could some products be 
maintained/developed on the market beside s the SEPA products? Pl ease explain why and 
specify the conditions which would have to be met by such products. 
A large majority of respondents were of the vi ew that a migration end-date should not mean 
that all legacy payments should migrate. In some markets, so me legacy instruments indeed 
present specific functionalities, due to historic al or legal reasons, which are not available 
within SEPA schemes. This is the case for so me non preauthorised forms of direct debits, 
dematerialised bills of exchange, promissory notes, or other products currently tailored for specific user groups. Moreover, these services sometimes meet specific needs that are not 
interesting outside the community that currently used them. Some also pointed out that it was important to leave some room for innova tion and competition on the payment market. 
In their answers, many of these respondents nevert heless underlined that  there was a need to 
define precisely the payment products that w ould be authorised to remain on the market. 
Some suggested in this respect to use the de finition of corresponding payments provided in 
the new Regulation on cross-border payments. Others suggested to de fine a quantitative 
threshold (such as 10 % of paym ent transactions) above which such payments would not be 
considered as 'niche' products anymore. Some other criteria were mentioned, such as making 
this information public for transparency reason s and making it mandatory to justify why such 
payments could not migrate. Some respondents al so pointed out that the situation was likely 
to evolve in time as it would be eventually logical for such 'niche' product(s) either to be 
phased out because of low demand or incompatibility  with European laws, or to be integrated 
within SEPA, for instance through AOS. This  would however require more time than 
standard products. In any event, innovation sh ould always remain possible on the market 
according to a few respondents. 
Some respondents, especially corporate repres entatives, however considered that SEPA 
migration should mean that all legacy payments  migrate to the new SEPA schemes. Besides 
cheques and urgent credit transfers which were not in the scope of SEPA, all credit transfers 
and direct debits should in their views migrate to be fully in line with SEPA vision and fully 
reap the potential benefits of this project. A few pointed out some conditions to allow this full 
migration, in particular an e-i nvoicing service or a possibility of payment initiation by mobile. 
EN 70   EN 4.3. One end-date or several end-dates? 
Question 7:  Do you think there should be a single end-date for SCT and SDD migration or 
two separate migration end- dates? Please explain why. 
A majority of respondents expresse d their support for an  end-date to be set separately for the 
two schemes in the scope of this consultation,  i.e. the SCT and the SDD. Many pointed out 
that this would be logical gi ven that these two schemes had not been launched at the same 
time and are therefore not at the same level of  maturity. The SCT and the SDD are also two 
different instruments clearly distinct in the mi nd of users. Given that  SCT migration involved 
fewer changes than SDD migration and therefor e seemed easier, separate end-date(s) would 
be justified so as to avoid delaying SCT migration. Separate end-dates would moreover allow 
for a concentration of efforts on one scheme onl y and a better management of each migration. 
A few respondents added that individual communities should however not be prevented to migrate earlier and that earlier end-da te could be set at national level. 
Some respondents, mostly on the supply side of the market, were on the contrary of the view 
that it would be better to set (an) end-date(s) both for SCT and SDD at the same time. In 
terms of communication, SEPA mi gration would be clearer to the public. It would moreover 
induce fewer costs as the two migration could be handled in one go and c ould in particular be 
easier for corporate that have to migrate their IT systems. Both schemes indeed rely on the 
same standards. 
Question 8:  What do you think the best approach woul d be regarding the territorial scope of 
(a) migration end-date(s )? Please explain why. 
In terms of territorial approach, a large majority of responde nts indicated their preference for 
a European end-date, as it would provide more visibility to the SEPA project from 
a communication point of view. It would al so ensure a level playing field across 
Member States and allow companies to develop a true European approach for their payments. 
On the contrary, setting different  end-dates in the ar ea would be costly a nd difficult for those 
companies and banks doing business across the EU. 
Most of these respondents however considered th at some flexibility should be allowed to set 
an earlier end-date at national level if the national communities  wished so. This would allow 
to cater for specific situations  at national level and not to  delay Member States whose 
migration was already well advanced. This would also avoid a European wide big bang where 
too much migration would be concentrated at th e end of the migration period. Such flexibility 
should however fulfil two main conditions accord ing to the respondents: first, the end-dates 
should be set in such a way as not to pe nalise the migration of the most advanced 
Member States; second, such flexibility should remain compatible with cross-border payments using legacy formats within the area until the official end-date. 
A phased approach for the migration was also suggested. One respondent thus indicated that 
a distinction could also be made between thos e countries which were already quite advanced 
in terms of dematerialization of payment transa ctions, and those where this was less the case. 
Another respondent suggested to set (an) end- date(s) for cross border payments so that 
multinationals which would like to centralise European payments could do so at the same 
time, while domestic payments could sw itch over to SEPA at their own pace. 
EN 71   EN A last set of respondents, among which ma ny were not convinced about the need for 
an end-date, emphasised the need to determine such end-dates only at national level in order 
to fully meet market conditions and ad apt the pace of migration accordingly. 
Question 9:  Do you think that the migration end- date(s) should be the same for euro 
payments in euro area countries and in non-euro  area countries or that there should be 
different migration end-da tes? Please explain why. 
Views were rather mixed on th is question. A first set of respondents, mostly from the 
euro area Member States, considered that th e same approach should be followed throughout 
the European Union for the reasons alread y mentioned above rega rding the need for 
a European end-date. They also considered it easier to migrate when payments volume are 
low. These respondents however pointed out th at the end-date shoul d only concern euro 
payments (as indicated in the question), pr ovided they existed today, and not payments 
denominated in national currencies. 
An equivalent number of respondents, with more representatives from the non-euro area 
Member States, were on the contrary of the view  that end-dates should be different for euro 
payments in non-euro area countries. Euro pa yments indeed represent small volumes in 
non-euro area Member States, as well as in th e total of euro payments in the EU. These 
respondents therefore considered that such mi gration was not necessary to the success of 
SEPA. Regarding the modalities of the end-da te for non-euro area Member States, some 
respondents indicated that SEPA migration should only occur at the time of the euro 
changeover of the Member State. Other referred  to the provisions of the new Regulation on 
cross-border payments according to which non- euro Member States were given four more 
years for their migration, or one year after their euro changeover if the latter occurred within 
the first three years of the period and considered  that some end-date(s) should be set at one 
point for non-euro area Member States. 
4.4. How to set (an) end-date(s)? Self-regulation vs. regulation 
Question 10:  If (a) migration end-date(s) was (were)  to be established, should this be done 
by self-regulation or by regulation? Please expl ain why and elaborate on the modalities (e.g. 
if regulation is preferred, who w ould should be the regulating body?). 
A large majority of respondents indicated th eir preference for a regulation, for several 
reasons. This was considered more in line with  the political vision of a single market for 
payments in Europe as this would give a clea r signal to market participants that SEPA was 
irreversible. Respondents also i ndicated that a regulation woul d have the advantage to be 
enforceable within all the area. This was seen as  necessary to force stak eholders to migrate to 
SEPA and to avoid competition issues that su ch migration may raise if implemented only by 
market participants. Almost all respondents fa voured a EU legislatio n, but a few respondents 
mentioned ECB regulation as well, as one of the possible tools which could be used in 
complement to EU legislation. Many respondent s however emphasised that, in the case of 
a regulation, it would be of pr imary importance to associate all stakeholders to the decision 
making process for the success of SEPA. A few respondents, mostly on the supply side, also 
suggested following a regulatory approach at Eur opean level, while leav ing the possibility for 
national communities to set earlier end-da tes through balanced solutions between 
self-regulation and regulation. 
EN 72   EN A few respondents, mostly on the demand side of the market and from one Member State, on 
the contrary indicated their pr eference for an end-date set by the market, considering that 
SEPA was a project of the market, which should therefore be able to decide how to migrate 
and when. Views were however di vided on whether such process should in that case only 
involve the supply side of the mark et or all market participants. 
A few other respondents, mostly on the demand side, finally considered some intermediate 
solutions, whereby self-regulation could be  accompanied by some political support or 
endorsement in order to accelerate market deve lopments. Ultimately, a regulation could then 
be put forward in the event of failure, according to two respondents. 
Question 11:  Do you think that some criteria (such as  critical mass) should first be followed 
before setting any migration e nd-date(s)? If yes, please expl ain why and elaborate on these 
criteria. 
A majority considered th at it would be counterproductive to  follow some quantitative criteria, 
such as critical mass, before a migration end-date  could be set. There was indeed a risk that 
the end-date would not be set as long as some level of migration was not reached, but that 
such level would never be reache d because there was a need for an  end-date to reach a critical 
mass, leading to a circular reasoning. Making the end-date dependant on some external factor 
would according to these respondents moreover in troduce some uncertainties in the process 
and could make the planning necessary for SEPA  migration more difficult. A few respondents 
however considered that some quantitative criter ia could be usefully followed, without them 
to be prerequisite for the end-date. 
On the other hand, a significant number of thos e who provided an answer were of the view 
that a certain volume of payments should migr ate before an end-date can be set. These 
responses mainly came from two Member States  and from the demand side of the market. 
Such criteria would indeed ensure that users’  acceptance of the SEPA products is fully taken 
into account, in accordance with the fact that SEPA was primar ily a market driven project. 
Most of these respondents mentio ned criteria relating to a certain  percentage of transaction 
volumes to be reached, ranging from 50 % to 90 %, to measure this SEPA migration. Some 
respondents also suggested a more balanced approach taking into account both volume 
migration and geographical coverage. 
EN 73   EN Annex 3a: Dialogue with the Industry and Public Consultation on MIF for Direct Debit 
Dialogue with the Industry 
SEPA DD MIF has been extensively discussed in  the context of a dial ogue with the banking 
industry represented in the EPC for a long time. The discussion focused to a large extent on 
the justification of a MIF per transaction under EU competition rules. In the framework of the 
competition analysis of SEPA undertaken by DG Competition and the National Competition 
Authorities, the question had ar isen of how to assess under the EU competition rules whether 
there is a justification for a MI F per transaction. As a result , a dialogue with the EPC took 
place during most of 2008. In this dialogue it wa s signalled that a general per transaction MIF 
does not seem necessary nor justifie d for direct debit transactions. 
However, in view of the diversity of situations  at national level as regards the existence of 
MIFs per transaction and the expected positive effects to European consumers and companies of a full migration to the SD D system, the Commission acknowledged the need to incentivise 
banks, in particular the ones wh ich currently receive high MIFs, to migrate towards SDD. To 
cater for this need, under the clarificati on provided by the Comm ission and the ECB in 
September 2008
82, it could be envisaged that for the per transaction MIFs  applied in the 
existing domestic legacy direct debit systems are maintained for domestic transactions under 
the SEPA Direct Debit systems during a shor t and well defined transitional period, unless 
competition proceedings at national level would l ead to these MIFs being decreased, in which 
case this lower level would apply. Likewise, a default MIF per transaction for cross-border 
SDD transactions could be envisa ged for the same transitional period, in order to protect the 
transitional maintenance of domestic MIFs from  cross-border arbitrage for MIF values below 
this default level. 
This concept of a transitional MIF which might be acceptable under the EU competition rules 
was taken over in the discussions on the re view of Regulation 2560/2001 on the equivalence 
of charges for national and cross border paym ents in euros. As a result, its successor 
Regulation 924/200983 now defines a transitional framework for migration to the SEPA Direct 
Debit system by banks. This transitional regime includes a three-year period, until 
31 October 2012, for maintaining MIFs for national direct debits and a temporary default MIF 
for cross border SEPA direct debit transact ions. This however does not prevent national 
competition authorities from reviewing existing MIFs for national direct debits including a 'national SDD' during the transition period. 
During the negotiations of the proposal for Regulation at th e beginning of 2009, the dialogue 
on MIFs for SEPA direct debit after the expiry  of the transitional period was re-launched. 
With certainty on a transitional regime in sight under Regulation 924/2009, the industry also called for clarity on the compatibility of the long-term 'business model' with the competition rules. The background of this was that without  such certainty on a long term model some 
banking communities still were reluctant to sign up to the SDD system, which risked 
jeopardizing its launch. Recita l 11 of Regulation 924/2009 mentioned in this respect that the 
industry could make use of the legal certaint y provided during the tr ansitional period to 
develop and agree a common, long-term business model in line with EC competition law and 
                                                
 
82 Press Release: Payments: Commission and ECB support launch of pan-European SEPA Direct Debit; 
provide guidance to industry , IP/08/1290, 4.9.2008. 
83 Article 6 of Regulation 924/2009 on cross-border payments in the Community, OJ L 266/11, 9.10.2009. 
This Regulation applies since 1 November 2009. 
EN 74   EN the Community regulatory framework. Also, th e Commission intended to  provide guidance, 
"within the framework of a sustained dialogue with the banking industry and on the basis of 
contributions made by the relevant market actors". 
In reply to the call for guidance on the l ong term business model the Commission and the 
ECB adopted a joint statement on 24 March 200984. They expressed the view that a general 
per transaction MIF does not seem necessary nor justified for direct debit transactions. A MIF 
for error transactions could nevertheless be e nvisaged, provided it is economically justified, 
enhances efficiency and benefits users. 
Following the joint statement, the EPC plenary of 31 March 2009 decided in favour of the 
launch of SDD on 1 November 2009. 
The Joint Statement also stated that "provided that the Commission will have received the 
necessary contributions by rele vant market actors, the Commi ssion expects to be in a position 
to provide further guidance by November 2009, which would clarify the eventual case-by- 
case assessment under Article 81(3) EC Treaty". 
However, in summer 2009, the EPC decided not to further invest as scheme manager in 
efforts to obtain clarity on a possible multilateral Balancing Payment Mechanism for R-transactions under the core SDD scheme
85  
Consequently, the dialogue on (an) acceptable m odel(s) for collective financing arrangements 
regarding SDD could not be completed. Notwith standing this, to assist the industry, the 
Commission subsequently adopt ed a Commission Working Document, setting out the general 
principles to be applied under competition rules when analyzing collective agreements on interchange fees which was fo llowed by a public consultation
86. 
The Commission Working Document focuse s on general principles concerning MIF 
arrangements – applied on a per transaction basis  and concerning R-tr ansactions – and 
alternative payment arrangements.  It outlined the principles applied under competition law 
when analyzing such systems, with a view to pr ovide greater clarity and predictability within 
the general analytical framework used to dete rmine whether MIFs in the context of direct 
debit markets comply with competition law, in  particular as regard s Article 101(3) TFEU. 
The Document explained that MIFs result fr om a collective agreem ent between payer and 
payee banks that restricts competition between the payee banks on the fees they pay to payers’ banks. It distorts the competition between payee banks by putting a floor under the fees that payee banks charge to their corporate custom ers. Companies will have to pass on these 
inflated fees to their consum ers through their own bills. Since the consumer’s own bank – the 
payer bank – receives its revenues from the paye e bank it might not charge the consumer, who 
thinks he receives the service for free. This is  however not true as co sts are being passed on 
by the company to their customers, the final consumers. The consumer has no way of 
                                                
 
84 Joint statement by the European Commission and the European Central Ba nk clarifying certain 
principles underlying a future SEPA direct debit (SDD) business model See: 
http://ec.europa.eu/competition/sectors/financial_services/sepa_direct_debit.pdf . 
85 Answer by the EPC to the November 2009 consultation, p. 2. 
86
 http://europa.eu/rapid/pressReleasesAction.do ?reference=IP/09/1666 &format=HTML&aged=0
&language=EN&guiLanguage=en  
EN 75   EN knowing that he pays indirectly  through the company beneficiary of the direct debit and how 
much he pays. 
Even if the consumer knew that his bank is ch arged for the transacti on and if he would know 
the level of the fee, th e collective character of  the fees prevents the consumer from looking 
around and switching to a bank that will char ge less for retail ba nking operations with 
counterparties. Commercial enterprises whose banks are being charged this 'minimum floor' 
are also restricted in eliciting lower banking fees. In fact this arbitrarily and collectively fixed 
hidden fee is not observed by any of the users of the direct debit service. 
Summary of the answers to the public consultation on MIF for Direct Debit 
(November 2009) Overall, 23 responses were  received in the public consultation: 
14 originating from the banking s ector, either from individual banks (4), national (7) or 
European banking federations (3). Eight user organisations responded to the consultation, 
three European and five nationa l ones. Most replies from the banking sector originate from 
countries where MIFs per transaction (France, Italy) or MIFs for R- transactions (Germany) 
are in place. The EPC, as the owner and the manager of the SDD scheme also submitted a reaction. Apart from the EPC, only the Europ ean banking federation s representing mostly 
payer banks recipients of MIFs (savin gs and cooperative banks) responded. 
The EPC, whilst acknowledging the previous clarifications provide d through Regulation 
924/2009 and the Joint Statemen t of the European Central Bank and the European 
Commission of 24 March 2009, recalls the decisi on of the EPC Plenary of 26 June 2009 not 
to pursue the case for a possible MIF for R-tr ansactions under the core SDD scheme. Whilst 
not making a substantiated contribution, it co nsiders that some communities of scheme 
participants may want to continue to suppor t the case for a MIF for R-transactions. This 
suggests that there is no majority within th e EPC to request a MIF for R transactions. 
The contributions on the substantial aspect s of MIFs can be summarized as follows: 
– Opinions are polarised with regard to th e question whether a MIF sets a floor to 
charges negotiated by payee banks with their clients. The banks that responded to the 
consultation generally defend the view that  it does not. Howeve r, end-users argue 
that it does. Some banks argue that larg e invoicers have sufficient bargaining power 
to pay only part of the MIF, or even no MI F at all. On the other hand, most users’ 
respondents disagree with the respondent s from the banking side and support the 
conclusions of the consultation document on th is issue. Some are of the view that 
MIFs are a form of collective price fixing by banks in an untra nsparent way that 
distorts competition and ra ising barriers to entry. 
– The working document highlights the fact that card payments and direct debit 
payments are different – notably in terms of the (higher) poten tial for payees to 
incentivise the use of direct debit by pa yers. A number of respondents from the 
banking side also underscore the differences  between the two payment instruments. 
In this respect both technical (initiation of the payment) or  legal (pre-existence or not 
of a contract between the payee and the pa yer, possibility to revoke the payment, 
reimbursement rights) differences are mentioned. 
– 
On the issue of costs incurred by banks, one respondent from the banking sector 
argues that a large part of the costs rela ted to direct debit is fixed and does not 
depend on the number of transactions. On the other side, some respondents from the 
EN 76   EN end-user side are of the view that, given that a large part of  the related costs is fixed, 
the fixed costs should have become dilu ted with transaction volumes having 
increased strongly, which should have led to  a significant decrease in interbank fees. 
They submit that this however has not happened. Moreover, so me of the French 
end-user respondents argue that different payment instruments in France, each with 
their own MIF, do not exhibit a positive co rrelation between the cost of processing 
and the level of the MIF applied to it. Allegedly, the situation is rather that the better performing the instrument, the higher the MIF. The evidence in the discussion of 
costs from both sides as men tioned above is however limited. 
– A number of respondents argue that payees generally benefit most  from DD. Due to 
this, an association representing payers is of the view that pay ees should be charged 
whilst payers should see no (visible) charge. 
– On the question whether the absence of a MIF would mean that payers will be (more) 
visibly charged for individual DD transactions  as compared to today’s situation, most 
respondents from the banking sector argue that this would be the case. One bank argues however that this would be an i ndependent commercial decision to be made 
by each bank. 
– In contrast to this, most end-users empha size that, SDD being payee-driven, it is no 
longer banks that handle and store the mandates, but payees. As a logical 
consequence of this, one association of payees points out that SDD thus shifts 
a significant cost from the banking side to th e payee. In its view, this means that the 
costs incurred by banks will be even lower than before while the work performed by 
the payer bank was already minima l, and so were its costs. 
– Besides, most respondents from the banking  sector argue that in the absence of 
a MIF, payees would not pass on their bene fit in terms of cost reduction to their 
clients. Some argue that the unequal barg aining power betwee n the payer and the 
payee is problematic in this respect, or that a MIF is 'automatic', and is thus more 
efficient in terms of 'pass on' as compar ed to rebates which would be 'individual' 
and/or 'manual'. In contrast, a number of respondents on the users’ side agree with 
the consultation document that rebates provi de a direct incentive to payers, whereas 
the same effect is much less visible if operated through a MIF: a rebate at the user-level is seen as more effective and e fficient than inter-bank fees. On top of this, 
incentivisation of the use of a specific payment instrument is seen as being part of the 
commercial freedom of payees as regards their business model, according to several 
respondents. 
– Regarding the existence of rebates concrete examples, illustrating that substantial 
rebates are given to payers by payees for th e use of direct debit have been provided 
by some users. Banking respondents on the othe r side seem to be largely unaware of 
the existence of rebates. A banking responde nt states that it doe s not know of any 
rebates given by payees to payers in Spai n. Some French respondent banks are also 
very critical of the effectiv eness of rebates. In complete contradiction with these 
though, a French respondent bank argues th at incentivization is very common in 
France: through publicity and rebates for clients that pay via DD. 
– Some respondents from the bank ing sector are of the view that payers are not always 
offered another choice than to pay via DD. To allow for rebating to be effective, 
EN 77   EN an association of payers pleads for an oblig ation for payees to offer various means of 
payment. The inability of consumers to choose between payment instruments, would 
make superfluous the incentivising of th e use of SDD or surcharging for using 
an alternative instrument, as this can onl y apply if other instruments than SDD are 
available. 
A number of respondents have also addressed the multilateral R-transaction fees option in 
their replies: 
– A few respondents from the banking sector ar e calling for more clarity as regards the 
difference between MIFs for regular transactions and multilateral R-transaction fees. One banking respondent is of the view that  the costs for R-transactions if assessed 
comprehensively cannot be readily dist inguished from the costs of normal 
transactions or the operati onal costs of banking business. This view does not seem to 
be shared by other banking respondent s supporting a cost-based multilateral 
R-transaction fees option. 
– Opinions are polarised otherwise. Some e nd-user associations argue that each side 
should bear its own costs (the  so called SHARE principle) , even for R-transactions 
and therefore argue for a business mode l without MIFs for R-transactions. 
– The working document raises doubts as to wh ether R-transaction MI Fs as a financing 
mechanism could be compatible with co mpetition rules. However, many of the 
comments on the banking side question the merits of the R-transaction MIFs as revenue streams. Many oppose R-transactions MIFs as in their view they cannot be 
used as a financing mechanism within an e fficient business model, as R-transactions 
should happen only rarely. Given the small pa rt of R-transactions in the total number 
of transactions, either R-tr ansaction MIFs would not comp ensate for all the costs of 
the system or unacceptably high R-transaction MIFs would have to be imposed. Some point out that cost-based R-transact ion MIFs imply that the costs for regular 
transactions will not be compensated th is way. On the other hand, some other 
(banking) respondents – although supportive of  R-transaction MIFs – have a wide 
interpretation of the meaning of 'cost base d', suggesting that investments, operational 
costs and a fair rate of return should be taken into account. Some also argue that the 
difference in labour costs across Member States should be taken into account. 
– Those respondents that are in  favour of R-transaction MIFs  generally agree with the 
working document’s analysis  and emphasize in particular  that the fees should be 
cost-based in order to cover the cost of  R-transactions only. Some respondents both 
on the banking and on the users’ side submit that payer banks should not be 
permitted to compensate for any inefficiency on their part through R-transaction MIFs. 
– A difficulty flagged by se veral respondents is how to  find out who caused the 
R-transaction. Some respondent s argue that it is not always possible for banks to 
determine whether the origin of the R-transa ction was the fault of the payer or of the 
payee. An association of payees is in favour of an automated settlement procedure 
which allocates fees to the party that ha s probably caused the R-transaction (based on 
the majority of the actual cases). It submits that representing exceptional cases cannot be the objective of an interchange  fee with the object ive of increasing 
efficiency: R-fee reimbursement in excepti onal cases should therefore be settled 
EN 78   EN between payer and payee outside SDD. With the same objective of increased 
efficiency in mind, an association of pa yees pointed out that prior checks by the 
payer bank of the mandate and of the availa bility of funds could benefit end users 
and the (efficiency of the) SDD scheme as a whole, in line with the suggestion in the 
working document. 
– Some respondents submit that, as an alte rnative to pure R-tr ansaction MIFs, the 
payer bank should fix and pub lish the handling fee for R-tr ansactions unilaterally and 
in an automated way, which would save a lot of (bilateral) contractual costs. 
On bilateral interchange fees: – A number of respondents also elaborate on the section in the consultation document 
dealing with bilateral interchange fees (BIFs), which mostly clarified the nature of 'pure' bilateral interchange fees under comp etition rules. Instead of addressing this 
though, most of the responses restrict them selves to squarely rejecting BIFs as 
a financing mechanism’s option, on the ba sis of the number of BIFs agreements 
which would allegedly have to be conclude d between every single bank in the SEPA 
territory. Some respondents say it is not a feasible option unless there is a default 
MIF on top of which – more favourable – bilateral fees could be agreed between 
some banks. 
– Some respondents argue that there is mandato ry reachability for SDD, so – insofar as 
they currently offer a national DD service – banks have no choice whether to accept or refuse SDD, whether with or without a bilateral agreement. As the payee banks 
know that payer banks will have to ha ndle the DD anyway, it is seen as not 
appropriate to leave to the market the conc lusion of bilateral agreements as banks are 
not in a balanced negotiating position. 
– Two Dutch respondents express their support of  BIFs, which is the system currently 
used in the Netherlands. 
The German Savings Banks made a proposal on th e fee for R transactions. The idea was that 
each bank unilaterally set its own f ees (interchange fee) for R –transactions to be paid by the 
payee’s banks. Under this proposal, all the paye r banks should display on their website the fee 
they request for an “R” transaction. All paye es’ bank could thereby kno w in advance whether 
the consumer’s banks take fee for that kind of transaction. 
National Competition Authorities (NCAs) have b een continuously involved and consulted in 
the Dialogue between DG Competition and the EP C, including on the issue of the SDD MIF 
and were generally supportive of the approach  followed. Eleven out of the twelve NCAs 
responding to the consultation were supportive  or took a neutral position. However, in 
addition to the replies to the consultation mentioned above, ther e was also a submission from 
the Portuguese Competition Authority (PCA), which was critical of the Commission’s 
approach, inter alia highlighting the advantages  of MIFs for Direct Debit in light of the 
efficiencies of the Portu guese Direct Debit system. 
EN 79   EN Annex 4: Integrating a fragmented market  – the background of the SEPA project 
The European payments market afte r the introduction of the euro 
A unique opportunity – and at the same time a crucial necessity – for the integration of 
European payment systems emerged after the in troduction of the euro. From the outset, it was 
obvious that the full benefits of a common currency and a true single market would only be 
reached if businesses and consumers were able to make payments throughout the whole of the 
EU as rapidly, reliably and cheaply as they can do domestically. Furt hermore, with common 
payment standards and an inter-operable payments  infrastructure across the EU, it would be 
possible to gain economies of scale, support pan-European innovation, increase competition and, as a consequence, offer paym ent services at the best possi ble prices and service levels 
throughout Europe. 
However, because of the previous existen ce of different nationa l currencies and major 
differences in national legislations, payment systems in the Member States historically 
evolved independently of each other and with in the scope of their national boundaries. 
Consequently, Member States had develope d and implemented different technologies, 
payment message formats, payment services an d governance models leading to significant 
cost, price and service level differences across the EU. At the same time, barriers for cross-border competition were significant and innovation of payment services mostly took 
place at national level. Even after the euro intr oduction, pure market forces in themselves did 
not create sufficient momentum to overcome th is fragmentation. It therefore soon became 
clear that only a concerted effort of the paym ent services industry, s upported by the European 
legislators, could lead to an  integrated payments market. 
The vision of a Single Euro Payments Area 
In order to address the fragmentation describe d above, the European banking sector developed 
the concept of a Single Euro Payments Area  (SEPA). In a completed SEPA, all euro 
payments are considered domestic and no distin ction is made between cross border payments 
within SEPA and national payments. Therefore, payments in euro could be made between any 
two payment accounts in SEPA using a uniform set of payment instruments. The aim of 
SEPA is to provide European ci tizens and businesses with low co st, user-friendly, and reliable 
payment services. Moreover, SEPA payment in struments should lead to convergence towards 
a service level comparable to the most advanced national payment instruments which exist today. 
The envisioned SEPA is the largest payment initi ative ever to be carried out in Europe and 
a project which many consider even surpasses th e euro cash change-over in terms of its scale 
and complexity. In return, the SEPA project ha s the potential to prov ide tremendous benefits 
to the EU economy through increasing pa yments efficiency, improving business 
competitiveness and providing a platform for future innovation in fields such as mobile payments, online payments, and e-invoicing. 
The European Parliament (EP), the Council, the Commission, and the European Central Bank 
(ECB) together with the National Central Banks  of the Eurosystem have always expressed 
strong political support for SEPA. In its  SEPA resolutions of 12 March 2009 and 
10 March 2010, the EP emphasised "…its contin ued support for the creation of SEPA, which 
is subject to effective competition and where there is no distinction between cross-border and 
EN 80   EN national payments in euro…" . The following chronology include s key statements for the 
general support of SEPA by the Council, the Commission, and the ECB.  
4 May 2006 Joint Statement from the European Commission and the European 
Central Bank A common vision for the Single Euro Payments Area 
(SEPA)  
"(…) The delivery of SEPA instruments is only the first step, since the introduction of 
the instruments as a mere cross-border payment solution would not result in a 
genuinely integrated market at the level of the euro area. In particular, a critical mass 
of national credit transfers, direct debits and card payments should have migrated to 
SEPA payment instruments by the end of 2010. Further steps will be necessary in order 
to ensure widespread adoption of new and efficient SEPA instruments. (…) The 
Commission and the ECB support to the greatest possible extent continued self-regulation by the industry, but given the importance and the size of the social and 
economic benefits of SEPA, the Commission expressly reserves the right to introduce or 
propose necessary legislation to achieve it." http://www.ecb.int/press/pr/date/2006/html/pr060504_1.en.html#
 
22 January 2008 Economic and Financial Af fairs Council conclusions on SEPA, press 
release, 2844th Council meeting, p. 14-15 
"The Council EMPHASISES its support for the aim of the Single Euro Payments Area 
(SEPA): to achieve an integrated market for pay ment services in euro which is subject 
to effective competition and where there is no distinction between cross-border and 
national payments in euro within the EU; (…) CALLS for rapid and smooth SEPA 
migration so that dual payment processing costs are kept to the minimum." http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ecofin/98276.pdf
 
10 February 2009 Economic and Financial Af fairs Council conclusions on SEPA, press 
release, 2922nd Council meeting 
"The Council REITERATES its support for the aim of the Single Euro Payments Area 
(SEPA), which is to achieve an integrated and competitive internal  market for euro 
payments, (…) NOTES that significant effort s are required to accelerate the current 
slow rate of SEPA migration, which seems to be focused mainly on cross-border 
payments and EMPHASISES that the full benefits of SEPA can only be obtained 
through the full migration of domestic euro payments traffic…" 
http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ecofin/105993.pdf  
The implementation of the SEPA vision from 2002 onward required the removal of all legal 
and technical barriers that keep national markets apart. While the Commission focused on 
creating the necessary regulatory framework in  order to remove legal hurdles, the banking 
industry set out to eliminate technical barriers by the deve lopment and implementation of 
common payment formats, messaging and communica tion standards to ensure interoperability 
and adequate security. 
The regulatory framework 
The first Regulation on Cross-Border Paymen ts (EC) No 2560/2001 provided the regulatory 
impetus for the integration of the European payments market by fixing the same bank-to-
customer charges for cross-border euro pa yments as for corresponding domestic euro 
payments. 
It was followed by the Payments Services Di rective (2007/64/EC) whic h provided the overall 
legal framework for SEPA, by defining the legal conditions and requirements for payment services within the EU, both for cross-border and domestic payments. The PSD, which had to 
EN 81   EN be implemented in Member States by 1 Nove mber 2009, facilitated in particular the 
development of common rules for cro ss-border direct debit transactions. 
Finally, the second Regulation on Cross-Border Payments (EC) No 924/2009 facilitated the 
implementation of a pan-European direct de bit scheme by setting temporary rules for 
inter-bank remunerations for the execution of di rect debit transactio ns. Furthermore, the 
Regulation stipulated that those banks which offer national euro direct debits shall also be 
reachable for pan-European (SEPA) direct debits in euro by 1 November 2010. 
The competition framework 
In the framework of the creation of the Single Euro Payments Area (SEPA) the question of 
how to assess collective financing mechanisms  for SEPA Direct De bit (SEPA DD) under the 
European competition rules has arisen.  
Initially, introducing a collectivel y agreed interbank fee for SEPA  DD had been contemplated 
by the organisation that has se t up the SEPA Direct Debit sy stem, the European Payment 
Council or 'EPC'. This so-called Multilatera l Balancing Payment (MBP) was a multilateral 
interchange fee (MIF), i.e. a collectively agreed fee to be paid by the payment service 
provider of the payee to the one of the paye r for each SEPA DD transaction. Such MIFs per 
transaction exist in the legacy schemes of some  Member States. Current ly, two types of MIFs 
can be observed on the market: 
– per transaction multilateral interchange fees and 
– multilateral R-transaction fees. 
A per transaction MIF is a fee agreed collec tively by payer banks and payee banks in the 
framework of a direct debit scheme to be paid  to payer banks by payee banks for each direct 
debit transaction. Such MIFs can either be set by  the association responsible for the scheme or 
agreed collectively by groups of banks part icipating in the di rect debit scheme. 
An R-transaction MIF is a fee agreed collectively in the framework of a direct debit scheme to 
be paid between a payee bank and a payer bank in case of a so-called R-transaction. 
R-transactions are transactions  that cannot be properly execut ed. Depending on the type of 
transaction, the letter 'R' can st and for rejection, refusal, retu rn, or reversal, among others. 
There is a wide range of reasons why it may not be possible to correctly execute a direct debit 
transaction, including lack of funds, revocation, wrong amount or date, lack of mandate, and 
wrong or closed account. Depending of the coun try, R-transactions cover between 0.1 % and 
3 % of all transactions.  
At present the direct debit schemes of only si x EU Member States – 25 % of the market – 
operate with a per transaction MI F. Currently, per transaction MI Fs exist in Belgium (2 cents 
per transaction), Spain (less than 3 cents), Sweden (11 cents), France (12 cents), Portugal 
(23 cents), and Italy (25 cents) with a clear trend towards a decreasing or zero MIF. As 
a consequence, more than two thirds of all di rect debit transactions in the EU are executed 
without a MIF per transaction.87 Some of the per-transaction MIF arrangements in domestic 
legacy schemes are under antitrust scrutiny by national competition authorities. Multilateral 
                                                 
87 ECB Blue Book 2000-2007, http://sdw.ecb.europa.eu/browse.do?node=2746 . 
EN 82   EN R-transaction fees exist in five euro countries, two of wh ich are also among the countries in 
which per transaction MIFs are applied.88 
The technical framework 
In June 2002, the banking industry establishe d the European Payments Council (EPC) to 
support and promote the creation of a Single Euro Payments Area. The EPC’s role is to define 
common positions for core payments services. In particular, this entails the formulation of rules, best practices a nd standards for pan-European payment instruments. 
In this context, the EPC developed common sche mes for credit transfers and direct debits in 
euro which are defined by so-called rulebooks . In January 2008, the SE PA Credit Transfer 
(SCT) scheme was launched, enabling payment se rvices providers to offer a common credit 
transfer service throughout SEPA, currently encompassi ng all EU Member States, 
Switzerland, Norway, Iceland, Liechtenstein a nd Monaco. This was followed by the launch of 
the SEPA Direct Debit (SDD) scheme in Nove mber 2009. This scheme created, for the first 
time, a direct debit instrument for euro paymen ts that can be used bot h domestically and on 
a cross-border level throughout SEPA. 
The schemes developed by the EPC are not obligatory and only those PSPs which have 
formally adhered to them are allowed to us e the SCT and/or SDD schemes. Adherence to 
SEPA schemes does not imply the mandatory  phase-out of natio nal legacy payment 
instruments for the adhering PSPs. As a cons equence, both the SCT and SDD schemes 
currently co-exist with national legacy payment systems. 
The EPC is supported by national coordination committees which aim at facilitating the 
migration from legacy to SEPA instru ments in the different Member States. 
                                                
 
88 R-transaction MIFs of varying sizes exist in Aust ria, France, Germany and Portugal. In Spain, such 
R-transaction MIFs only apply to non STP direct debit transactions. 
 
EN 83   EN Annex 5: Payment data EU 
Table 1:  Volume of transactions per payment instrument, in millions (2008) 
Member State Credit transfers Direct debits Cards (except 
e-money cards) Cheques Other 
Belgium 929.5 247.9 934.1 8.8 81.4 
Germany 5 624.6 7 982. 2 2 244.4 65.2 48.8 
Ireland 168.1 104.0 317.9 117.2 – 
Greece 36.6 15.9 84.7 28.8 1.8 
Spain 780.4 2 308.9 2 098.4 136.0 62.1 
France 2 697.3 3 023.6 6 542.5 3 487.4 142.6 
Italy 1 062.9 554.1 1 395.9 384.9 418.4 
Cyprus 16.9 12.4 30.2 26.8 – 
Luxembourg 63.0 14. 1 50.2 0.2 2.2 
Malta 4.9 1.1 10.1 11.9 – 
Netherlands 1 479.7 1 225.5 1 874.1 – 176.1 
Austria 961.0 794. 0 344.3 3.0 37.1 
Portugal 136.2 190. 7 893.6 173.3 0.9 
Slovenia 171.0 41.5 108.6 0.3 – 
Slovakia 212.2 101.8 87.3 0.1 – 
Finland 748.0 82.0 1 011.0 0.6 – 
Euro area sub-total 15 092.2 16 699.6 18 027.3 4 444.6 971.4 
 
EN 84   EN  
Bulgaria 56.7 0.4 12.7 – – 
Czech Republic n.a.  n.a. 147.5 0.3 84.9 
Denmark 287.7 193.2 935.9 13.7 – 
Estonia 100.1 17. 8 148.3 0.0 0.0 
Latvia 121.9 4.4 95.1 0.0 0.9 
Lithuania 109.7 10.9 88.9 0.3 – 
Hungary 569.5 67.7 166.3 – 13.2 
Poland 1 144.2 20.4 576.7 0.0 – 
Romania 187.3 7.3 69.3 10.6 0.4 
Sweden 890.0 229.0 1 634.0 1.0 – 
United Kingdom 3 185.1 3 076.9 7 595.0 1 403.0 – 
Total EU27 21 744.3 20 327. 6 29 497.1 5 873.5 1 070.8 
Other payment instruments include e-money purchase transactions and specific national instruments.  
Source: ECB Payment Statistics, September 2009 
 
EN 85   EN Table 2:  Volume of transactions per payment inst rument, in % of Member State total (2008) 
Member State Credit transfers 
% Direct debits 
% Cards (except e-money cards)
% Cheques 
% Other 
% 
Belgium 42.2 11.3 42.4 0.4 3.7 
Germany 35.2 50.0 14.1 0.4 0.3 
Ireland 23.8 14.7 44.9 16.6 n.a. 
Greece 21.8 9.5 50.5 17.2 1.1 
Spain 14.5 42.9 39.0 2.5 1.2 
France 17.0 19.0 41.2 21.9 0.9 
Italy 27.9 14.5 36.6 10.1 11.0 
Cyprus 19.5 14.4 35.0 31.1 n.a. 
Luxembourg 48.6 10. 9 38.7 0.2 1.7 
Malta 17.6 3.7 36.1 42.6 n.a. 
Netherlands 31.1 25. 8 39.4 n.a. 3.7 
Austria 44.9 37. 1 16.1 0.1 1.7 
Portugal 9.8 13. 7 64.1 12.4 0.1 
Slovenia 53.2 12. 9 33.8 0.1 n.a. 
Slovakia 52.9 25. 4 21.8 0.0 n.a. 
Finland 40.6 4.5 54.9 0.0 n.a. 
Euro area sub-total: 27 30 33 8 2 
 
EN 86   EN  
Bulgaria 81.2 0.6 18.2 n.a. n.a. 
Czech Republic n.a.  n.a. 63.4 0.1 36.5 
Denmark 20.1 13.5 65.4 1.0 n.a. 
Estonia 37.6 6. 7 55.7 0.0 0.0 
Latvia 54.8 2.0 42.8 0.0 0.4 
Lithuania 52.3 5. 2 42.4 0.1 n.a. 
Hungary 69.7 8.3 20.4 n.a. 1.6 
Poland 65.7 1.2 33.1 0.0 n.a. 
Romania 68.1 2.6 25.2 3.8 0.2 
Sweden 32.3 8.3 59.3 0.0 n.a. 
United Kingdom 20.9 20.2 49.8 9.2 n.a. 
Total EU27 28 26 38 7 1 
Other payment instruments include e-money purchase transactions and specific national instruments.  
Source: ECB Payment Statistics, September 2009 
 
EN 87   EN Table 3:  Value of transactions per payment instrument, in EUR billions (2008) 
Member State Credit transfers Direct debits Cards (except e-money cards) Cheques Other 
Belgium 4 447.0 64.0 53.0 50.0 2.7 
Germany 61 898.0 11 330.0 152.0 408.0 0.2 
Ireland 199.0 106.0 26.0 797.0 – 
Greece 654.0 10.0 9.0 456.0 1.1 
Spain 10 681.0 860. 0 102.0 778.0 360.0 
France 19 446.0 1 054. 0 332.0 2 070.0 473.0 
Italy 7 364.0 345.0 137.0 1 093.0 825.0 
Cyprus 351.0 4.0 3.0 43.0 – 
Luxembourg 1 130.0 7.0 4.0 – – 
Malta 19.0 0.2 0.6 15.0 – 
Netherlands 5 803. 0 301.0 87.0 – 0.5 
Austria 2 404.0 308. 0 21.0 17.0 1.7 
Portugal 1 061.0 35. 0 31.0 355.0 11.0 
Slovenia 278.0 2.0 4.0 0.1 – 
Slovakia 1 294.0 542.0 5.0 0.1 – 
Finland 4 573.0 45.0 36.0 26.0 – 
Euro area sub-total: 121 602. 0 15 013.2 1 002.6 6 108.2 1 675.2 
 
EN 88   EN  
Bulgaria 137.0 0.2 1.0 – – 
Czech Republic n.a.  n.a. 10.0 1.5 – 
Denmark 634.0 81.0 47.0 29.0 – 
Estonia 167.0 1.6 3.0 – – 
Latvia 519.0 0.3 2.0 – – 
Lithuania 538.0 0.7 2.0 0.8 – 
Hungary 1 595.0 2.2 5.0 – 7.0 
Poland 876.0 4.2 19.0 – – 
Romania 1 750.0 1.8 4.0 24.0 1.8 
Sweden 1 154.0 47.0 74.0 7.0 – 
United Kingdom 102 823. 0 1 174.0 512.0 1 886.0 – 
Total EU27 231 795.0 16 32 6.2 1 681.6 8 056.5 1 684.0 
Other payment instruments include e-money purchase transactions and specific national instruments.  
Source: ECB Payment Statistics, September 2009 
 
EN 89   EN Table 4:  Value of transactions per payment instru ment, in % of Member  State total (2008) 
Member State Credit transfers 
% Direct debits 
% Cards (except e-money cards)
% Cheques 
% Other 
% 
Belgium 96.3 1.4 1.1 1.1 0.1 
Germany 83.9 15.4 0.2 0.6 0.0 
Ireland 17.6 9.4 2.3 70.7 n.a. 
Greece 57.9 0.9 0.8 40.4 0.1 
Spain 83.6 6.7 0.8 6.1 2.8 
France 83.2 4.5 1.4 8.9 2.0 
Italy 75.4 3.5 1.4 11.2 8.4 
Cyprus 87.5 1.0 0.7 10.7 n.a. 
Luxembourg 99.0 0.6 0.4 n.a. n.a. 
Malta 54.6 0.6 1.7 43.1 n.a. 
Netherlands 93.7 4. 9 1.4 n.a. 0.0 
Austria 87.4 11. 2 0.8 0.6 0.1 
Portugal 71.1 2. 3 2.1 23.8 0.7 
Slovenia 97.9 0. 7 1.4 0.0 n.a. 
Slovakia 70.3 29. 4 0.3 0.0 n.a. 
Finland 97.7 1.0 0.8 0.6 n.a. 
Euro area sub-total: 84 10 1 4 1 
 
EN 90   EN  
Bulgaria 99.1 0.1 0.7 n.a. n.a. 
Czech Republic n/a n.a. 87.0 13.0 n.a. 
Denmark 80.2 10.2 5.9 3.7 n.a. 
Estonia 97.3 0.9 1.7 n.a. n.a. 
Latvia 99.6 0.1 0. 4 n.a. n.a. 
Lithuania 99.4 0. 1 0.4 0.1 n.a. 
Hungary 99.1 0.1 0.3 n.a. 0.4 
Poland 97.4 0.5 2. 1 n.a. n.a. 
Romania 98.2 0.1 0.2 1.3 0.1 
Sweden 90.0 3.7 5.8 0.5 n.a. 
United Kingdom 96.6 1.1 0.5 1.8 n.a. 
Total EU27 89 6 1 3 1 
Other payment instruments include e-money purchase transactions and specific national instruments.  
Source: ECB Payment Statistics, September 2009 
 
EN 91   EN Annex 6: Overview of national SEPA migration plans 
Table 1:  National target dates by Member State 
Country Target date Detailed comments 
Euro area   
Austria No  
Belgium Yes – Credit transfers: end 2010 
– Direct debits: end 2012 
Cyprus Yes – Credit transfers: end 2012. 
– Direct debits: November 2014 
Finland SCT: yes 
SDD: under discussion – Credit transfers: end 2010 
France Conditional Will only be fi xed once 'critical mass' has been reached for SEPA instruments 
Germany No  
Greece Partly – Credit transfers: No target date 
– Direct debits: implicit once transposition of PSD implemented 
Ireland Under discussion  
Italy No  
Luxembourg SCT: completed 
SDD: No  
Malta SCT: yes 
SDD: n.a. – Credit transfers: end 2010. 
– Direct debits: no legacy di rect debit scheme existing 
Netherlands Under discussion  
Portugal Conditional Will only be fixed once 'critical mass' has been reached for SEPA instruments 
Slovakia Partly – Credit transfers: end 2012 
– Direct debits: under discussion 
Slovenia Conditional Will only be fixed once 'critical mass' has been reached for SEPA instruments 
Spain Under discussion  
Non-euro area   (for payments in euros) 
Bulgaria SCT: no 
SDD: n.a. – Direct debits: no legacy di rect debit scheme existing 
Czech Republic No  
Denmark No  
Estonia Under discussion Depending on accession to euro 
Hungary No  
Latvia Under discussion Depending on accession to euro 
Lithuania No  
Poland No  
Romania SCT: conditional 
SDD: no Will only be fixed once 'critica l mass' has been reached for SCT 
Sweden SCT: partly completed 
SDD: n.a. – Credit transfers: done for cross-border euro payments, but no target date for 
domestic euro payments 
– Direct debits: no legacy direct  debit scheme in euro existing 
United Kingdom SCT: partly 
SDD: n.a. – Credit transfers: November 2010 for domestic euro direct credit scheme 
operated by Bacs – Direct debits: no legacy di rect debit scheme existing 
Source: European Commission, 2009 
 
EN 92   EN Annex 7: SEPA migration pr ogress in the Member States 
The tables shown below present the share of SE PA Credit Transfer (S CT) transactions as 
a percentage of the total volume of all credit transfer transactions initiated in a country (i.e. credit transfer in the legacy format as well as SCTs). They assess the situ ation in all euro area 
countries (below) and some non-eu ro area EU countries (next pa ge, euro transactions only). 
The indicators are compiled semi-a nnually by the NCBs and the firs t set of results refers to 
the first half of 2008; the la st for the second half of 2009. 
Graph 1:  National SCT indicators, euro area 
 
Source: European Central Bank 
Graph 2: National SCT indicators, non- euro area EU countries 
 
Source: European Central Bank 
 
EN 93   EN Lessons to be drawn for setting an end-date for migration: 
– SEPA migration progress at the national le vel demonstrates that only well planned 
migration effort, centrally organised and strongly suppor ted/lead by Member State 
authorities, with binding dead lines assigned for all stakeholders results in a quick 
adoption of SEPA payment in struments (See national migration plans, available at 
ECB website). 
– The role of public administrations should be  particularly underlined. For example, 
quick increases in the volume of SCT transactions in Belgium, Spain and Slovenia in the second half of 2009 are la rgely due to the migration of certain types of state 
payments to the new SEPA instruments. 
– Large utility companies (telecoms, energy a nd water providers etc)  could also play 
an important role in promoting new pan-European payment format, both by 
increasing volumes and by raising awareness on the demand side. 
– In addition, active support SEPA paym ent formats by banks (e.g. automatic 
conversion of all permanent orders into SC T and SDD) leads to additional increases 
in the volume of SEPA payments. This is in  particular visible for euro payments in 
the non-euro area countries. 
 
EN 94   EN Annex 8: Reasons for slow migration to SEPA 
The problem of slow migration results from a number of different driv ers, with uncertainty 
behind the completion of SEPA being the root cause.  
Root cause: Uncertainty of SEPA co mpletion and phase-out of legacy products  
Based on the original EPC timetable, SEPA wa s launched with the objective that by end-2010 
a critical mass of payments would migrate to the SEPA schemes developed by the EPC. It has 
never been defined in strict terms what cons tituted this 'critical mass'. Nor has it been 
determined by when so called 'legacy' produc ts, i.e. the national payment instruments 
preceding SEPA, should be phased-out and completely replaced by SEPA instruments. In any case, taking into account the current actual migr ation rate, the original  objective of the EPC 
has now become unrealistic. 
Market participants facing th e potential decision whether to  migrate to SEPA products 
therefore harbour reasonable doubts as to if and when a cr itical mass for SEPA will be 
attained and whether SEPA instruments will i ndeed be the only available choice of credit 
transfer and direct debit instruments at a late r stage. The lack of a common time horizon for 
complete migration to SEPA credit transfers and direct debits and a missing 'sunset' for 
corresponding legacy instruments encourages market players on the supply and demand side 
to delay migration efforts. 
Reluctance to invest: first mover disadvantage 
PSPs (Payment Service Providers ) deciding to market the ne w SEPA instruments early and 
actively have a major first mover disadvantag e in the current environment. During the 
transitional period when customer s have not yet fully migrated to SEPA these PSPs still have 
to support duplicate costs, i.e. costs for both the existing payment systems as well as the new 
SEPA system. With a decision to close down le gacy systems unilaterally PSPs risk alienating 
or even losing their customers, if a large share of other payment service providers still offers 
the traditional payment systems. 
The first mover disadvantage is, however, not  limited to PSPs. Payment services users, in 
particular businesses, also incur duplicate cost as  long as their trading partners have not fully 
migrated to SEPA. As there is no clear signal  from the market (through significantly better 
SEPA product terms and conditions) or from the regulator (establishing a formal end-date), 
investment into new SEPA instruments resultin g in duplicate costs are difficult to justify, as 
the savings from the new payment instrume nts cannot be realised  without significant 
migration by other stakeholders. 
Perceived lack of predictability and clarity as regards the long term business model 
In the event that the perceived lack of predictability and clarity persists in the market it is not 
unlikely that payee banks may not be able to o ffer cross-border services as quickly and as 
efficiently as they would otherwise. The direct debit market is a market with a relatively small 
number of payee banks and a hi gh number of payer banks. This  majority has allowed payer 
banks in several countries to impose to th e banking community a business model based on 
a MIF per transaction flowing from the bank of the payee to the bank of the payer. In the 
absence of clear rules about the economic model, payee banks may adopt a 'wait and see' 
 
EN 95   EN approach pending the outcome of (national or Eu ropean) proceedings on the compatibility of 
collective financing a rrangements with EU competition rules. 
The perceived lack of clarity may therefore lead  to a slower take up of SEPA direct debit 
services by banks and providers of direct debit pa yment services. This risk of a slower take up 
as a consequence of a perceived lack of clar ity has in particular been highlighted by the 
European Central Bank ('ECB'). In its 7th SEPA Progress Report published on 
21 October 201089 the ECB signals that although the launch of SDD was a major 
achievement, the figures on the take up of the sy stem in the first few months after the launch 
have been fairly modest, amounting to well be low 1% of transactions . Identifying the long 
term economic model as a remaining stumbli ng block, the ECB notes that the Regulation on 
cross-border payments only provides for a temporary solution until 1 November 2012. The 
ECB adds that the financial industry expects the European Commissi on to provide guidance 
on the long term charging princi ples for SDD which are compa tible with competition rules. 
Missing incentive for PSPs to develop SEPA products fully meeting user needs 
Implementing SEPA does not only represent a significant challenge fo r the supply side but 
also for the demand side of the payments market. As a consequence, users need a compelling reason to move away from legacy to new SEPA  products as long as the latter are still 
available. Only SEPA products which fully meet user needs or are offered at a cheaper price 
than corresponding legacy instruments provide such a compelling reason. 
As long as there is no certainty about SEPA completion PSPs can continue to offer existing 
legacy products to their cu stomers and do not have a suffi cient incentive to develop and 
actively market SEPA products which meet all customer requirements. 
Current examples of suboptimal user experience in the area of credit transfers include online 
banking applications which offer easier access to legacy credit transfers than to SCT, or in 
some cases, limited remittance fields in the SCT message format
90. User concerns for the 
SDD mainly relate to the management, securi ty, notification and checking of direct debit 
mandates, which entitle the credit or to debit the debtor’s account91. These concerns can be 
however fully allayed by better communication on part of the banks and some changes to the 
SDD rulebooks as well as through a possible regulatory intervention. 
Fragmented demand side and low level of SEPA awareness 
Like many network industries, the market fo r payment services is characterised by the 
demand side being much more fragmented than the supply side. This is driven by the significantly higher number of market participants on the demand side, and by the larger 
degree of heterogeneity on this side of the mark et. Two implications arise from this situation. 
First, there is a significant difficulty and comple xity for the demand side to organise concerted 
action placing pressure on a nearly united supply side with relatively fewer players. This 
effect is exacerbated by the absence of wi despread SEPA information and marketing 
                                                
 
89 7th Progress report on SEPA, p. 42, 
http://www.ecb.int/pub/pdf/other/s ingleeuropaymentsarea201010en.pdf , p. 17. 
90 In other cases the SCT has significantly expanded the existing remittance field. 
91 These concerns are currently being addressed by the EPC. 
 
EN 96   EN campaigns from the supply side. As a result, ma rket players on the demand side are often not 
even aware of SEPA and the potential  benefits it could bring to them. 
Second, the substantial overall economic gain for the demand side is a result of aggregating 
benefits which are spread over a very large num ber of users. Especially for consumers and 
SMEs, these benefits are theref ore more limited on an individu al basis. This effect is 
magnified by strong consumer inertia regarding basic payment services. The potential benefits 
of pan-European payment instruments may at fi rst sight appear less tangible for consumers 
than the change of habit which the new paym ent instruments require, i.e. using IBAN/BIC 
account identifiers, particularly  if their bank has not developed user-friendly conversion 
facilities. 
In conclusion, given the above analysis, there is a tendency fo r both sides of the market to 
wait for movement on SEPA migration by the other side, e.g. banks wait for greater customer 
interest reinforced by public measures; whil e users wait for a compelling product offer 
supported by more intense SEPA marketing by banks. While banks could seek to force the 
migration issue by collectively wi thdrawing existing payment product s, they have concerns to 
do so because of a possible negative reaction by competition authorities. The end-result is gridlock which can be broken by a regulatory intervention.  
 
EN 97   EN Annex 9: National differences of payment characteristics 
The following table presents some of the principal characteristi cs of the national payment systems in the EU and illustrates so me of the differences and 
fragmentation of the EU payments market. 
Table 1:  Selected differences between national payment systems 
If domestic DD scheme are in use: Member State Main account 
identifier in use for 
domestic 
payments Further 
account 
identifiers 
which can 
be used for 
domestic 
payments Main bank 
identifier in 
use for 
domestic 
payments Further 
bank 
identifiers 
which can 
be used for 
domestic 
payments Main 
interbank 
format in 
use for 
domestic 
payments Further 
interbank 
formats 
which are in 
use for 
domestic 
payments Are 
domestic 
credit 
transfer 
(CT) and/or 
direct debit 
(DD) 
schemes 
in use? i) how is the 
mandate handled 
(Debtor driven 
Mandate Flow 
and/or Creditor 
driven Mandate 
Flow) ii) Is 
mandate 
related 
in-
formation 
transmitt
ed before 
the first 
debit iii) Has the 
migration 
from legacy 
to SEPA 
mandates 
been solved 
on national 
level CT and/or DD instruments 
which for technical 
reasons might be difficult 
to migrate to SCT and/or 
SDD (and their estimated 
market share) 
AT BBAN* IBAN National 
bank code BIC EDIFACT ISO20022, 
SWIFT MT CT, DD CMF, DMF no yes Payments with truncated 
image (17 %) 
BE BBAN IBAN National 
bank code BIC Proprietary SEPA CT CT, DD DMF Mandate 
is stored 
by debtor 
bank yes (by law) none 
CY BBAN 
IBAN for 
government IBAN National BIC National 
electronic 
format SWIFT MT 
SEPA CT No national direct 
debit scheme    
FI BBAN  Bank code 
in the 
account 
number  proprietary 
formats  CT, DD x yes Banks will be 
offering e-
invoicing 
instead Old domestic payments 
system will be discontinued 
The banks will be using 
STEP2 services 
FR BBAN IBAN National 
bank code BIC National 
electronic 
format ISO 20022 CT/DD CMF no yes 
(by law) Specific legacy instruments: 
TIP, télérèglement (0.90 % 
of cashless payment 
transactions) 
 
EN 98   EN DE BBAN IBAN 
(not in DTA 
format) Bank Sort 
Code 
(Bankleit-
zahl) BIC 
(not in DTA 
format) DTA SWIFT, 
EDIFACT 
formats in 
rare cases CT, DD 
(two 
procedures) CMF 
(collection 
authorisation 
procedure, similar 
to SDD Core) 
DMF  
(debit 
authorisation 
procedure, 
comparable to 
SDD B2B) no no Card transaction collection 
procedure, handled via 
domestic DD. 
Paperless cheque collection 
procedure for low-value 
cheques (BSE procedure), 
Image-based cheque 
collection procedure (ISE 
procedure) for large-value 
cheques, handled similar to 
domestic DD. 
Estimated share: 
15 % of domestic 
transactions. 
Analytical work has been 
taken up to find alternative 
processing solutions in the 
long run. 
EL IBAN National 
identifier BIC National 
code 
number 
(3 digits) ISO20022 Proprietary CT, DD CMF 
DMF (AOS) yes Yes, to be 
finalised with 
the 
transposition 
of the PSD Yes. Card transactions 
collection, when the card is 
not linked to an account, are 
processed with CT without 
IBAN (1.4 %) 
 
EN 99   EN IE BBAN none National 
Sort Code 
(NSC) none Bi-lateral 
exchange of 
files between 
members 
banks based 
on an agreed 
technical 
format. 
Similar to the 
UK format 
(BACS). Bi-lateral 
exchange of 
files between 
members 
banks based 
on an agreed 
technical 
format. 
Similar to the 
UK format 
(BACS). yes (both) There are 2 direct 
debit schemes 
within IRECC, 
Direct Debit (DD) 
and Direct Debit 
Plus (DD+). 
In DD, a paper 
mandate is 
completed by the 
debtor and 
returned to the 
originator, who 
then forwards it to 
the debtor’s bank, 
where it is stored.
In DD+, the debtor 
agrees to payment 
by direct debit (the 
agreement can be 
verbal, written or 
on-line), mandate 
details are verified 
and stored by the 
originator. no yes, through 
legislation none 
IT IBAN none National 
bank code none Proprietary none CT, DD CMF/DMF yes yes MAV –  Payment on notice 
and bank form: credits are 
collected by notifying the 
debtor to pay – at any bank 
– using a special form sent 
to him by the creditor’s bank. 
Ri.Ba.  – Automated Bank 
Receipt – non pre-authorized 
direct debit via electronic 
receipt issued by the 
creditor. 
(33 %) 
LU IBAN – BIC – ISO20022 Nationally 
agreed 
format for DD DD (without 
clearing 
and 
settlement 
mechanism
) DMF mandate 
is stored 
by debtor 
bank no 
(contractual 
issue) – 
MT IBAN – BIC 
(8-digit) Bank Sort 
Code MT103 – No CT and 
DD 
schemes No national direct 
debit scheme   None for technical reasons. 
 
EN 100   EN NL BBAN NA 
(domestic 
payments is 
interpreted 
as 
payments 
with legacy 
instruments
) N.A. (via 
BBAN) NA Betopd  Netherlands BBAN NA 
(domestic payments 
is 
interprete
d as 
payments 
with 
legacy 
instrumen
ts) NA (via 
BBAN) NA 
PT BBAN IBAN National 
Bank Code BIC Proprietary ISO 20022 CT, DD DMF and CMF yes yes none 
SI IBAN none National 
bank code BIC ISO20022, 
Proprietary SWIFT MT 
(large 
payments) CT, DD DMF no In principle 
yes none 
SK BBAN – National 
bank code – National 
format - CT, DD DMF – not yet – 
ES BBAN IBAN * NRBE 
(National 
Bank Code 
assigned by 
Banco de 
España) BIC* Proprietary 
format SEPA 
standards * CT/DD CMF no yes none 
BG IBAN  BIC  SWIFT MT 
Proprietary  CT and DD 
in national 
currency 
BGN DMF no   
CZ BBAN none National 
bank code none National 
format none Yes CT and 
DD DMF Not 
relevant 
for DMF no SIPO DD 
 
EN 101   EN DK BBAN  National 
bank code  UDUS 
(national data 
format)  yes, both DMF Yes 
(before 
the expiry 
of a 
month, 
PBS 
notifies 
debtors 
about all 
their 
direct 
debits for 
the 
following 
month, 
including 
recurrent 
direct 
debits) No (only 
relevant if 
Denmark 
joins the 
euro area) No estimates 
EE BBAN IBAN National 
bank code BIC (in 
RTGS 
system 
which 
works as a 
back-up for 
ESTA) Proprietary 
formats SWIFT MT 
(in RTGS 
system which 
works as a 
back-up for 
ESTA) CT, DD DMF yes no none 
However all migration 
aspects of core instruments 
have not been mapped yet. 
HU BBAN none National 
bank code none Proprietary none CT, DD DMF yes No, DD is 
HUF scheme, 
no migration 
is in progress none 
LV IBAN IBAN BIC BIC SWIFT MT ISO20022 CT, DD1 CMF, DMF yes yes The impact of SDD are 
changes in payment habits 
and the need to update 
creditor identifier 
LT IBAN – BIC – Proprietary 
format – CT, DD 
(no formal 
schemes) DMF – yes Some specific national 
instruments: 
– debit payment instructions 
for agricultural production 
– debit payment instructions 
according to executive 
documents 
(negligible market share)  
 
EN 102   EN Source: ECB / ESCB / National Central Banks, February 2010 PL BBAN (based on 
IBAN format)/IBAN none National 
bank code BIC Proprietary 
EDIFACT ISO20022, 
SWIFT MT CT, DD BMF yes no Tax and social security 
payments (appr. 5 %) 
RO IBAN IBAN BIC BIC Proprietary 
(XML-based) ISO 20022 CT and DD 
in national 
currency 
(RON) DMF yes NA NA 
SE Bank account 
number Bankgiro-
number. 
However, it 
is NOT an 
account 
number. It 
is a service 
which 
makes it 
possible to 
connect a 
BG name 
(no) to 
several  
accounts. 
Plusgiro-
number. Swedish, 
domestic 
bank 
clearing 
number NA Domestic 
Swedish 
bank-formats, 
SWIFT-
formats NA Yes, both 
CT and DD 
for 
payments in 
SEK Creditor driven yes NA – no euro 
DD in 
Sweden Yes, Bankgiro numbers are 
not bank account specific 
and are therefore difficult to 
migrate to SCT. However, 
these transactions are 
mainly made in SEK and not 
for migration to SEPA. 
UK BBAN IBAN UK Sort 
Codes or none Bi-lateral 
exchange of 
files between 
members 
banks based 
on an agreed 
technical 
format.  yes – both The debtor can 
either complete a 
paper/electronic 
mandate or 
provide the details 
verbally. 
Confirmation of 
the mandate is 
then provided to 
the debtor no NA NA 
 
EN 103   EN Annex 10: Overview of national payment systems in the EU 
The following table lists national payment syst ems currently in use in the different EU 
Member States. 
Table 1:  Principal national retail payment systems (RPS) in the EU 
Member State Payment 
system Operator Processed 
currency Links with 
other RPS (if 
yes, which 
ones) Participants 
from other 
countries (if 
yes, which 
countries) Processed 
SEPA 
formats 
(SCT and/or 
SDD) Processed 
legacy 
formats 
(credit 
transfer 
and/or 
direct 
debit 
Austria STEP.AT Oesterreichische 
Nationalbank euro RPS, BI-
COMP/ICBPI, 
Equens CZ, DE, HU, 
MT, SK SCT, SDD 
(via EBA 
STEP2) EDIFACT 
(CT, DD) 
SWIFT MT 
(CT) 
Belgium CEC National Bank of 
Belgium euro none none SCT only proprietary 
CT in 
CIRI01 
format 
proprietary 
DD in 
DOM80 
format 
Bulgaria BISERA 
BISERA7-EUR 
BORICA 
SEP Bankservice AD 
Bankservice AD 
BORICA AD 
SEP BULGARIA 
AD lev (BGN)
euro 
lev (BGN)
lev (BGN) no 
no 
no 
no no 
no 
no 
no no 
SCT, SDD 
no 
no SWIFT MT 
(CT, DD) 
Cyprus Cyprus 
Cheques 
Clearing 
House 
JCC Transfer Committee of 
CCCH 
 
 
JCC Ltd 
(interbank joint 
venture co) euro 
 
 
 
euro no 
 
 
 
no Open to 
Cypriot 
branches of 
foreign banks 
Open to 
Cypriot 
branches of 
foreign banks N/A for 
cheques 
 
 
no / no 
intention N/A for 
cheques 
 
 
National 
electronic 
format 
Czech 
Republic CERTIS Česká národní 
banka koruna 
(CZK) none none no yes – CT, 
DD 
Denmark Sumclearingen 
euro 
Sumclearingen 
DKK PBS (both) euro 
 
krone 
(DKK) no no no EDIFACT 
 
UDUS 
(national 
data 
format) 
Estonia ESTA Bank of Estonia kroon 
(EEK) – – – Proprietary 
formats 
Finland POPS 
PMJ individual banks euro 
euro no Sweden Not compliant urgent 
credit 
transfers 
and 
cheques, 
CT, DD, 
repetitive 
payments, 
POS and 
bank card 
settlements 
 
EN 104   EN France CORE STET euro none No foreign 
direct 
participant 
Indirect 
participants 
from the EU: 
BE, DE, ES, 
IT, LU, NL, 
PT, SE, UK SCT N/A 
All 
transaction 
data 
between 
participants 
is 
exchanged 
in XML ISO 
20022 
format 
Germany RPS Deutsche 
Bundesbank euro EBA STEP2, 
STEP.AT of 
OeNB, 
Iberpay Yes, but only 
indirect ones SCT, SDD 
Core and 
SDD B2B DTA (CT, 
DD 
including 
card 
collections, 
cheque 
collections )
SWIFT MT 
103+ (CT) 
Greece DIAS 
 
 
ACO DIAS SA 
 
 
Bank of Greece euro 
 
 
euro EQUENS 
 
 
none CY, UK, FR, 
DE (direct 
participants) 
CY, FR, UK, 
DE, IE SCT, SDD 
 
 
none Proprietary 
format 
(CT,DD) 
Cheques 
Hungary ICS ('BKR')  forint 
(HUF) no links, (the 
operator of 
ICS acts 
(jointly with 
the CB) as a 
service 
provider for 
indirect 
STEP2 
membership 
via the CB) none none (only 
HUF 
payments are 
processed) proprietary 
('GIRO') 
format 
Ireland IPCC 
  
IRECC Irish Paper 
Clearing 
Company Limited
Irish Retail 
Electronic 
Payments 
Clearing 
Company Limited euro 
  
euro none 
  
none none 
  
none none, not 
SEPA 
compliant 
none, not 
SEPA 
compliant Proprietary 
paper CT, 
Cheques 
Proprietary 
CT, DD 
Italy BI-COMP Banca d’Italia euro Equens, 
STEP.AT BE, DE, FR, 
UK, SM 
(the country 
has been 
intended as 
that whose 
code is 
embedded in 
the 
participant’s 
BIC) SCT, SDD 
(also via 
Banca 
d’Italia’s 
intermediation 
to EBA 
STEP2) CT, DD 
Latvia EKS Latvijas Banka lat (LVL), 
Euro – – – SWIFT MT 
(CT) 
Lithuania LITAS-MMS 
 
 
KUBAS Bank of Lithuania
 
 
Lithuanian 
Central Credit 
Union litas (LTL)
 
 
litas (LTL) Systems 
LITAS-MMS 
and KUBAS 
are linked no 
 
 
no no 
 
 
no Proprietary 
format (CT, 
DD) 
Proprietary 
format (CT, 
DD) 
Luxembourg –  –     
 
EN 105   EN Malta Malta Clearing 
House (MCH) The Central Bank 
of Malta euro no no N/A 
Only clearing 
of local 
cheques. N/A. 
Only 
clearing of 
local 
cheques. 
Netherlands ZVS 
CSS 
Equens euro 
 VocaLink 
OeNB 
DIAS 
Iberpay 
ICBPI UK, NL, DE, 
BE, LU, SE, 
FI, EL, IT 
SCT 
SDD 
German 
CT DD 
Dutch CT 
DD 
Poland ELIXIR 
EUROELIXIR Krajowa Izba 
Rozliczeniowa SA zloty (PLN)
euro EBA Clearing 
(via National 
Bank of 
Poland) N/A SCT Proprietary 
(CT, DD) 
Portugal SICOI 
SLOD92 SIBS euro EBA XCT, 
EBA Step-
SCT AT, BE, CH, 
ES, FR, EL, 
LU, LV, MT, 
UK SCT and 
SDD (from 
Nov 2010) Proprietary 
(CT and 
DD) 
Romania SENT TRANSFOND 
S.A. leu (RON) no no no Proprietary, 
XML-based 
(CT, DD, 
truncated 
paper 
cheques, 
bills of 
exchange 
and 
promissory 
notes) 
Slovakia EURO SIPS Národná banka 
Slovenska euro – – no CT, DD 
Slovenia SEPA IKP 
SEPA EKP 
 
Collection 
Centre Bankart d.o.o. 
Bankart d.o.o. 
 
Bankart d.o.o. euro 
euro 
 
euro no 
yes (EBA 
STEP2-SCT)
no no 
no 
 
no SCT 
SCT 
 
no no 
no 
 
Proprietary 
(CT, DD) 
Spain SNCE Iberpay (private 
company owned 
by banks) euro Equens, RPS
STEP2 (as 
technical 
facilitator for 
the direct 
participation 
of Banco de 
España) no SCT / SDD Proprietary 
format 
Sweden Bankgirot 
 
Dataclearingen 
Privatgirot 
 
Plusgirot Bankgirocentralen 
BGC AB 
Bankgirocentralen 
BGC AB 
Privatgirot AB 
 
Nordea krona 
(SEK);euro
krona 
(SEK) 
krona 
(SEK) 
krona 
(SEK);euro  US, DK, NO, 
FI, BE, UK no 
 
no 
 
no 
 
no CT, DD 
(only SEK)
CT 
 
CT 
 
CT, DD 
(only SEK) 
United 
Kingdom BACS 
 
 
Cheque and 
Credit Clearing Bacs Company 
 
 
Cheque and 
Credit Clearing 
Company Sterling 
(GBP) 
 
Sterling 
(GBP) N/A 
 
 
N/A no 
 
 
no N/A 
 
 
N/A Direct 
Debit/Credit 
transfer 
Credit 
transfer 
Source: ECB / ESCB / National Central Banks, February 2010 
                                                 
92 SLOD ceased operations in February 2009. 
 
EN 106   EN The European Commission report on the retail banking sector inquiry of 2007 has assessed 
the operating efficiency of existing Europ ean clearing and settle ment infrastructures93. The 
ratio of operating costs to the total number of transactions by payment system has been 
calculated for each system that was able to pr ovide operating cost data. The data showed huge 
variability across schemes, ranging from operational cost of EUR 0.01 to EUR 0.28 per 
transaction. The study also c onfirmed that payments proce ssing is subject to significant 
economies of scale: there was a strong correlati on between the operating cost per transaction 
on one side, and the underlying transa ction volume on the other side. 
                                                 
93 For more information see Report on the retail banking sector inquiry , Staff Working Document, 
European Commission, 2007, 
http://ec.europa.eu/competition/sectors/financial_services/inquiries/sec_2007_106.pdf . 
 
EN 107   EN Annex 11: Prices of retail bank account services in the EU 
Table 1:  Average prices for bank account services in  the EU in 2007 (four consumer profiles, 
prices in euro/year) and average nu mber of banking operations per capita  
Payment service user profile (average prices in EUR/year) 
Member State 
Average Basic Passive Active Number of 
payment 
transactions 
per capita 
(yearly) 
Austria 140.47 83.95 99.54 197.46 175 
Belgium 58.15 16.28 29.05 82.07 132 
Bulgaria 26.94 9.30 17.14 42.83 6 
Cyprus 84.59 48.74 6.52 184.99 65 
Czech Republic 95.37 54.81 39.65 156.52 59 
Denmark 74.27 38.91 37.92 128.41 229 
Estonia 50.51 46.98 25.57 93.08 96 
Finland 104.42 94.04 44.65 206.56 268 
France 154.11 91.21 91.35 232.15 217 
Germany 89.13 78.92 62.85 114.71 129 
Greece 53.98 45.06 14.81 111.67 11 
Hungary 76.20 64.08 28.39 144.42 48 
Ireland 81.85 37.17 56.40 118.39 84 
Italy 253.14 143.19 134.99 401.72 48 
Latvia 115.24 107.33 63.26 192.28 52 
Lithuania 34.76 14.69 11.20 112.92 43 
Luxembourg 56.64 25.64 40.37 95.99 121 
Malta 71.85 45.38 53.21 99.47 52 
Netherlands 45.95 28.85 30.13 55.60 193 
Poland 73.21 50.55 45.97 114.01 56 
Portugal 44.89 13.19 26.01 81.97 119 
Romania 82.59 69.79 30.28 141.90 11 
Slovakia 73.68 55.59 44.49 125.08 45 
Slovenia 100.40 70.13 43.50 200.76 125 
Spain 178.21 134.06 104.72 303.57 103 
Sweden 61.84 53.35 25.16 128.21 165 
United Kingdom 103.20 28.34 94.99 111.40 225 
EU27 111.62 61.47 74.41 159.18 130 
Four consumer usage profiles are identif ied in the EU, based on the intensity of usage and in relation to payment 
preferences (average, active, passive and basic user). Depending on the usage profile, a specific mix of payment 
instruments (credit transfers, direct debits, payment cards) is assumed.  
Average user profile corresponds to the entire population of current account holders, providing an 
understanding of how a random individual from the relevant population behaves;  
Active user profile comprises the top 1/3 users when individuals ar e ordered according to their usage intensities; 
Passive user profile  comprises the bottom 1/3 users ordered according to usage intensities;  
Basic user profile comprises users with a low-cost 'basic account',  where the permitted transactions are clearly 
defined. 
Source: Van Dijk Management Consultants study for the European Commission, 2009 
 
EN 108   EN The above table outlines the significant price differences for the provision of payment 
services through a payment account. For example,  the average price of a current account for 
consumers ranges from EUR 253 (country average)  in Italy to as low as EUR 27 (country 
average) in Bulgaria. For active users94, the difference is even greater: from a maximum of 
EUR 402 in Italy to a minimum of EUR 43 in Bulg aria. The analysis show ed that in absolute 
terms Austria, France, Italy and Spain are am ong the most expensive countries for banking 
services, while Bulgaria, Netherlands, Belgium and Portugal display the lowest price levels. The above price differences cannot be simply explained by disparities in purchasing power 
across EU Member States. This is demonstrated  by the fact that many countries with high per 
capita GDP have low prices of account services and vice versa. 
                                                
 
94 Top third of bank clients in terms of the number of transactions. 
 
EN 109   EN Annex 11a: Impacts of prohibiting MIFs  per transaction and allowing MIFs 
for R-transactions 
1. QUALITATIVE IMPACTS  
Since pan-European direct debit transactions are or will be car ried out through (an) entirely 
new system(s) that will replace a variety of  presently existing domestic systems the likely 
impact of prohibiting per transaction MIFs and conditionally allowing MIFs for R-transactions can only be assess ed on the basis of certain qual itative and quantitative impacts 
which can be expected. The present annex contai ns an assessment of a number of qualitative 
circumstances influencing the impact o a prohibition of per transaction MIFs. 
– Under the new SEPA DD system, payers’ banks  will face lower costs as compared to 
national direct debits as pa yees will handle the mandate 
Under direct debit, the payer gives a mandate to  the payee to request th e payment of a (often 
recurring) transaction. However, in the fram ework of the SEPA direct debit system the 
mandate given by the payer will no longer be managed by the payer’s bank but by the payee (the creditor company) itself. This is likely to have a downward impact on costs presently 
incurred by payers’ banks as SEPA DD thus shif ts a share of these fr om the banking side to 
the payee. In turn, this might call into questi on at least partly the necessity of financing 
models currently in place, based on a different ma ndate handling and related features of direct 
debit transactions. 
– Under a transparent charging system, pay ees can incentivise the use of SEPA DD 
through rebates and thereby reduce the effective consumer charges 
A direct rebate at the user-level is more effectiv e and efficient than an indirect incentive in the 
form of a possible reduction of consumer fees  charged by the payer’s banks that could result 
from its revenues deriving from co llectively agreed inter-bank fees. 
Concrete examples of the existence of rebates,  pointing out to substantial rebates being given 
to payers by payees for the use of direct de bit have been provided in the course of the 
consultation on the Commission Working Document by some users, and this fact has also 
been acknowledged by some banking respondents. 
A rebate provided directly by payees to reward the use of direct debit reduces the effective 
price paid by consumers. 
– The costs to the overall system will no longe r be inflated through MIFs, as MIFs are 
passed through a number of players who may all add their respective mark-ups 
In case the payer bank charges the payee bank an interchange fee of α the payee bank will 
pass on this fee to the payee, possibly also adding a mark up β. In turn, the pa yee will pass on 
this fee of α + β to the payer, also possibly together with a mark up λ. As a consequence, for 
each direct debit transaction, the overall costs to the direct debit system may be increased by 
the mark ups from the payee bank and from the payee respectively β and λ, which are passed 
on to the payer, for instance through increased overall retail prices. 
 
EN 110   EN In contrast, if the payer bank’s costs of providing the direct de bit service are charged directly 
to the payer, they are not subject to possible mark ups by the other parties in the payment 
chain. 
– Conclusions on impact of prohibiting MIFs per transaction and conditionally 
allowing MIFs for R-transactions 
On the basis of the analysis laid out above, MI Fs per transaction are unlikely to achieve the 
goals of efficient use of direct debit payments . MIFs per transaction constitute a restriction by 
object under Article 101 TFUE as they reduce competition between payee banks on the fees they pay to payer banks, to the detriment of comp anies, whilst inflating the costs to the overall 
system as MIFs are being passed through with successive additional mark ups to all parties 
down the payment chain, until the final consumer. 
In terms of possible efficiencies, the available data show that there doe s not appear to be a 
correlation between the existence of (high) MIFs and (low) consumers’ fees for using direct 
debit or between the existence of  (high) MIFs and (low) bank account fees for consumers. As 
a result, one cannot infer a link neither between  the existence (and level) of a MIF per 
transaction and consumers’ fees for using direct  debit nor between the existence (and level) of 
a MIF per transaction and bank account fees for consumers. 
On that basis, alternative bus iness models to MIF per transaction under which the payer is 
charged directly, without being subject to possible mark ups, would appear both more 
efficient in terms of the means of payment us ed and in terms of competition for companies 
and consumers, as the latter w ould be faced with a transparen t price signal on the basis of 
which efficient choices can be made. Under a tr ansparent charging system, a direct rebate at 
the user-level reducing the effective price paid  by consumers is more effective and efficient 
than a (possible) indirect incentive in the form  of a possible reduction of consumer usage fees 
or current account fees charged by the payer’s banks. 
2. SEPA
 DIRECT DEBIT : CORRELATION BETWEEN EXISTENCE OF A MIF  PER 
TRANSACTION AND HIGHER USAGE OF DD 
There does not seem to be a correlation between  the existence of a MIF per transaction and a 
higher usage of DD. Any expecta tion that the elimination of MIFs would lead to lower usage 
of direct debit does not seem to be corroborated by the existi ng figures. The available data 
show that there does not appear to be a correlation between the existence of MIF per transaction and a higher usage of direct debit.  
The countries with a MIF per tr ansaction are Spain (3 cents), France (12 cents), Sweden 
(10 cents), Belgium (2 cents) Portugal (23 cen ts) and Italy (25 cents).  The UK, where no MIF 
per transaction applies, and France account for approximately the same share of the total 
direct debits within the EU. As a result, one cannot infe r a link between th e existence of 
a MIF per transaction and the usage of DD on that basis. 
 
EN 111   EN Graph:  Share of direct debit transaction in the non-cash payments in the EU in 2009 
 
Source: ECB Blue Book figures 
This table shows that in countries such as Ge rmany, Spain, Austria and the Netherlands Direct 
Debit represents more that 25 % of the non-cash pa yments (credit transfer, direct debit, cards, 
cheques). 
Graph:  Number of direct debit transact ion in the EU in 2009 by inhabitants Direct Debit as % share in national payments
 
EN 112   EN 
Source: ECB Blue Book figures 
The countries with a MIF per tr ansaction are Spain (3 cents), France (12 cents), Sweden 
(10 cents), Belgium (2 cents) Portugal (23 cents ) and Italy (25 cents). There does not seem to 
be a correlation between the existence of a MI F per transaction and a higher usage of DD. 
3. SEPA  DIRECT DEBIT : CORRELATION BETWEEN EXISTENCE OF A MIF  PER 
TRANSACTION AND GENERAL BANK ACCOUNT FEES FOR PAYMENT SERVICES  
Since direct debit transactions will be carried out through (an) entirely new system(s) that will 
replace a variety of presently existing domestic systems the likely impact of prohibiting per 
transaction MIFs and conditionally allowing MIFs  for R-transactions can only be assessed on 
the basis of certain qualitative and quan titative impacts which can be expected. 
The countries with a MIF per tr ansaction are Spain (3 cents), France (12 cents), Sweden 
(10 cents)95, Belgium (2 cents) Portugal (23 cents) a nd Italy (25 cents). The countries with 
a MIF for R-transactions are Germany (300cents), Austria (500 cents), France (72 cents) and Italy (25 cents). 
3.1. Fees for retail payment services 
There appears to be no evidence that the existe nce of MIFs results in lower bank account fees 
for consumers. 
It is difficult to verify claims that abolishing per transaction MIFs is likely to lead to higher 
fees for consumers. However, on the basis of current information it can be established that 
                                                
 
95 The Swedish system is not really comparable beca use it works with an authorisation request for each 
transaction (as for card schemes). EU Average =43Direct Debit Transactions per ca pita in 2009
 
EN 113   EN there appears to be no evidence that the existence of MIFs re sults in lower bank account fees 
for consumers. As shown in the graph and the table below fees for payments services in 
France, Spain and Italy (which are all countries  with a MIF) are among the highest in the EU. 
There does not appear to be a correlation betw een the existence of (h igh) MIFs and (low) 
bank account fees for consumers. As a result, one cannot infer a link between the existence 
(and level) of a MIF per transaction and ba nk account fees for consumers on that basis. 
 
Except Portugal, countries with the higher MIFs for direct debit are also the countries where 
the bank accounts are the most expensive for consumers (the ranking is from the least expensive or 1
st to the most or 27th). Hence there is no clear link between high MIFs and low 
prices of banking services for consumers. 
 MIF per 
transaction Ranking out of 27 
countries, Sanco study 
revised (Bain and 
Company 2010) Number of DD 
transaction per 
inhabitant and per year 
Belgium 2 cents 5 24 
Spain 3 cents 25 53 
Sweden 10 cents 3 26 
France 12 cents 22 51 
Portugal 23 cents 6 21 
Italy 25 cents 27 10 
 
EN 114   EN 4. SEPA  DIRECT DEBIT : RELATIONSHIP BETWEEN MIF S CHARGED FOR DIRECT 
DEBIT AND CONSUMER FEES CHARGED FOR DIRECT DEBIT  
There is no clear evidence that consumers ar e charged less for using direct debit in the 
countries in which MIFs are in place as compared to the other Member States. 
It has been argued that in the absence of MIFs, consumers will be charged more for using 
direct debit than under the current market conditions. 
However, a preliminary analysis of public figur es related to the costs charged to consumers 
for the use of direct debit and to the costs char ged to consumers for reje ction of a direct debit 
(2009 data collected under the DG Health and Consumers Study96) shows that there is no 
clear evidence that consumers are charged less in  the countries in which MIFs are in place as 
compared to other Member States. For instance, in  spite of MIFs in place  in France and Spain, 
consumers can be charged for using direct de bit (in Spain), for inst alling a direct debit 
instruction (in France) and in case of a rej ect of a direct debi t (in both countries). 
Other data available also show that there does  not appear to be a correlation between the 
existence of (high) MIFs and (low) consumers’ fees for using direct debit. As a result, one 
cannot infer a link between the existence (and leve l) of a MIF per trans action and consumers’ 
fees for using direct debit on that basis. 
4.1. Study carried out on request of DG Heal th and Consumers regarding prices of 
current accounts provided to consumers 
http://ec.europa.eu/consum ers/strategy/docs/prices_c urrent_accounts_report_en.pdf  
Table:  Overview of fees for the rejection of direct debits for consumers in Europe 
Country Costs for DD in general 
% / EUR Costs for rejection of a DD 
% / EUR 
Belgium 0.0 % 0.00 0.0 % 4.68 
France 0.0 % 0.00 0.0 % 9.94 
Germany 0.0 % 0.00 0.0% 0.00 
Netherlands 0.0 % 0.00 0.0 % 0.00 
Ireland 0.0 % 0.10 0.0 % 9.96 
Spain 0.267 % 1.05 0.425 % 1.54 
United Kingdom 0.0 % 0.00 0.0 % 22.4897 
Note: The average is based on a non-weighted aver age of the possible amounts or percentages 
for each country. In case of a variable price (lik e in Spain), we have chosen the lowest price. 
                                                 
96 Data collection for prices of current accounts provided to consumers, Final Report , available at 
http://ec.europa.eu/consumers/strategy/docs/prices_current_accounts_report_en.pdf . 
97 Exchange rate GBP 1.00 = EUR 1.07. 
 
EN 115   EN 4.2. Informal survey by Commission services 
The Commission services have in the mean time also carried out an informal survey 
identifying, through internet research and phone ca lls, the fees applicable to ordinary private 
customers for a number of major banks in coun tries with a relatively high number of direct 
debit transactions, that has de livered the following results: 
Spain 
– Clients do not pay fees for setting up  or closing a direct debit order. 
– The modification of the DD order is also a rarely charged service. 
– Nevertheless, in Spain most of the fees per transactions  are in percentage with 
a minimum and a maximum threshold. The fees are applicable from a minimum amount of money (the amount  of the transaction). 
– The same happens with the rejected DD transactions. For R-transactions, 
a percentage fee is applicab le from a minimum amount th at varies from EUR 0 to 
EUR 6. 
– The average fee per transaction is 0.29 % from the minimum amount of the 
transaction that is on average EUR 3. 
– The average fee per R-tran saction is 0.5 % from the minimum amount of the 
transaction that on average is EUR 2.21. 
Italy 
– There are no fees for setting up, modificati on or R-transactions DD (or at least it in 
not indicated on the 'tariffs and prices brochure'). 
– The average fee per transaction is EUR 1.26. 
Belgium 
– Clients do not pay fees for setting up or closing of DD. 
– The fees per transaction vary from EUR 0.05 to EUR 0.5. 
– No fees are charged for the modification of  DD, except the ING case when they ask 
for EUR 30 fee if the client asks for a c opy of the mandate of DD. If the reason why 
the consumers want the copy of the DD mandate  is justified, then it costs EUR 30. If 
there is no justified reason for asking for it, it costs EUR 60. 
France 
– Clients do not pay fees per direct debit tran saction or for the modification of the DD 
order. The DD transactions are often the bills of the national gas and electricity 
companies (EDF/GDF) or of organisations providing aid and the DD transaction are 
already included in a classic or ordinary ba nk account package. In this case the client 
can pay a bank account annual fees but no for the DD transactions. 
 
EN 116   EN – Nevertheless the clients pay a high fee fo r R-transactions. If the direct debit was 
rejected due to a lack  of funds, the account holder has to pay a fe e equal to the direct 
debit to the bank, with a maximum of  EUR 20.00 (no minimum amount neither 
a threshold). The average R-transaction fee is EUR 20. 
– Several banks ask for fees for setting up DD and closing a DD orde r. Compared with 
the 2007 figures for which the average wa s close to 0, the average for setting up 
a direct debit is now EUR 4.63 for financia l institutions (e.g. consumer credit) and 
EUR 2.52 for 'normal' direct debits. 
United Kingdom 
– There are no fees per DD transaction ch arged in UK. Neither for setting up, 
modifying nor closing a DD order. 
– The average fee for an R-transaction is GBP 17.2. 
Ireland 
– There are fees per DD transacti on and the average fee is EUR 0.0975. 
– There are no fees charged for the modi fication or the closure of a DD order. 
– Regarding R-transaction, clients mu st pay in average a EUR 9.76 fee. 
Germany 
No fees are of application to payers in Germa ny. It has to be underlined however that even if 
under German case-law, the payer bank cannot char ge the payer for a R-transaction, the payer 
– if responsible fo r the R-transaction – would have to face the co sts of the interchange fee 
from the payee, and the possible mark ups by the other parties in the payment chain. The 
payer bank would pass on the interchange fee to the payee bank. The payee bank would pass 
on the interchange fee to the pa yee, possibly adding a mark up. In turn, the payee would pass 
on the bill to the consumer, possibly adding an additional mark up. 
Austria 
Fees are of application to payers in Austria fo r the rejection of a dire ct debit order, ranging 
from EUR 4.60 to EUR 10.  
Netherlands 
No fees are of application to  payers in the Netherlands.  
Portugal 
– There are no fees per DD transaction char ged in Portugal. Neither for setting up, for 
modifying or for closing a DD order. 
– Regarding R-transactions, two banks a pply a fee for executing DD orders in 
situations of lack of sufficient funds and one bank applies a fee in any situation in 
which it becomes necessary to regularize a DD order. 
 
EN 117   EN – All five banks charge fees for unauthorized  overdrafts which can result, inter alia, 
from DD transactions with  lack of sufficient funds.[98][99][100][101][102] 
– All fees identified below, including footnot es, are accrued of Stamp Duty (currently 
4 %). 
                                                 
98 Caixa Geral de Depósitos charges the following unauthor ized overdraft fees: no f ee if the overdraft lasts 
less than 2 days; EUR 4.81 if it lasts between 2 and 10 days; EUR 9.62 if it lasts more than 10 days. 
99 Millenniumbcp charges a EUR 7.50 unauthorized overdraft fee. 
100 Banco Espírito Santo charges a EUR 10 unauthorized overdraft fee. 
101 BPI charges an unauthorized overdraft fee varying between EUR 5 and EUR 20. 
102 Santander Totta charges a EUR 9.75 unauthorized overdraft fee. 
 
EN 118   EN Annex 12: Cost-benefit analysis – scop e and methodology of the SEPA study 
by CapGemini 
Scope 
Member States: Sixteen EU Member States are included in the quantitative analysis, 
representing 95 % of the GDP of the EU27, 96 % of the non-cash tran saction volume, and 
99 % of the corresponding value. These countri es are Austria, Belgium, Germany, Spain, 
Finland, France, Greece, Ireland, Italy, Luxembou rg, Netherlands, Poland, Portugal, Sweden, 
Slovenia, and United Kingdom. Twenty five EU Member States are included in the 
qualitative analysis (all except Romania and Bulgaria). 
Payment instruments: all major cashless payment instruments are in scope: credit transfers, 
direct debits and card transactions (by debit,  delayed debit and credit cards). E-payments, 
mobile payments and cash transactions are out of scope103. 
For stakeholders, the study defi nes the following groups: consumer s (individuals over fifteen 
years old), SMEs (companies with less than 250 employees), merchants (companies that trade 
goods or services and have more than 250 em ployees), corporates (companies that are 
producing goods or services and have more th an 250 employees); public  entities (irrespective 
of size), and banks. 
Only the direct effects of SE PA have been included (that is, prices, operational costs, and 
investments). All indirect eff ects (such as mobile payments and replacement of cash) are 
excluded, as are non-payments-related effects (suc h as increased cross selling, lower interest 
rates, and increased cross-border trade). 
E-invoicing has been addressed as an additional related it em and sized independently. 
Methodology 
The study assesses the costs and benefits of  SEPA for the supply (banks) and demand 
(customers) sides over a 6 year time framew ork (2007–2012) for four corner scenarios: 
Demand Pull, All Tied Up (which is the baseline scenario for this impact assessment), Supply 
Push and SEPA Big Time (which represents es sentially the setting of a migration end-date 
policy option). Each of these f our market scenarios represents a combination of the following 
possible values of the driving forces: namely: limited or extensive demand by the demand side; and reactive or proactive SEPA  strategies by the supply side. 
The development of the payments market withou t SEPA is used as the baseline for comparing 
the effects of SEPA. To evaluate the quantitat ive effects on stakeholders over time, the 'net 
SEPA effect' is defined as the logical sum of th e necessary investments, change in operational 
costs, and change in bank fees. 
                                                
 
103 See explanation in footnote 9 of the impact asse ssment for differences betw een this document and the 
CapGemini study. 
 
EN 119   EN Multiple data sources have been used in order to build the economic model in the study, 
including (but not limited to): 
– Interviews: Personal interviews were held  with representatives from supply and 
demand side of the market in 10 EU Member States. 
– Questionnaires: Over 950 replies to a questionnaire on SEPA ’s impact on the 
businesses of stakeholders from demand and supply side of the market were 
analysed. 
– Secondary research: Policy documents, databa ses, news reports, independent studies, 
stakeholder and other interest  group publications. A complete  list of sources used is 
detailed in the study. 
 
EN 120   EN Annex 13: SEPA end-date objectives 
Table 1:  The link between the identified problems and objectives 
 Problems Objectives 
Untapped economies of scale To increase the efficiency and 
competitiveness of the EU 
payments market by realising 
economies of scale and operational 
synergies on both the supply and 
demand side through non-cash 
payments standardisation 
Restriction of competition To create an open and level playing 
field for competition in the payment 
service market at European level 
and facilitate downward price 
convergence for payment services 
in Europe General 
('Europe 2020' level) 
Hindering of innovation To establish a pan-European 
platform from which innovative and 
value-adding payment services and 
products can be launched 
Continuation of fragmented payments market To achieve full operational 
integration of t he payments market 
in Europe for credit transfers and 
direct debits 
Specific 
Multiple payment platforms to be 
maintained by market payment 
providers and users To eliminate excess complexity and 
the duplicate cost on the supply and 
demand side 
Operational 
(root cause level) Uncertainty of SEPA completion To create transparency and market 
certainty regarding SEPA 
completion for credit transfers and 
direct debits and the phase-out of 
corresponding national legacy 
payment instruments; and to reduce 
the use of multi-lateral interchange 
fees per transaction for SEPA 
Direct Debits to the efficient level of 
zero, and to ensure that any fees 
for R-transactions support an 
efficient allocation of costs to those 
giving rise to them 
 
EN 121   EN Annex 14: Benefits of an end-da te and rapid migration to SEPA 
Increased standardisation leading to comp lexity reduction and economies of scale 
With full SEPA migration, multi-national businesse s would be able to centralise their euro 
cash management and simplify/automate their payment procedures. Payments for cross-border trade would become as efficient as domestic payments. This has a substantial 
positive impact in an economy where more than  50 % of all euro area exports and imports 
take place between euro area Member States . Instead of using a multitude of electronic 
banking packages, corporates w ould be able to rationalise  their banking relationships. 
A survey undertaken by payment pro cessor VocaLink among al most 250 corporates
104 
showed that this is perceived as a key benefit. 51 % of respondents named single-bank 
relationships among the top three desired featur es of efficient payment services. Payment 
format simplification is anothe r area of great potential bene fits. Anecdotal evidence from a 
large corporate, operating in 25 EU countries, shows that almost  20 different formats are used 
for domestic and cross-border payments by this  enterprise. Furthermore, many of its payment 
transactions are still paper ba sed. A complete SEPA would en able enterprises to centralise 
and automate their payment activities, fo r example in Shared Service Centres. 
Straight-through-processing of pa yment transactions and automa tic reconciliation with other 
processes of the financial supply chain would al so be facilitated. This  would lead to better 
treasury management, reduced banking fees a nd improved liquidity. The recent financial 
crisis is an eloquent witness to th e importance of liquidity management. 
Furthermore, SEPA should help SMEs not ha ving the same cash management resources as 
large corporates to operate across borders. Pan-European standardis ation would make the 
processing of payments simpler and cross-bord er payments within the Community would not 
cause any additional effort in comparison to domestic payments. Evidence on the potential benefits for SMEs can also be drawn from a survey on payment services, which has been 
undertaken in the European Business  Test Panel in November/December 2009
105. Of the more 
than 250 businesses responding to this question (85 % of which were SMEs), more than 50 % 
believed that SEPA would drive down paymen t processing cost while less than 10 % thought 
that cost would actu ally go up. 20 % of the respondents did not have an opinion, and 20 % 
predicted no significant change. Beyond direct savings from cheaper payment transactions, 
SMEs could be able to make better use of st andardised banking softwa re as well as simpler 
and therefore more affordable integrated  accounting and reporting applications. 
Similarly, Public Administrations as heavy user s of payment instrument s should benefit from 
SEPA in that it simplifies their payment processes and allows for more efficient straight-through-processi ng of payments. Public tendering of  payment services at European 
level should become easier, since the number of  potential PSPs would increase, their offers 
could be better compared and inefficiencies caused by national payment formats should 
disappear. The combination of e-Invoicing so lutions and SEPA as an underlying payment 
platform would also facilitat e the automatic reco nciliation of invoices and payments. 
                                                
 
104 http://www.gtnews.co m/feature/338.cfm  
105 Results of the 2009 EBTP survey on payments, 
http://ec.europa.eu/yourvoice/ebtp/consultations/sepa3/statistics_en.pdf . 
 
EN 122   EN Similarly for consumers, who are becoming incr easingly mobile in pr ofessional and private 
terms standardised cross-border payments w ould eliminate the need for several payment 
accounts in different countries. This would be of particular importance for the 11 million 
EU27 citizens who live perman ently in another EU Member State outside of their home 
country106. More important in terms of absolute numbers, the benefits would extend to 
citizens living in border regions and citizens living abroad on a temporary basis. This includes for example seasonal workers, owners of a sec ondary residence, and in ternationally mobile 
students, whose number will continuously increas e due to the Bologna process and the 'Youth 
On The Move' flagship initiative  of the Europe 2020 strategy. 
For PSPs and payment processors, economies of  scale and common standards achieved by 
SEPA would make payments across the EU much more efficient. Even in its initial phases, 
SEPA has already helped to trigger some rationalisation and consolidation in payments 
processing as existing operators seek scale to remain competitive in the new emerging landscape
107. This shows the further consolidation potential amongst payment processors to 
achieve efficient size while banks could choos e to outsource payment services to remain 
competitive – all leading to a lower cost base and hence potentially more competitive pricing to customers. The potential so cial dimension of such conso lidation efforts on the payment 
supply side is not consid ered to be significant. 
Increased competition in an open and more transparent playing field 
For PSPs, an integrated payments market woul d lower entry barriers across borders, thereby 
attracting new market player s and intensifying competition. 
Furthermore, standardised Pan-European payment instruments under SEPA would allow 
consumers, businesses, and public administratio ns to more easily compare payment products 
proposed by different PSPs and thus allow users to benefit from the mo re intense competition 
in payments markets. The magnitude of th e price differences for payments from bank 
accounts was identified in the problem definition. This clearly points to the potential savings 
which could be realised by user s if prices for payment services were to converge downwards 
through the integration of the EU payment mark et. For consumers, this would also positively 
contribute to better financial inclusion and access to basic financial services. Moreover, 
enhanced competition could give users a broader choice of payment services at affordable 
costs. 
                                                
 
106 http://epp.eurostat.ec. europa.eu/cache/ITY_OFFPUB/KS-SF- 09-094/EN/KS-SF- 09-094-EN.PDF  
107 Merger of TAI and Interpay to Equens in 2006, 
http://www.equens.com/aboutus/organisation/development.jsp ; 
Merger of SIA and SSB to SIA-SSB in 2007, http://www.siassb.eu/Engine/RAServePG.php/P/250210010404
; 
Merger of Banksys and BCC to ATOS Worldline in 2007, 
http://www.atosorigin.com/en-us/Newsroom/en-us/Press_Releases/2007/2007_06_01_02.htm ; 
Merger of Voca and LINK to VocaLink in 2007, 
http://www.vocalink.com/en/AboutU s/Press%20room/2010pressreleases/2007archive/Pages/VocaandL
INKmergeandlaunchpan-Eur opeanclearingservice.aspx ; 
Merger of PBS, BBS and Teller expected to be completed in 2010, 
http://www.pbs.dk/en/themes/news/Pages/news-20100105-merger_approved.aspx . 
 
EN 123   EN Opportunities for pan-European innovation 
Through common standards and the creation of a European level playing field, a completed 
migration to SEPA would foster payments modernisation and the development of new 
services such as mobile and online payments, or e-Invoicing, on a pan-European basis to the 
benefit of consumers and other users. To support the growth of e-commerce, there is a need to 
develop secure and efficient payment means ba sed on international st andards. Similarly, 
SEPA would improve straight through processing of electronic invoi ces with respect to 
payment and reconciliation proc esses. It would thereby accel erate the replacement of paper 
invoices by more efficient and environmenta lly friendly e-Invoices. Regarding mobile 
payments, an increased take- up of this payment channel at European level would have 
positive effects on financial inclusion by making basic financial services more accessible for un-banked or under-banked citizens. SEPA can provide a platform to facilitate the 
development of such new serv ices at European level. 
 
EN 124   EN Annex 14a: Benefits of Prohib iting MIFs per transaction and conditionally allowing 
MIFs for R-transactions through a provision on MIFs in the Regulation on end-dates 
Impact of an antitrust enforcement option (no further guidance) Theoretically, one could envisage  a scenario, where no guidance is  provided at all and where 
only European antitrust enfor cement is relied upon. In the light of th e various calls for 
guidance from the Parliament, the ECOFIN Counc il and the relevant provisions in Regulation 
924/2009 this option would however not seem to pr ovide sufficient certainty creating a level 
playing field between banks across the SEPA. 
It is clear, indeed, that such a scenario would represent the lowest leve l of legal certainty and 
predictability. In this case only the draf t working documents pub lished earlier by the 
Commission, the Joint Statement of the E CB and of the Commission of 2009 and the 
transitional provisions under Re gulation 924/2009 would offer gui dance to stakeholders. The 
result may be a series of enforcement ac tions by NCAs and less legal certainty and 
predictability for market players and consumer s. The impact of such an option would risk 
substantially delaying – or decr easing – the benefits that coul d be achieved by providing more 
comprehensive clarity through a binding Commun ity instrument on SEPA direct debit MIFs 
(such as transparency, more competition, mo re choice and innovation, higher usage). 
We will therefore focus on assessing the impact of the two options of Commission guidance 
and of a binding Community instrument. 
Impact of a non-binding Community inst rument option (Commission guidance) 
– Lack of legal certainty and clarity 
Guidance on SEPA direct debit interchange fees  would be non-binding to  parties other than 
the Commission. As a consequence, payment servi ce providers would in first instance remain 
free to establish their business models and assess their compliance with competition rules 
individually. Subject to their assessment a nd the consecutive measures they take, national 
competition authorities and DG Competition w ould then have to assess their compliance 
separately on a case-by-case basis and within  the framework of the Commission guidance. 
These factors may lead to an untimely and scattered enforcement across Member States, 
thereby substantially lessening the taking up  of SEPA direct debit by companies and 
consumers across all Member States, which is cr ucial for reaping the full benefits of SEPA. 
– Delaying the full benefits of SEPA 
The process described in the foregoing paragr aph could be lengthy, and there would be an 
increased risk of divergence a nd lack of clarity between the position taken by stakeholders 
and authorities. Migration to direct debit systems complying with essential requirements 
would be delayed as not all banks would immediately abide by th e Commission guidance 
which appears to be the case, until clarity is obtained with respect to all collective 
arrangements regarding which doubts may occur on their compatibility with the competition 
rules, i.e. until all national and European proceedings with respect to such arrangements have followed their courses. Besides, this would again be likely to cause a delay in realising the full 
benefits of SEPA. 
 
EN 125   EN A certain level of uncertainty with respec t to the compatibility of certain industry 
arrangements with public regulation and, more specifically, competition rules is a regularly 
occurring and often inevitable element of busin ess risk. However, in view of the network 
effects of comprehensive European sy stems such as SEPA Direct Debit, i.e. the importance of 
the adherence of a critical mass of financial institutions to the system, such uncertainty may be detrimental to the effective migration to the SDD system. The resulting lack of a unified 
European approach would therefore impair the efficiency of SEPA DD. 
– The lack of legal certainty as regards business models and interbank fees would risk 
causing a slower take-up by compan ies and ultimately consumers 
There would be a risk that the lack or decreased  level of clarity which would be a likely result 
for at least a transitional period would lead to  the lack of confidence by consumers, and to 
companies willing to maintain legacy direct debit systems as they would be hesitant to be the 
first one to move to SEPA DD. This is likely to materialise in  lower take-up of SEPA direct 
debit services than would be  the case if a comprehensive end-date solution, including 
certainty on the business model would be brought to the market through an end dates 
regulation. 
– Risk of maintaining high prices, lim ited transparency and choice for users 
Due to the delays and uncertainties associated  with this option, cons umers may continue to 
face higher prices caused by the inflated cost base resulting from MIFs. Also the limited 
transparency on prices inherent to a MIF-ba sed business model would continue to exist, 
limiting competition and the offering of competitive offers, at least until an overall common business model in line with competition rules would be implemented. 
– Delaying the creation of a level play ing field between market players 
This solution would also create legal uncertain ty as regards the financing regime applying for 
cross border SDD under the general reachab ility clause in Regulation 924/2009, which 
obliges banks offering direct debi t at national level to also offe r SEPA DD. This could result 
in the cross border functiona lities of SEPA DD being cu rtailed, whilst SEPA wide 
reachability was intended as an im portant contributing factor in realising the full potential of 
SEPA for consumers and companies. 
Therefore the choice of adopti ng a non-binding Community instru ment would fall far short of 
being optimal as in particular it would not entirely address the calls for a definitive and 
speedy solution, and is likely to stifle migra tion to SDD, rendering the end dates regulation 
inoperative as a result. 
Impact of a Binding Community instrument option 
– Legal certainty 
As described above there were  clear calls for pr oviding urgent and unequivocal guidance on 
long-term business models. A binding Community  instrument is a be tter choice to achieve 
these goals. 
Moreover, as is also true for the migration, an d as set out above, substa ntial benefits can be 
achieved with setting clear rules,  and such benefits can dimini sh if guidance is delayed and 
there is no clarity in the market as a result. 
 
EN 126   EN It is important to clarify what will happen after the expiry of the transitional period for 
cross-border direct debit MIFs defined in Regulation 924/2009. This cl arification should be 
provided by the Proposal (i.e. by way of another regulation): any other solution will inevitably result in uncertainty.  
Overall assessment 
Due to the network nature of the payment industry the full benefi ts of SEPA will only 
materialise once the transition to pan-European payment instruments is completed at domestic 
level in all EU Member States under unifo rm conditions. Potentia lly differing national 
implementations run the risk of perpetuating th e current payment market fragmentation. Also, 
economies of scale will not materialise in the ab sence of a common European solution. This is 
particularly true in the area of  processing where whilst maintaining several infrastructure and 
schemes will provide additional revenues for processors for instance, it is hardly a cost efficient solution in terms of economic welfare. 
Any form of competition enforcement action or competition guidance is likely to provide less 
certainty to the market and a more fragmente d level playing field th an a binding community 
instrument. It is therefore recommended to use the legal instrument of the regulation to be 
proposed for providing clarity on MI Fs and other interchange fees. 
Comparison in terms of impacts on stakeholders  
The impact is likely to be markedly different depending on the choice of instrument. It can be 
reasonably expected that the possibility of  antitrust enforcemen t only or a non-binding 
guidance will put significantly less  pressure on payment servi ce providers and provide less 
incentives for them to start competing on a pan- European scale than the adoption of a binding 
regulation. 
– (Companies) 
It is to be expected that  under an anti-trust enforcement only or a non binding guidance 
option, (big) companies notably would not take the risk of being the first SEPA DD movers, 
especially in the face of uncertainties regard ing business models and the charging structure 
resulting from these. In a framework of persis ting fragmentation of ma rkets, companies would 
continue to suffer from duplicate system and process costs and would not be in a position to integrate payments on a cross border basis. Th e benefits of SEPA fo r companies would be 
curtailed. 
Under a binding regulation, companies are more likely to move to SEPA DD. As a result, 
they could enjoy stronger bargaining power a nd the possibility to seek tender offers to 
integrate their payments on a cross-border basis.  This will result in economies of scale and 
a reduction in the processing costs.  It is expected that these gains will more than compensate 
the fact that under the SEPA DD system, payees  will face higher costs as they will handle the 
mandate. 
– (Consumers) 
It is to be expected that  under an anti-trust enforcement only or a non binding guidance 
option, consumers might still be faced with higher  prices, lack of transparency and lack of 
choice as a result of an unlevel playing field (uncertainty as regard s the financing regime 
 
EN 127   EN applying), which could result in the cross border functionalities of SE PA DD being limited. 
Overall, the benefits of SEPA for consumers would be curtailed. 
Under a binding regulation, consumers would be in  a position to benefit from a pass on of the 
benefits accrued to the companies (under the assumption of a healthy level of competition 
prevailing in the relevant c onsumers products or services’ markets, ceteris paribus). 
Under the binding regulation option, consumers w ill also face more direct and transparent 
price signals, due to the certainty on the bus iness model. MIFs impose a hidden cost on 
consumers. If they are abolished banks will compete with each other in a transparent way. 
Obviously, payers’ banks recupera te the costs they incur and make a reasonable margin on the 
services they provide, including in the Member St ates where no MIFs are currently in place. It 
can therefore not be excluded that when faced w ith the disappearance of per transaction MIFs 
as a source of revenue, (some) payers’ ba nks may start charging consumers directly. 
The findings based on current direct debit transa ctions in the EU sugge st would suggest only 
a moderate effect on consumer charges. There is no clear evidence that consumers are charged 
less in the countries in which MIFs are in pl ace as compared to the other Member States. 
There is no clear evidence either  that in countries with no MIFs , direct debit transactions are 
'cross subsidized' through high bank account fees  in general. Besides,  under the new SEPA 
DD system, payers’ banks will face lower costs as compared to national direct debits as 
payees will handle the mandate. SEPA should tri gger economies of scale, a higher degree of 
competition between banks and more choices for consumers. Finally, the Commission will monitor excessive price increases using the abolishment of per transaction MIFs as a pretext. 
Under a transparent charging system, payees coul d pass on the benefits they reap from SEPA 
DD to payers as they can in centivise the use of SEPA DD th rough rebates and thereby reduce 
the effective consumer charges. 
– (Banks) 
It is to be expected that unde r an 'anti-trust enforcement only' – or a 'competition guidance' 
option, banks in countries where MIFs are in pl ace will maintain thei r current business model 
until successful competition proceedings by national or European competition authorities have brought them to an end. This would result in an unlevel playing field (uncertainty as 
regards the financing regime a pplying), which could result in th e cross border functionalities 
of SEPA DD being limited. As a result, the competitive pressure from consumers and companies as explained above would be more li mited, which allows the less efficient banks to 
maintain un-transparent and high pr icing structures, to the detriment of more efficient market 
actors. 
Under a binding regulation, the most efficient ba nks will be in a position to offer competitive 
offers to companies and consumers, resu lting in economies of scale and increased 
efficiencies. The less efficient banks will be forced to improve the running of their business and their offers in a transparent manner, on the basis of up-to-date business models. The resulting increased competition is in line with  the core objectives of  the creation of SEPA. 
 
EN 128   EN Annex 15: Cost-benefit analysis for a full SEPA migration with an end-date 
(CapGemini study) 
The following tables and graphs present a cost-benefit analysis for the policy option of setting 
a SEPA migration end-date by regulation. For comparison purposes , the costs and benefits of 
the baseline policy option (no end-date) are also shown. Costs and benefits cover the six year 
period (2007- 2012). For othe r assumptions, please see explanations in Annex 12.  
Cost-benefit analysis at level of supply and demand side 
The setting of a SEPA migration end-date a nd the optimisation of payment operations bring 
important benefits to both the supply and demand sides of the EU payments market. It is the 
dynamic effect of increased competition (falling prices and/or better conditions for payment 
services) which doubles the expected benefits  for the demand side and accordingly reduces 
profits of the banks. However, as indicated in the main body of the Im pact Assessment, this 
revenue reduction is primarily in relative te rms. In absolute terms, bank profitability for 
payments is still estimated to rise from EU R 10 billion in 2006 to EUR 21 billion in 2012. 
Table 1:  Costs and benefits to demand side 
Demand Baseline scenario 
slow migration 
(EUR billion) Setting SEPA end-date 
scenario rapid migration  
(EUR billion) 
Investment cost -10 -17 
Operational cost savings -25 +101 
Net SEPA benefit before pr ice effect -35 +84 
Competition impact on payment fees +8 +91 
Net SEPA benefit -27 +175 
Source: CapGemini study 
Table 2:  Costs and benefits to supply side 
Supply Baseline scenario 
slow migration 
(EUR billion) Setting SEPA end-date 
scenario rapid migration  
(EUR billion) 
Investment costs -7 -10 
Operational cost savings 0 +49 
Net SEPA benefit before pr ice effect -7 +39 
Competition impact on payment fees -8 -91 
Net SEPA benefit -15 -52 
Source: CapGemini study 
Cost-benefit analysis at Member State level  
The two graphs and the table belo w present the economic impact of  setting an end-date at the 
Member State level. On average, in the period an alysed Member States may expect to gain an 
additional 0.2 % of the national GDP if the end-date is set in comparison to the existing situation. A rough calculation of additional bene fits for 11 Member States which were not 
fully analysed in the CapGemini report (eight  of them from the non -euro area) puts these 
figures at a somewhat lower valu e of between 0.12–0.14 % of their GDP. 
 
EN 129   EN One of the more prominent results of the cost-ben efit analysis is the fact that the supply side 
of the market (the banks) is expected to lose part of its potential paym ent profits when a full 
SEPA migration occurs, in comparison to the ba seline scenario. The additional analysis at the 
Member State level shows that such situation is likely to occur in all but three Member States 
(Belgium, Netherlands and Finland,  see the table). A logical assu mption is therefore that with 
the exception these three Member States, most of  the supply side players in the other Member 
States would follow a damage limitation strategy i.e. do not pursue actively migration to 
SEPA payment instruments. This is an importa nt consideration to take into account when 
discussing the reasons of slow migration to  SEPA (see Chapter 3.2.1) and another argument 
in favour of setting an en d-date at the EU level. 
 
EN 130   EN Graph 1:  Full SEPA migration benefits  at the Member State level as a % of the national GDP 
(2006) 
0,15%
-0,05%
EU0,14%
-0,05%
FR0,14%
-0,04%
IE0,14%
-0,05%
GR-0,04%0,08%
SL-0,08%0,12%
AT-0,05%0,12%
SE0,12%
IT-0,05%0,14%
ES-0,04%0,14%
PL-0,05%
LU0,15%
FI-0,05% -0,05%0,16%0,17%
NL-0,05%
DE0,16%
BE UK-0,05%0,16%
-0,05%
-0,07%
PT0,14%
-0,07%0,17%
SEPA Big Time All Tied Up 
SEPA Big Time = Full SEPA migration scenario  
All Tied Up= Baseline scenario 
Source: CapGemini study 
Graph 2:  Full SEPA migration benefits at the Member State level for demand and supply 
side 
0,20%
LU0,00%0,16%
BE0,03%0,13%
NL-0,10%0,25%
UK0,00%0,15%
FI-0,06%0,21%
EU-0,12%0,26%
FR-0,06%0,20%
IE-0,19%0,33%
PT-0,05%0,18%
PL-0,12%0,25%
ES-0,03%0,17%
IT-0,04%0,17%
SE-0,04%0,16%
AT-0,20%0,32%
SL-0,01%0,10%
GR
Net SEPA Effect Supply side-0,03%-0,01%0,18%
DE
Net SEPA effect Demand side 
Source: CapGemini study 
 
EN 131   EN Table 3:  Full SEPA migration with an end-da te: impact at the Member State level 
Member State Net effect supply side 
(EUR billion) Net effect demand side 
(EUR billion) Net effect country 
(EUR billion) 
Germany -1.847 30.641 28.794 
United Kingdom -13.791 35.362 21.571 
France -16.842 36.067 19.226 
Italy -3.310 18.507 15.197 
Spain -10.238 22.030 11.791 
Netherlands +1.073 5.382 6.455 
Belgium +0.029 3.902 3.931 
Poland -1.139 4.346 3.207 
Sweden -1.025 3.907 2.882 
Austria -0.779 3.215 2.436 
Ireland -0.982 3.171 2.190 
Finland  +0.023 1.908 1.932 
Portugal -2.263 3.880 1.617 
Greece -0.236 1.713 1.477 
Luxemburg -0.090 0.550 0.460 
Slovenia -0.483 0.780 0.296 
EU16 -51.900 175.362 123.462 
Source: CapGemini study  
 
EN 132   EN Annex 16: Essential requirements for pa n-European payment credit transfers 
and direct debits 
Table 1:  List of essential requirements for credit transfers and direct debits 
Essential requirement Justification Additional implications/ 
considerations 
Technical interoperability of 
PSPs and payment 
infrastructures Eliminates technical obstacles for 
processing of payments at European level none 
Full reachability of PSPs Ensures that every payment account in 
the EU can be reached through pan-
European payments none 
Mandatory use of IBAN (and 
BIC where necessary) at a 
domestic level IBAN and BIC are the only international 
standards for bank account numbers and 
bank identification which are currently in 
use throughout the EU Potential restriction to IBAN only 
would require IBAN format to be 
modified in some Member States 
Mandatory use of ISO 20022 
payment messaging 
standard ISO 20022 is the only international 
payment messaging standard which is 
currently in use throughout the EU Consumers and small businesses 
exempted; only applies to batch 
transactions 
Mandatory data elements to 
be used in payment 
messaging Ensures easier payment reconciliation 
and straight-through-processing  Set of required data elements 
conditional on bank-to-bank, bank-
to-customer, or customer-to-bank 
transaction domain 
Minimum threshold of 140 
characters in remittance 
information field Ensures sufficient remittance data in line 
with currently used international and 
SEPA instruments while giving option to 
MS to use more remittance data 
domestically none 
Pan-European payment 
instruments must allow for 
straight-through processing 
in all stages Maximises possible ben efits of efficient 
and fully automated electronic payment 
processing Erroneous transactions, such as 
rejects, returns, or recalls could be 
out-of-scope for full STP