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)
Date: 2010-12-16
Institutions: European Commission
Subjects: bank charges, capital transfer, credit transfer, electronic money, financial legislation, intra-EU payment

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 

   EN 

 
 
  
 
 
 
 
 
 
 
TABLE OF CONTENTS 

1. 

2. 

3. 

Introduction .................................................................................................................. 5 

Procedural issues and consultation of interested parties .............................................. 6 

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 migration 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 act and justification ....................................................................... 24 

4. 

4.1. 

4.2. 

5. 

5.1. 

5.2. 

5.3. 

Objectives................................................................................................................... 25 

General, specific, and operational policy objectives.................................................. 25 

Consistency of the objectives with other EU policies................................................ 25 

Policy options............................................................................................................. 26 

No intervention – baseline scenario ........................................................................... 26 

Give new impetus to SEPA migration by additional incentives ................................ 26 

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. 

6.1. 

6.2. 

6.3. 

6.4. 

Analysis of impacts and comparison of options ........................................................ 27 

Impact of possible additional incentives for SEPA migration ................................... 27 

Impact of setting a SEPA migration end-date............................................................ 28 

Comparison of baseline scenario versus setting an end-date ..................................... 32 

Assessment of the instruments for setting an end-date .............................................. 33 

6.4.1.  Self-regulation............................................................................................................ 33 

EN 

2 

   EN 

6.4.2.  Non-binding Community instrument (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 the implementation of a SEPA migration 
end-date ...................................................................................................................... 35 

6.5.1.  Reference basis for pan-European credit transfers and direct debits ......................... 35 

6.5.2.  Transaction domain.................................................................................................... 38 

6.5.3.  Product specification.................................................................................................. 39 

6.5.4.  Member States scope.................................................................................................. 41 

6.5.5.  Deadlines.................................................................................................................... 43 

6.5.6.  Cross-border opening of bank accounts for pan-European credit transfers and 

direct debits ................................................................................................................ 45 

6.5.7.  Clarity on the long term business model for pan-European direct debits .................. 47 

6.5.8.  Overview of the chosen sub-options .......................................................................... 54 

6.6. 

Other impacts ............................................................................................................. 55 

7. 

8. 

9. 

Conclusions ................................................................................................................ 56 

Monitoring and evaluation ......................................................................................... 56 

Glossary...................................................................................................................... 57 

10. 

Annexes...................................................................................................................... 59 

Annex 1: Key statements by European Institutions 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 (MIF) for SEPA Direct Debit............................................... 61 

Annex 2: Chronology of key consultations and events regarding the establishment of 
an end-date for SEPA migration .............................................................................................. 63 

Annex 3: Summary of the public consultation on SEPA migration (September 2009)........... 64 

Annex 3a: Dialogue with the Industry and Public Consultation on MIF for Direct Debit 
Dialogue with the Industry....................................................................................................... 73 

Annex 4: Integrating a fragmented market – the background of the SEPA project................. 79 

EN 

3 

   EN 

Annex 5: Payment data EU ...................................................................................................... 83 

Annex 6: Overview of national SEPA migration plans ........................................................... 91 

Annex 7: SEPA migration progress 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 through 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 pan-European payment credit transfers 
and direct debits ..................................................................................................................... 132 

EN 

4 

   EN 

1. 

INTRODUCTION 

Secure,  rapid  and  efficient  payment  systems  are  crucial  for  the  conduct  of  economic 
transactions  and  to  the  proper  functioning  of  the  Internal  Market.  While  the  euro  has 
facilitated cash payments between Member States 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  legal  side  by  the  Payment  Services  Directive  or 
PSD (2007/64/EC)1. This aims at establishing standardised conditions and rights for payment 
services  offered  in  the  internal  market  thereby  benefitting  consumers  and  companies  across 
the  EU.  The  Regulation  on  Cross-Border  Payments  in  the  Community  (EC) No 924/20092 
obliges payment service providers (PSPs) to charge the same price for cross-border payments 
in euro up to EUR 50 000 as for corresponding national payments in euro, irrespective of the 
real costs of transactions. 

Building  on  this  common  legal  framework,  the  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 introduction 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  payments  area  has  enjoyed  strong  political 
endorsement at EU and national level. This has encouraged banks 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  the  European  banking 
sector. The schemes developed by the EPC apply to the EU and closely associated countries 
with  significant  euro  payment  volume,  namely  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 context. It is fully in line with the Europe 2020 strategy which aims at 
developing a smarter economy in which prosperity 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 rapid5. 

1 
2 
3 

4 

5 

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2007:319:0001:01:EN:HTML 
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:266:0011:01:EN:HTML 
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. 
A  payment  service  for  debiting  a  payer’s  account.  The  payment  transaction  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 one-time payments, in some countries even at the point 
of sale. 
SEPA: potential benefits at stake, CapGemini, 2007,  
http://ec.europa.eu/internal_market/payments/docs/sepa/sepa-capgemini_study-final_report_en.pdf. 

EN 

5 

   EN 

                                                 
Two  crucial  milestones  on  the  way  towards  the  realisation  of  SEPA  through  pan-European 
schemes have already been achieved, namely the 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 innovation at European level as for the first time it enables direct 
debits to take place on a cross-border basis. Actual migration from national legacy payment 
instruments to these core SEPA payment instruments is, however, lagging behind and mainly 
limited  to  cross-border  transactions  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  the  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 reserved6 the right at an early date 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 payment instruments would have to be phased-out 
and replaced by SEPA products. This view is shared 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 view, are provided in Annex 1. 

This  impact  assessment  therefore  analyses  the  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 transfers and direct debits, 
have  not  yet  been  designed  by  the  industry.  Although  a  general  SEPA  card  framework  has 
been developed by the EPC, further standardisation work is still 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,  following  the  publication  of  the  Communication 
Completing  SEPA:  a  roadmap  for  2009-20127.  A  Steering  Group  composed  of  various 
Commission  services  (Internal  Market  and  Services;  Competition;  Enterprise  and  Industry; 
Economic and Financial Affairs; Employment, Social Affairs and Equal Opportunities; Health 
this  purpose8. 
and  Consumers  and 
Representatives  of  the  European  Central  Bank  (Directorate  General  Payments  &  Market 
Infrastructure) were closely involved in this process. 

the  Secretariat-General)  was  established 

for 

6 
7 
8 

Joint statement of the Commission and the ECB on SEPA, 4.5.2006. 
http://ec.europa.eu/internal_market/payments/docs/sepa/com_2009_471_en.pdf 
Even though not represented in the Steering Group, the Directorate General for Taxation and Customs 
Union has been consulted on the issue of cross-border bank account opening. 

EN 

6 

   EN 

                                                 
In its opinion 21 May 2010, the Impact Assessment Board (IAB) gave a favourable view on 
the impact assessment but requested a number of clarifications and improvements. Therefore, 
as recommended by the IAB, analysis of the reasons for slow migration to SEPA, including 
the impact of the adverse economic climate, has 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 Annexes 12 and 15 now present a more detailed analysis of the 
costs and benefits, including analysis at Member State level, and extensive 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-friendly  improvements  have  been  made  to  the 
presentation  of  the  document,  including  a  full  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  inter-service  consultation  on  the  proposal  for 
Regulation  which  ended  in  July  2010,  a  provision  addressing  the  long-term  business  model 
for  pan-European  direct  debits  was  added.  Following  the  modification  of  the  Impact 
Assessment to incorporate the rationale for a proposed regulatory intervention 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 clarifying the nature of the problem and the baseline situation, at 
making the variation in stakeholder opinions transparent and at strengthening the assessment 
of  impacts.  Besides,  on  the  initiative  of  Commissioner  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 Commission since 2006 (see Annex 2 for a chronological 
overview of the main events as well as references to relevant documents and reports). These 
include: 

– 

– 

9 

10 

A comprehensive study into the costs and benefits of SEPA migration carried out by 
CapGemini Consulting. The final study results, published in January 2008, indicate 
that the potential benefits of a rapid migration from national payment instruments to 
SEPA instruments9 were around EUR 300 billion over a six-year period (2007–2012) 
for the EU economy as a whole. This estimate was based on the assumption of swift 
and comprehensive migration on both the supply and demand sides. In contrast, the 
study shows that protracted migration has a significant negative impact. 

A study10 aimed at preparing the monitoring of the impact of SEPA on consumers, 
carried  out  by  Van  Dijk  Management  Consultants  and  published  in  August  2008. 
This study provided data on the prices of the means of payment and will allow the 
comparison of these data with those which will be collected in future studies. 

The scope of the analysis by CapGemini includes credit transfers, direct 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 overall 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. 
http://ec.europa.eu/consumers/rights/docs/SEPA_monitoring_study.pdf 

EN 

7 

   EN 

                                                 
– 

– 

– 

– 

– 

11 

12 

13 

A public stakeholder consultation on whether and how deadlines should be set for the 
migration  of  existing  national  credit  transfers  and  direct  debits  to  the  new  SEPA 
payment  instruments.  The  primary  consultation  was  organised  by  the  Commission 
services between June and August 2009. Results were published in September 2009 
and  reveal  that  a  large  majority  of  stakeholders  generally  expressed  support  for 
fixing, at EU level, a deadline for full 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  opinions  continued  as  the  long  term 
business  model  for  SDD  had  not  been  determined.  In  order  to  provide  guidance  to 
the  banks,  the  Commission  and  the  ECB  issued  a  joint  statement  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). 

in 

the  second  half  of  2009  and  more 

Annual consultations on SEPA through the European Business Test Panel. The last 
consultation  was  undertaken 
than 
400 enterprises  participated.  These  were  composed  of  85 %  SMEs  and  15 %  larger 
corporations.  The  2009  consultation  included  questions  on  phasing  out  legacy 
payment  instruments  and  setting  a SEPA  migration  end-date.  Almost  70 %  of  the 
respondents  argued  that  SEPA  instruments  should  not  only  complement  but  should 
replace  existing  legacy  instruments.  Around  two  thirds  of  respondents  favoured 
setting a migration end-date by regulation. 

to  selected  banks  by 

the  Commission  services 

A  questionnaire  sent 
in 
December 2009–January 2010. This questionnaire concentrated on the specific issue 
of  duplicate  costs  incurred  by  individual  PSPs  for  running  payment  systems  and 
processes (payment platforms) for existing national payments and new pan-European 
SEPA  payments  in  parallel.  For  this  purpose,  19  of  the  largest  banks  or  banking 
groups in Europe, representing a mix of commercial, savings, and cooperative banks 
from  nine  countries,  were  selected.  A  large  majority  of  respondents  indicated  that 
such costs were significant and therefore supported 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 assumed 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 processors 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  hand,  it  must  be  recognised  that  payment 

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 remuneration for each direct debit transaction. See Glossary 
in Chapter 9. 
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 Articles will expire on 31 October 2012. 
For more information and full texts of these documents see: 
http://ec.europa.eu/competition/sectors/financial_services/banking.html/ 

EN 

8 

   EN 

                                                 
users  do  not  face  the  same  investment  pressure  and  do  not  incur  duplicate  costs  as 
banks  and  processors  since  users  can  delay  SEPA  migration  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  institutions,  consumer  organisations  and  other 
social  and  economic  partners,  notably  through  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,  their  comments  closely  reflected  those 
made  in  the  public  stakeholder  consultation  mentioned  above.  Concerning  the  PC 
members, almost all of those expressing a view 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 SEPA 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 volume (or around 42 billion 
transactions in 2008)15. In terms of transaction value, retail credit transfers and direct debits 
represent  over  95 %  of  non-cash  payment  transactions  in  the  European  Union  (or 
EUR 248 trillion in 2008, which is roughly 20 times more than the 2008 GDP of the EU). 

14 

15 

Retail payments typically mean payments on behalf of bank customers, such as individuals, companies, 
and public authorities. 
ECB Payment Statistics, September 2009. 

EN 

9 

   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  the  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  transfers  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 

10 

   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,  representing  more  than  95 %  of  the  payment 
volume in the EU, adhere to this scheme (status December 2009). Furthermore, the launch of 
the  SEPA  Direct  Debit  scheme  (SDD)  has  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-condition for the development of SEPA, even if 
a crucial one. Progress in terms of payment market integration is determined by actual usage 
of SEPA instruments and in this respect migration results are disappointing. As of April 2010, 
only 7.5 %16 of all credits transfers processed by clearing and settlement mechanisms located 
in the euro area were executed in the SCT format. In most Member States, SCT transactions 
were  mainly  limited  to  cross-border  transactions.  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  compared  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 already 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 
17 

Latest figures on http://www.ecb.int/paym/sepa/timeline/use/html/index.en.html. 
2nd SEPA Progress Report, Commission Services, November 2009, 
http://ec.europa.eu/internal_market/payments/docs/sepa/progress_report_2009_en.pdf. 

EN 

11 

   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-European  credit  transfer  and  direct  debit 
resulting in co-existence of national legacy systems and SEPA 

As  discussed  in  the  previous  chapter,  full  integration  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,  although  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 below), linear extrapolation would imply complete 
SEPA migration after 30 years. Even in a more optimistic scenario, 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  and  identifies  possible  success 
factors which promote rapid migration. 

EN 

12 

   EN 

 
Graph 3: Credit transfer transactions processed in SEPA format (in the euro area) 

Source: European Central Bank 

While SEPA migration shows a relatively steady upwards progression, there remain notable 
differences  in  the  degree  of  SEPA  readiness  between  the  supply  (banks  and  other  payment 
service  provides)  and  the  demand  sides  (companies,  public  administrations  and  individual 
consumers)  of  the  market.  As  mentioned  before,  the  technical  capability  to  handle  SEPA 
transactions  and  offer  the  corresponding  SEPA  payment  instruments  already  exists  on  the 
supply side, investment in SEPA compliance has already 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 the 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 payments market share by offering standardised 
products,  a  better,  more  integrated  service  and  the  cross-selling  of  other  cash  management 
products  to  'premium'  users,  typically  larger  businesses  with  cross-border  activities.  On  the 
other hand, smaller banks, less internationally oriented, may fear that although they have to 
make comparable investment, they will not enjoy the same business opportunities and will be 

EN 

13 

   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  binding  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  business  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 transaction, 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  competition,  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 bank – the payer bank – receives its revenues 
from the payee bank it might not charge the consumer, who might then thinks he receives the 
service for free whilst the consumer has no way of knowing that he pays indirectly through 
the company beneficiary of the direct debit and how much he pays. However, to incentivise 
banks, in particular the ones which currently receive 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  interchange  fees  as  a  financing  model  for  direct 
debit  transactions,  in  force  until  31  October  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  these  MIFs  being  decreased,  in  which  case  this 
lower level would apply. A transitional default 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 provider18) are also in place in five Member States, 
three of which also have a MIF per transaction in place. At present 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,  such  per  transaction  MIFs  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)  and  are  gradually  decreasing  in  most  Member States. 
R-transaction  MIFs  of  varying  sizes  exist  in  Austria,  France,  Germany,  Portugal  and  Spain 
(for  a  minority  of  labour  intensive  R-transactions  Business  models  with  MIFs  for 
R-transactions which have been set up as a financing mechanism (i.e. not to compensate and 
allocate  the  costs  of  R-transactions  only)  tend  to  have  equivalent  effects  to  MIFs  per 
transaction business models19. Some PSPs believe that further legislation is needed to clarify 
the  validity  of  a  long-term  business  model  after  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  the  Commission  Working  Document  on  the  applicability  of 
Article  81  EC  to  MIFs20.  The  perceived  lack  of  legal  certainty  means  that  PSPs  may  try  to 
maintain their existing schemes for as long as possible and delay the effective transfer to the 
SEPA systems. 

18 
19 

20 

See Glossary in Chapter 9. 
See  the  Commission  Working  Document  on  the  Applicability  of  Article  81  of  the  EC  Treaty  to 
multilateral interbank-payments in SEPA Direct Debit, published on 3.11.2009, p. 11. 
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 

14 

   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 and predictability with respect to 
the  long  term  business  model  is  a  key  problem  inhibiting  the  effective  establishment  of 
a Single Euro Payment Area with respect to direct debit transactions. 

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 payment services. This risk of a slower take up 
as  a  consequence  of  a  lack  of  clarity  has  in  particular  been  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  SDD  was  a  major  achievement,  the  figures  on  the 
take  up  of  the  system  in  the  first  few  months  after  the  launch  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  provides  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  already  provided  will  be  addressed  in  more 
details further below (see 6.5.7). 

On the demand side (in practice mainly companies 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 the status quo. Basically, as long as the old legacy 
systems remain operational, the demand side does 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 investment – 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  corporate  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  company.  (see  also  Annex  8:  reasons  for  slow 
migration:  reluctance  to  invest).  Public  administration  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,  insufficient  public  involvement  in  the 
migration  process  and  partly  due  to  the  complexity  of  the  process.  As  a  result,  SEPA 
investment by the demand side lags the supply side. 

The  danger  of  a  protracted  transition  period  is  also  exacerbated  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  pruned  their  marketing  budgets  for 
SEPA and do not make particular efforts to promote 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/singleeuropaymentsarea201010en.pdf, p. 17. 

EN 

15 

   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 require any immediate investment. The impact of the most recent 
debt crisis and austerity measures taken by several Member States are also not propitious to 
new investment. Moreover, these types of effects are aggravated in a network business where 
the utility of the system depends largely upon all parties migrating. Since there is no certainty 
that all will move, the safest course 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 micro 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 consequences, such as: unrealised economies of scale, 
barriers  to  competition,  price  and  quality  divergence  for  payment  services,  and  hindered 
innovation at European level. 

In  summary,  the  SEPA  project  is  far-reaching,  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 concerted migration effort by the market as whole 
is  needed  in  a  network  business  environment.  The  result  is  gridlock  and  market  failure.  As 
long  as  existing  legacy  payment  instruments  can  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  flipside,  banks  will  shy  away  from  promoting  SEPA 
products  (and  fully  investing  in  SEPA)  until  their  customers  are  'SEPA-ready'  and  due  to 
revenue considerations. Furthermore, even though 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 for 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 analysis 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 diverging payment standards and processes 

Despite  the  existence  of  pan-European  payment  instruments  (SCT  and  SDD),  payments 
within  the  EU,  especially  domestic  transactions,  are  still  predominantly  in  national  legacy 
formats. This situation will prevail as long as national systems and SEPA co-exist. 

Today,  national  legacy  credit  transfers  and  direct  debits  significantly  diverge  across 
Member States.  Especially  account  identifiers  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  reconciliation  of  payments,  in  others  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 

16 

   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 around 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  national  processing  infrastructures  and  schemes  for  retail  euro 
payments,  with  different  standards,  operational  aspects,  cost  structures,  and  levels  of 
efficiency. Annex 10 provides an overview of payment systems by Member State. 

The differences in payment formats and payment processes described above represent severe 
barriers  for  the  inter-operability  of  payment  services  between  Member States.  More 
importantly  however,  these  differences  impede  the  realisation  of  substantial  economic  scale 
effects for those market participants on the supply and demand side which operate or desire to 
operate in more than one Member State. The current 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  Journal  of  Banking  &  Finance  in  200823  confirms  that  there  are 
substantial  untapped  scale  economies  in  payment  processing.  The  study  suggests  that  in 
quantitative  terms  a  doubling  of  the  payment  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  undertaken  by  A.T.  Kearney  analysed  the  costs  of 
payments for 40 leading banks in Europe in 200725. The results showed that banks in the most 
efficient EU countries were able to process an electronic national payment at only one eighth 
of the cost incurred by banks located 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 treasury operations and cash pools at national level. 
For  this  purpose,  they  have  to  maintain  relationships  with  a  multitude  of  PSPs  offering 
different  kinds  and  levels  of  services  using  different  payment  formats.  All  this  limits  the 
benefits  of  a  common  currency  and  significantly  adds  to  the  complexity  and  cost  of  the 

22 

23 

24 

25 

This generates important additional costs on cross-border payments and affects automated processing of 
payments. 
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. 
Apart from the payments already processed via retail payment systems, there is a substantial untapped 
potential  of  payments  which  is  still  processed  via  correspondent  banking  relationships.  In  some 
countries  (e.g.  in  Germany  or  Austria)  the  share  of  payments  exchanged  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. 
See The SEPA Shake-Out. Challenges in cards and payments, A.T. Kearney, 2008. 

EN 

17 

   EN 

                                                 
 
liquidity  management  of 
true  for  SMEs  and 
micro-enterprises  which  face  significant  barriers  to  develop  efficient  payment  operations 
when  entering  foreign  markets  because  of  the  complexity  of  setting  up  new  payment 
processes. 

these  businesses.  The  same  holds 

In  summary,  as  long  as  different  national  payments  systems,  instruments  and  formats  are 
used, the economies of scale and potential benefits of a fully integrated payments market will 
not materialise which means foregoing substantial saving opportunities at EU level. 

Limited competition in the EU payments market 

The  payment  industry  is  a  network  industry  and  therefore  to  achieve  inter-operability  and 
competition,  it  is  necessary  to  first  establish  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  procedures)  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 which 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 foreign PSPs limit competition from one direction. 
Conversely  however,  cross-border  mobility  of  payment  service  users  is  also  an  important 
requirement for competition to be fully effective 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 there are major hurdles to the cross-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  basis  that  the  consumer  is  not  a  resident  or 
a national  of  the  Member State  concerned.  Furthermore,  as  European  payment  users  and 
consumers  become  increasingly  mobile,  and  work,  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-border basis. Although there has been a spectacular growth of 
online banking services at national level, this growth has not been replicated at a cross-border 
level.  In  theory,  distance  is  not  a  relevant  parameter  for  the  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 

18 

   EN 

                                                 
This  need  to  open  payment  accounts  on  a  cross-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 large 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 Citizen Signpost Service (CSS) of the Commission 
focussing  on  situations  with  a  cross-border  dimension  corroborate  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 regulatory requirements or limitations at  national 
level which would justify a general restriction of payment account services to residents only. 
Nevertheless, some of these banking associations acknowledged that a significant number of 
individual banks refuse to open payment accounts to non-residents as a matter of principle30. 

Anecdotal evidence based on citizen complaints 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 citizen studying in France was rejected by a French 
PSP on the basis of the student’s nationality. 

Consequently,  the  choices  of  users  for  purchasing  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 the differences in price levels for payments across the EU. The 
price  of  current  account  payment  services  varies  dramatically  between  Member States  as 
a recent study of Van Dijk Management Consultants on behalf of the European Commission 
demonstrates31.  In  particular,  this  affects  consumers,  micro-enterprises  and  SMEs  as 
corporates have stronger bargaining power and the possibility to seek tender offers for their 
payment needs. Annex 11 provides a detailed overview of  the different bank account  prices 
across EU Member States. 

27 

28 

29 

30 

31 

Over  the  past  three  years,  the  Commission  Services  have  received  complaints  concerning  PSPs  in 
Austria, Belgium, Czech Republic, France, Germany, Italy, Ireland, Luxembourg, Netherlands, Poland, 
Portugal, Slovakia, Spain and United Kingdom. 
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. 
In  this  context,  the  Commission Services  corresponded  with  national banking  associations  in  Austria, 
Belgium, France, Luxembourg, Netherlands and United Kingdom. 
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". 
Van Dijk Management Consultants study for the European Commission, 2009,  
http://ec.europa.eu/consumers/rights/docs/study_bank_fees_en.pdf. 

EN 

19 

   EN 

                                                 
In  summary,  as  long  as  competition  in  the  European  payment  market  is  hampered  by 
fragmentation  along  national  barriers,  simplification  of  payment  processes,  effective 
competition and downward price convergence will be difficult to achieve. 

In  addition  to  these  general  aspects,  as  regards  direct  debit  specifically,  the  persistence  of 
business  models  based  on  MIFs  per  transaction  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  described  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 banks 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 consumers through their own bills. Since the consumer’s 
own bank – the payer bank – receives its revenues 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 company 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  whose  banks  are  being  charged  this  'minimum 
floor' are equally restricted in eliciting lower banking fees. In fact, however, the collectively 
fixed, hidden, fee is not observed by any of the users 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 restriction of competition, in particular by object33. 

As  to  stakeholder  views  and  the  reasons  why  alternative  business  models  to  MIFs  per 
transaction under which the payer is charged directly appear both more efficient in terms of 
an effectively functioning market to the benefit of companies and consumers, please refer to 
Annex 3a. 

32 
33 

Cf. footnotes 16 and 17. 
Commission Working Document, p. 6. 

EN 

20 

   EN 

                                                 
Hindered innovation 

A  fragmented  payments  market  impairs  the  emergence  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 processes in the financial supply chain, such as 
e-Invoicing or e-Billing36. 

These new payment channels could promise significant potential at global level, both in terms 
of  economic  benefits  and  user  convenience,  in  particular  for  consumers  and  SMEs.  Recent 
estimates  by  Juniper  Research  suggest  that  purchases  via  mobile  devices  of  digital  and 
physical  goods  will  generate  transactions  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 %  annually38.  e-Invoicing  currently  experiences  growth  rates  of 
around  40 %  annually  across  Europe  according  to  studies  by  Billentis39.  The  number  of 
enterprises currently applying e-Invoicing in Europe is estimated to have crossed the 1 million 
threshold (out of a total of 23 million). 

Based on  the growth potential indicated 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)  and  for  mobile  payments  (m-Payments)…". 
However,  market  fragmentation  currently  hinders  the  emergence  of  potential  pan-European 
payment  innovations  and  consumers  can  only  benefit  from  these  services  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 would 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. Similarly, 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 

35 
36 

37 

38 

39 

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 necessarily have to be performed through 
online banking systems. 
Mobile payments are defined as payments whose initiation is performed by using mobile phones. 
e-Invoicing  is  the  electronic  transfer  of  billing  and  payment  information,  via  the  Internet  or  other 
electronic means between the trading parties – businesses, the public sector, consumers – involved in 
commercial transactions. 
Press Release: Juniper Research Forecasts Total Mobile Payments to Grow Nearly Ten Fold by 2013, 
http://juniperresearch.com/shop/viewpressrelease.php?pr=106. 
E-Payments: Potenziale innovativer Bezahlsysteme; S Heng, DB Research, January 2008, 
http://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000000000220279.pdf. 
E-Invoicing/E-Billing:  European  Market  Overview  &  Forecast;  B Koch,  Billentis,  February 2010, 
http://www.billentis.com/ebilling_e-invoicing_European_Market_Overview_2010.pdf. 

EN 

21 

   EN 

                                                 
 
A  multitude  of  different  systems,  standards,  and  rules  in  different  countries  also  negatively 
impacts the development and security of innovative 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  the  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  risk  of  fraud  and  non-payment  in  cross-border 
electronic sales compared to domestic sales41. 

In summary, the continuation of a fragmented payment 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 operational cost for legacy and SEPA systems 

The  provision  or  use  of  electronic  payment  services  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  require  ongoing  maintenance  to  ensure  their 
continuous and seamless integration with all other 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  purely  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 
transitional  costs  of  providing  or  using  payment  services. 
suffer  from  duplicate, 
Simultaneously  maintaining  national  legacy  payment  platforms  and  a  new  pan-European 
SEPA  platform  requires  significant  extra  resources  and  leads  to  a  missing  return  on 
investment already taken. This is particularly true for PSPs which 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 example corporates who wish to integrate payments 
on  a  cross-border  basis,  also  suffer  from  duplicate  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 payment market is characterised by both the supply and demand 
side  delaying  at  least  part  of  their  investments  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 would result in completion of SEPA 
only after 30 years. 

According  to  the  cost-benefit  analysis,  developed  in  the  SEPA  study  by  CapGemini  (see 
Annex 12 for details on scope and methodology  used)  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 EUR15billion and the demand side EUR 27 billion, 

40 
41 

http://ec.europa.eu/consumers/strategy/docs/com_staff_wp2009_en.pdf 
It is therefore not surprising that the European e-Commerce and mail order trade association (EMOTA) 
in a letter to the EPC called upon banks to come forward with a proper solution for e-Payments. 

EN 

22 

   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 supply and demand side of the market 

Supply side (EUR billion) 

Demand side (EUR billion) 

Reduced revenues 

SEPA investment 

Operational savings 

Total effect supply 

Source: CapGemini SEPA study 

-8 

-7 

0 

Reduced prices 

SEPA investment  

Operational savings 

-15 

Total effect demand 

+8 

-10 

-25 

-27 

The negative effects would be spread over all stakeholders with the exception of consumers 
who  would  realise  slight  gains  even  under  a  slow  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 

Payment service providers 

Corporate businesses 

SMEs 

Merchants 

Public administrations 

Consumers 

Total effect 

Source: CapGemini SEPA study 

Baseline scenario 
(EUR billion) 

-15 

-11 

-11 

-3 

-6 

+4 

-42 

Independently,  in  August  2007  the  ECB  also  conducted  a  major  study  into  the  costs  and 
benefits  of  SEPA  on  the  supply  side  which  confirmed  the  view  that  a  dual  SEPA 
implementation phase should be as short as possible. A longer migration period would give 
rise  to  higher  costs  than  a  shorter  period  according  to  the  study.  In  particular,  the  ECB 
estimates  that  running  national  and  SEPA  systems  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  context  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 

23 

   EN 

 
                                                 
Of the banks contacted, 15 classified the duplicate 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  higher43. 
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 other 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  that  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  opinions44, 
almost  90 %  of  the  sampled  banks  confirmed  that  setting  an  end-date  would  support  the 
elimination of duplicate cost and 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 States alone. At this stage, national migration 
plans  to  SEPA  exist  in  almost  all  Member States.  While  all  these  plans  support  SEPA 
migration,  only  a  few  aim  for  the  systematic  and  full  replacement  of  legacy  payment 
instruments  by  a  given  deadline.  In  those  national  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  provide  sufficient  momentum  for  swift  and 
comprehensive  migration  to  SEPA,  and  are  also  not  coordinated  between  Member States. 
Annex 6 provides an overview of migration target dates by Member State. 

By its nature an integrated euro payments market requires a Community-wide approach as the 
underlying standards, rules and processes 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  whose  currency  is  the  euro.  Only  a  European 
approach,  co-ordinated  on  the  supply  and  demand  side,  can  unlock  the  full  potential  of  the 
network  benefits.  The  alternative  to  a  Community-wide  approach  would  be  a  system  of 
multilateral  or  bilateral  agreements  whose  complexity  and  costs  would  be  prohibitive  as 
compared  to  legislation  at  European  level.  A  possible  intervention  at  EU  level  therefore 
complies with the subsidiarity principle. 

43 
44 

One particular bank mentioned that these costs could reach up to as much as EUR 100 million annually. 
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 

24 

   EN 

                                                 
4. 

OBJECTIVES 

4.1. 

General, specific, and operational policy objectives 

According to Article 26 of the Treaty on the Functioning 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 policy objectives are identified: 

General: 

– 

– 

– 

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. 

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. 

To  establish  a  pan-European  platform  from  which  innovative  and  value-adding 
payment services and products can be launched. 

Specific: 

– 

– 

To achieve full operational integration of the payments market in Europe for credit 
transfers and direct debits. 

To  eliminate  excess  complexity  and  the  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 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. 

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. 

The link between the problems described in Chapter 3.2 and the objectives identified above is 
presented in Annex 13. 

4.2. 

Consistency of the objectives with other EU policies 

The objectives outlined above are consistent with the policies and objectives of the European 
Commission.  They  improve  the  functioning  of  the  European  market  for  payment  services 
through  standardisation  and  provide  a  platform  for  the  development  of  innovative  financial 
services  at  EU  level,  such  as  e-  and  m-Payments,  or  e-Invoicing.  Therefore,  the 
accomplishment of the above objectives will significantly contribute to the achievement of the 
Internal  Market  which  is  one  of  the  cornerstones  of  the  EU.  Furthermore,  by  facilitating 

EN 

25 

   EN 

financial  transactions  within  the  EU  the  objectives  also  support  the  move  to  a  smarter 
economy,  an  integral  part  of  the  Europe  2020  strategy.  An  integrated  payments  market  will 
also facilitate the participation of SMEs in the Single Market. SEPA, and especially its use as 
a platform for e-Invoicing by public administrations, 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 directly and significantly 
to the development of a digital and green economy.  

5. 

POLICY OPTIONS 

In  order  to  address  the  specific  problem  identified  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 resolved. Three main scenarios can be envisioned: 

(1) 

(2) 

(3) 

purely market driven migration to SEPA instruments and no intervention 

additional  incentives  to  support  and  accelerate  migration,  particularly  on  demand 
side 

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 migration 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 could be accelerated and reinforced by a series of 
measures  primarily  at  the  level  of  Member States  given  the  specificity  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  players  on  both  the  supply  and  demand  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  Commission  Communication,  addressed  to  all  stakeholders  of  the 
payments  market,  or  a  Commission  Recommendation  to  Member States  would  call  on  the 
setting of a SEPA migration end-date. 

EN 

26 

   EN 

5.3.3.  Option 3 – Binding ECB instrument 

Under this option, an ECB Regulation would establish 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  Regulation  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 chapter (6.1) provides an analysis of possible measures that could be 
undertaken  at  the  Member State  level  to  accelerate  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  policy  option  discussed  in  this  document  –  the  setting  of  a  SEPA 
migration  end-date.  After  a  comparison  (6.3)  between  this  policy  option  and  the  baseline 
scenario discussed in the problem definition, possible instruments for setting an end-date are 
discussed (6.4). Subsequently, a number of implementing 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  could  in  principle  be  boosted  by  a  series  of 
measures undertaken by or aimed at different SEPA stakeholders. A major advantage of such 
an approach would be speed as lengthy legislative procedures are not required. This option is 
flexible and should help accelerate migration to pan-European payment instruments. 

On  the  supply  side,  as  discussed  in  Chapter  3.2.1,  the  technical  capability  to  handle  SEPA 
transactions  already  exists.  From  this  perspective,  the  slow  migration  progress  could  be 
therefore addressed primarily by a full scale communication and awareness-raising campaign, 
addressed  to  the  payment  service  users,  and  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  rules,  write-off  of  the 
cost of personnel training or even tax rebates. In addition, 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  service  users.  Similarly,  public  authorities  could 
also  conduct  a  SEPA  communication  and  awareness-raising  campaign,  reinforcing  the 
marketing efforts of the supply side. 

Flanking measures could be undertaken at EU level. 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 could be given to the pan-European scoreboard 
of SEPA migration by public authorities already prepared by the Commission. Possibly, this 
scoreboard  could  be  extended  to  other  categories  of  stakeholder.  Coordination  and 
cooperation could be intensified 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 

27 

   EN 

to  improve  cooperation  and  especially  should  strive  to  create  peer  pressure  and  disseminate 
best practices among national authorities. 

Although  such  measures  are  clearly  beneficial,  there  remains  however  a  number  of 
weaknesses to such an approach. First, as shown in the problem definition, a root cause of the 
slow migration progress is uncertainty about final SEPA completion. Any set of non-binding 
measures  aimed  at  simply  accelerating  SEPA  migration  will  not  resolve  this  issue,  as  no 
obligation  for  migration  is  envisaged.  Consequently,  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  envisaged  incentives,  in  particular  those  aimed  at 
companies, will likely have to be of a financial nature (e.g. more attractive pricing of SEPA 
payment instruments than of the legacy payments, financial incentives by the state to promote 
SEPA investment). For example, it does not seem clear that a brochure or a media campaign 
extolling the long-term benefits of SEPA will in the current climate be sufficient to galvanise 
companies  into  making  major  SEPA  investments.  Indeed,  while  it  is  recognised  that 
considerable scope exists to market SEPA by public authorities in the way that the launch of 
the  euro  was,  nevertheless,  some  limited  communication  is  already  taking  place  today. 
Furthermore,  in  the  current  economic  climate  and  against  a  background  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  justify  such  investments  when  ultimately  SEPA 
should be beneficial to users in its own right. 

Thirdly, while increased cooperation between the SEPA Council and 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  consideration  applies  to  increasing  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  inducements  will  vary  by 
Member  State.  This  does  not  provide  the  necessary  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  exists,  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 SEPA migration end-date 

Ensuring the completion of SEPA migration for credit 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 substantial benefits to the EU economy as a whole, 
including  business,  public  bodies,  and  consumers.  This  was  confirmed  in  a  recent  survey, 
undertaken  among  350  professionals  of  the  financial  industry,  in  which  61 %  of  the 

EN 

28 

   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  benefit  of  EUR 123 billion  results  from  an  even 
higher  gain  on  the  demand  side  (EUR 175 billion)  offset  by  a  loss  on  the  supply  side 
(EUR 52 billion).  Benefits  on  the  demand  side  are  driven  by  two  factors:  First,  operational 
cost  savings  due  to  optimisation  of  payment  operations,  straight-through-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  lower  bank  fees,  i.e.  a  loss  of  revenues  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 reduction 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  2012.  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  operational  cost  savings  and  efficiency  gains  of 
EUR 15 billion  in  2012,  so  that  in  absolute  terms,  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 

SEPA investment 

Operational savings 

Total effect supply 

Source: CapGemini SEPA study 

-91 

-10 

+49 

-52 

Reduced prices 

SEPA investment  

Operational savings 

Total effect demand 

+91 

-17 

+101 

+175 

The  study  predicts  that  the  benefits  on  the  demand  side  would  be  spread  across  all 
stakeholders, i.e. consumers, SMEs, corporates, merchants and the public administrations. 

45 

Survey  on  the  State  of  the  European  Payments  Marketplace  by  the  Financial  Services  Club  in 
autumn 2009. 

EN 

29 

   EN 

 
                                                 
Table  4:  Economic  effects  for  stakeholders  2007-2012:  Comparison  of  baseline  and  SEPA 
end-date scenario 

Stakeholder 

Payment service providers 

Corporate businesses 

SMEs 

Merchants 

Public administrations 

Consumers 

Total effect 

Source: CapGemini SEPA study 

Baseline Scenario 
(EUR billion) 
(slow migration) 

Setting SEPA end-date 
scenario 
(EUR billion) 
(rapid migration) 

-15 

-11 

-11 

- 3 

-6 

+4 

-42 

-52 

+51 

+38 

+14 

+28 

+46 

+123 

As emphasised earlier, these benefits materialise 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  effects  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  period).  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  are  likely  to  gain  most  from 
SEPA. 

Annex 14 describes in more qualitative 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  investment  and  development  costs  (as  quantified  in  the 
CapGemini  estimates  above),  but  also  staff  training  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  migration  effect,  provided 
account is taken of their 'natural investment cycle'. 

System and process related investments would be more significant for PSPs but it has to be 
noted that most of these investments have already 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 

30 

   EN 

                                                 
already  been  undertaken  by  PSPs  was  confirmed  in  the  bank  questionnaire  mentioned 
previously. The competition effect of SEPA puts pressure on banking fees and revenues. The 
latter  effect  is  conversely  an  upside  for  users  of  payment  services.  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  required  change  by  developing  user-friendly  payment 
transaction  templates  and  automatic,  one-off  conversion  facilities  for  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, costs will be incurred in the new 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 debtor’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 through a debtor mandate flow. 

The  issue  of  possible  mandate  re-signature  could  arise  in  the  context  of  migrating  to  pan-
European schemes. All euro area Member States 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  this  Member State  are  monitoring  the  situation 
closely and the Commission is hopeful that a solution 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 benefits 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 emphasise that the majority of 
indicated expenditure on the supply 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  approaches).  On  the  demand  side  (in  practice, 
corporates  and  public  administrations)  investment  progress  is  lagging  (see  reasons  for  slow 
migration, Chapter 3.2.1). 

47 

In  some  cases,  PSPs  ask  for  IBAN  only  and  automatically  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-wide credit transfers. 

EN 

31 

   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 baseline scenario with 
that of setting a migration end-date. 

Table 5: Comparison in terms of achieving the specific objectives 

Objective/Option 

Base scenario 'do 
nothing' 

Setting an end-date 

Effectiveness 

Integration of the 
European payments 
market for credit transfers 
and direct debits 

Elimination of duplicate 
cost and excess 
complexity of payment 
systems 

0 

+++ 

0 

++ 

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 

Efficiency 

0 

++ 

Stakeholder 

Benefits 

Costs 

Overall effect 

Businesses 

SMEs 

Public 
administrations 

Consumers 

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 

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 

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 

Reduced banking fees/wider range of services due 
to increased competition 
Facilitation of professional and private mobility 
between Member States 
More innovative, user-friendly, secure, and 
convenient payment instruments 

Migration effort 
– new or 
upgraded 
payment 
systems and 
processes 
Staff training 

Migration effort 
– new or 
upgraded 
payment 
systems and 
processes 
Change of 
habits – IBAN 
(and BIC where 
necessary) 

Migration effort 
– new or 
upgraded 
payment 
systems and 
processes 
Staff training 

Change of 
habits – IBAN 
(and BIC where 
necessary) 

+++ 

++ 

++ 

++ 

EN 

32 

   EN 

 
Banks/PSPs 

Scale economies/Operational savings 
New business opportunities as competition barriers 
reduced 

Overall effect compared to the baseline scenario 
+++ (Strong); ++ (Moderate); + (Weak) positive effect 
– – – (Strong); – – (Moderate); – (Weak) negative effect; 0 neutral effect 

Investments for 
SEPA payment 
platform 
Revenue impact 
for incumbents 
due to increased 
competition 

+ 

Based  on  this  comparison  and  the  preceding  quantitative  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  stakeholder  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  timeline  foresaw  that  a  critical  mass  of  credit 
transfers and direct debits would have migrated to SEPA instruments by the end of 2010. In 
January 2010,  two  years  after  its  launch,  the  SCT  rate  has  barely  exceeded  6 %  and  SDD 
migration  has  yet  to  start.  Therefore,  current  migration  rates  are  very  far  away  from  the 
original target. 

6.4.2.  Non-binding  Community 
Recommendation) 

instrument 

(Commission  Communication 

or 

A Communication to stakeholders in the payments market is unlikely to have a stronger effect 
than  the  self-regulation  efforts  which  have  already  taken  place  during  the  last  years  (see 
above). While joint statements by the Commission and ECB, as well as institutional support 
from the European Parliament and ECOFIN, have 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  Member States  for  the  setting  of  SEPA 
migration  end-dates  at  national  level  is  very  unlikely  to  achieve  rapid  and  comprehensive 
migration in all Member States due to its non-binding character. Moreover, and as pointed out 
above  in  Chapter 3.3.,  a  concerted  and  synchronised  effort  by  all  stakeholders  across  all 
Member States is crucial for reaping the full benefits of SEPA. 

6.4.3.  Binding ECB instrument 

In the area of payments, the European Central Bank (ECB) has been entrusted with legislative 
competence48.  The  ECB’s  legislative  competence  is  however  limited  when  compared  with 
that of the EU legislator and relates to ensuring 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 

33 

   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  legislative  action  by  the  ECB  regarding  a  binding 
migration end-date would be limited in comparison to Community legislation. It would only 
apply to euro area Member States and it would not drive harmonisation on the demand side of 
the  payments  market  where  most  of  the  benefits  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  inverse  correlation  between  the  economic  effects  of 
SEPA and the duration of migration. In fact, the substantial benefits which can be achieved 
with  a  rapid  migration  can  turn  negative,  if  migration  is  protracted.  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 stakeholder categories on 
the supply and demand side, for setting a deadline for the migration to SEPA credit transfers 
and direct debits (see Annex 3 for full consultation results). Some respondents 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  necessary  incentives  to  those  who  are  currently 
reluctant  to  migrate.  By  accelerating  migration,  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 managed in parallel for too long a period of time. It 
would also provide certainty and allow for the appropriate planning of SEPA migration and 
the attribution of the necessary investment budgets. 

Furthermore,  many  market  players  themselves  call  for  the  establishment  of  an  end-date  by 
regulation at European level, as evidenced in statements49 by the EPC, different clearing and 
settlement infrastructures, and the European 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  advantage  of  allowing  for  a  more  flexible  approach, 
taking  into  account  the  specificities  of  national  markets.  A  Regulation,  on  the  other  hand, 
allows achieving the highest level 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 complete 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 Infrastructures 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 Corporate Treasurers, 15.10.2008. 

EN 

34 

   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 fragmentation. 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 setting 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 migration 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 end-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 seven relevant areas and the sub-options within 
each of these areas are described below. 

6.5.1.  Reference basis for pan-European credit transfers and direct debits 

Three  possible  approaches  have  been  identified  for  defining  what  exactly  constitutes 
pan-European  credit  transfers  and  direct  debits  in  the  context  of  setting  an  end-date: 
An approach  based  on  existing  schemes,  an  approach  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  respectively,  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, practices and standards. Reference of an end-date 
to these schemes would therefore provide a clearly defined technical basis and would avoid 
parallel streams of 'multi-harmonisation'. 

This approach would however imply the regulatory 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  monopoly  situation,  privileging  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  stakeholder  representation  (in  particular  from  the 
demand side) can be guaranteed during the future development process of the SCT and SDD 
schemes.  Payment  service  users,  and  especially  consumers,  have  remonstrated  about  not 
being  able  to  actively  participate  in  the  development  of  EPC  schemes  and  that  inadequate 
regard was given to their views and preferences50. In particular, in relation to the SDD, they 
highlighted the point that, although the CMF51 direct debit model is the majority approach in 

50 

51 

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/Content/Default.asp?PageID=835. 
Creditor Mandate Flow, i.e. the direct debit mandate is held by the Creditor or Creditor Bank. 

EN 

35 

   EN 

                                                 
 
the  EU  and  is  the  model  used  by  the  SDD,  nevertheless,  direct  debit  products  in  some 
Member States  are  based  on  the  DMF52  model.  Consumers  expressed  a  clear  preference  for 
this kind of approach and hence they argued the 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 
in  some 
information  fields 
Member States. 

in  comparison 

legacy  credit 

the  existing 

transfers 

to 

Furthermore,  as  the  EPC  rulebooks  underlying  the  SCT  and  SDD  are  subject  to  continuous 
development,  legal  adjustment  mechanisms  would  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 reference to an existing scheme is discarded. 

Sub-option 2 – approach based on key existing standards 

Technical  standardisation  is  a  cornerstone  for  the  integration  of  networks,  such  as  the 
European payments market. On this basis, the use of standards developed by international or 
European  standardisation  bodies  could  be  mandatory  as  of  a  defined  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  standards  by  all  PSPs  is  therefore  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  instruments  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  technical  requirements.  For  example,  some  Member States  (Italy, 
Greece, Luxembourg, Malta, Slovenia, Bulgaria, Latvia, Lithuania and Romania) already use 
the  IBAN  account  identifier  for  domestic  credit  transfers  and  direct  debits.  Nevertheless, 
national payment schemes still exist in these countries. Standards alone therefore do not fully 
address the problem of fragmentation 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-through-processing  etc. 
Relying  on  technical  standards  alone  therefore  leaves  too  much  leeway  for  inconsistent 
implementations of SEPA credit transfers and direct debits. 

The  public  consultation  on  SEPA  strongly  confirmed  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 account scheme characteristics. 

For these reasons, the option of exclusively referring to existing standards is discarded. 

52 
53 

54 

EN 

Debtor Mandate Flow, i.e. the direct debit mandate is held by the Debtor Bank. 
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). 
No  weighting  applied. 
representativeness for the payments market. 

respondents  may  have  significantly  different 

Individual 

levels  of 

36 

   EN 

                                                 
Sub-option 3 – approach based on 'general 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  essential  requirements.  The  requirements  would 
unambiguously  define  the  characteristics  needed  to  be  respected  by  inter-operable 
pan-European payment schemes without mandating the EPC schemes on a de jure basis. For 
inter-operability reasons, the essential requirements would however make reference to the use 
of  the  specific  existing  international  and  non-proprietary  standards  mentioned  under 
Sub-option 2. 

The essential requirements approach thereby provides a way to define pan-European payment 
instruments  while  avoiding  a  regulatory  endorsement  of  one  specific  scheme  which  was 
developed  by  the  industry.  For  this  purpose,  the  essential requirements  would  be  defined  in 
such a way that they allow for the application of the currently existing EPC schemes but do 
not  restrict  flexibility  and  innovation.  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 migration to pan-European payment instruments 
while remaining open and neutral towards potential 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  case  of  the  New  Approach  Directives55  or  the  recently 
adopted Regulation on the phasing-out of non-efficient light bulbs.56 

The possible approaches to a migration end-date were also discussed 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, six out of eight Member States representatives 
making  an  intervention  in  this  context  favoured  the  'essential  requirements'  approach  over 
a scheme-based approach. 

55 

56 

EN 

are 

22  New  Approach  Directives.  For 

Currently 
there 
http://www.newapproach.org/ 
and 
goods/regulatory-policies-common-rules-for-products/new-approach/index_en.htm. 
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. 

see 
http://ec.europa.eu/enterprise/policies/single-market-

information 

further 

37 

   EN 

                                                 
Table 7: Reference basis 

Sub-option 

Effectiveness in terms of relevant criteria 

Inter-operability 

Potential for 
competition 

Potential for 
innovation 

Efficiency 

0. Baseline scenario ('do nothing') 

1. EPC schemes and rulebooks  

2. Existing standards 

3. General essential 
requirements 

0 

+++ 

+ 

+++ 

0 

– – 

++ 

++ 

0 

– 

++ 

++ 

0 

0 

+ 

++ 

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,  tentative  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  payment  transaction  space  end-to-end,  i.e. 
for the customer-to-PSP and PSP-to-customer domain on top of the PSP-to-PSP domain. 

Defining a SEPA end-date for the supply side only 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  terms,  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 benefits of SEPA significantly outweigh the cost and investments 
of SEPA, in particular for the demand side of the market. 

Important  features  of  pan-European  credit  transfers  and  direct  debits,  such  as  real  straight-
through-processing,  and  a  common  launching  platform  for  providing  innovative  payment 
services  to  users,  only  materialise  if  harmonisation  takes  place  across  the  full  transaction 
domain. Only in such a scenario will multi-national businesses be able to standardise payment 
transactions  sufficiently  in  order  set  up  efficient  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 migration end-date to PSPs only would therefore directly impact the 
potential economic benefits of payment market integration. As pointed out in the beginning of 
this  chapter,  the  CapGemini  study  estimates  the  total  gain  of  rapid  SEPA  migration  on  the 
demand  side  of  the  payments  market  at  EUR 175 billion.  Of  this  benefit,  EUR 91 billion 

EN 

38 

   EN 

 
 
relate  to  lower  bank  fees  due  to  more  intense  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 market integration extending beyond the inter-bank 
space.  If  an  end-date  were  to  be  set  in  the  inter-bank  space  only  these  savings  would  not 
occur.  This  would  reduce  the  overall  SEPA  benefits  for  the  market  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  SEPA  instruments  to  the  PSP-to-PSP  space  could 
require a payment format conversion between users of payments and their PSPs which in turn 
increases complexity and could lead to increased processing effort and to a higher number of 
erroneous payment transactions. 

Finally,  the  public  consultation  on  SEPA  showed  that  a  large  majority  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 

0. Baseline scenario ('do nothing') 

1. PSP-to-PSP 

2. End-to-end 

0 

+ 

+++ 

Degree of 
market 
integration 

0 

+ 

+++ 

Potential for 
innovation 

Efficiency 

0 

+ 

++ 

0 

++ 

+ 

It  is  therefore  recommended  to  go  forward  with  Sub-option 2,  i.e.  an  approach  where  the 
requirements defined by an end-date would apply throughout the whole transaction domain. 

6.5.3.  Product specification 

This Impact Assessment covers credit transfers and direct debits. Card payments and cheques 
are  out  of  scope  of  this  analysis.  In  many  Member States  however,  there  are  certain  legacy 
payment  instruments  which  could  be  considered  credit  transfers  or  direct  debits  but  which 
have  very  specific  functionalities,  often  due  to  historical  or  legal  reasons.  The  transaction 
volume  of  such  products  is  usually  marginal;  they  could  therefore  be  classified  as  niche 
products. 

For the purposes of this analysis, niche products are defined as credit transfer or direct debit 
products  which  (1) Member States  define  as  'difficult  to  migrate'  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. The rationale underlying these two 
criteria  is  twofold.  First,  a  maximum  threshold  of  10 %  would  mean  that  at  least  90 %  of 
existing national payment instruments would migrate to the corresponding SEPA instrument 
and  hence  that  critical  mass  would  be  achieved  with  the  required  volumes  for  operating 
efficiency and economies of scale. Secondly, from a subsidiarity perspective, Member States 
are most familiar with their own payment instruments and therefore best placed to determine 

57 

EN 

No  weighting  applied. 
representativeness for the payments market. 

Individual 

respondents  may  have  significantly  different 

39 

levels  of 

   EN 

                                                 
whether migration is sufficiently difficult to justify derogation from the general obligation to 
migrate.  Low-volume  niche  instruments  are  usually  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 involved PSPs. The estimated volume share of these 
transfers  is  1.3 %  and  0.12 %  respectively  of  all  credit  transfers  undertaken  in  Spain.  As 
regards  direct  debits,  the  so-called  '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 shares are 4.3 % and 0.4 % respectively of all 
direct debits undertaken at national level. 

The definition of an end-date needs to specify whether such niche products shall also migrate 
to pan-European credit transfers and direct debits. Three possible options present themselves: 
an all-inclusive approach, a permanent exception 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 phased out as of a defined date. 

An  all  inclusive  approach  would  achieve  the  maximum  degree  of  harmonisation  for  credit 
transfers and direct debits in the EU. Ultimately, this would allow the complete elimination of 
national  legacy  payment  platforms.  It  would  therefore  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 niche products for the sake of an all inclusive 
SEPA  migration  might  require  significant  resources,  often  for  relatively  marginal  payment 
transaction volumes. Migration of 'regular' credit transfers and direct debits would risk being 
slowed down if it is to coincide with that of niche products. 

For the above reasons, an all inclusive 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  provide  specific  functionalities  which  are  not 
available under the currently existing pan-European credit transfer and direct debits schemes. 
In many cases these functionalities concern a particular  minority category  of  payment users 
which  for  historic  or  legal  reasons  only  exists  in  one  or  a  few  given  Member States. 
An 'exception'  approach  would  ensure  that  these  payment  instruments  could  continue  to  be 
used beyond a SEPA migration end-date. On the downside, such an approach 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 allow an appropriate balancing of the respective advantages and 
disadvantages  of  the  two  options  described  above.  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  majority  of  the  potential  SEPA  benefits  to  be 
reaped in a shorter time frame. The duration of this sunset period should be sufficiently long, 

EN 

40 

   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 

Sub-option 

Effectiveness in terms of relevant criteria 

Degree of 
market 
integration 

Meeting 
payment user 
requirements 

Speed of 
migration process 

Efficiency 

0. Baseline scenario ('do nothing') 

1. All-inclusive 

2. Permanent exception 

3. Staggered approach 

0 

+++ 

+ 

+++ 

0 

– 

++ 

++ 

0 

+ 

+++ 

++ 

0 

0 

+ 

++ 

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 the question whether concrete end-dates should be 
set  individually  for  each  Member State  and  whether  the  same  end-date  approach  should  be 
taken in the euro and in the non-euro 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  definition  and  further  elaborated  in  Annex 9,  target  dates  for 
replacing  national  credit  transfers  and  direct  debits  with  pan-European  payment  instruments 
have  so  far  only  been  set  in  three  Member States.  Four  countries  established  a  deadline  for 
one  of  the  instruments  and  three  defined  'critical  mass'  criteria  which  should  be  fulfilled 
before a target data is to be set. Most importantly however, in nine Member States, including 
three  euro area  countries,  no  target  dates  have  been  considered  at  all  and  in  eight 
Member States the subject is still under discussions. 

This indicates that the option of setting individual end-dates at national level is not a viable 
solution  for  a  quick  and  full  migration  to  SCT  and  SDD.  It  is  also  very  challenging  from 
a technical point of view. Setting 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 would increase the cost of SEPA migration for 
the EU economy and diminish the benefits promised by the quick integration of the payments 
market in the Community. 

EN 

41 

   EN 

An integrated European payments market requires a network of inter-operable PSPs, ensuring 
full reachability of all payment accounts throughout the EU for pan-European credit transfers 
and  direct  debits.  Only  such  an  environment  provides  a  level  playing  field  across 
Member States  and  allows  companies  to  develop  a  true  European  approach  for  their 
payments.  A  common  end-date  would  lend  a  stronger  political  impact  to  a  project  of  such 
importance, providing more visibility to the integration of European payments market from a 
communication  point  of  view.  Furthermore,  the  option  of  a  common  end-date  set  by 
regulation was strongly supported 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-date  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 accommodate 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 volume 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  the  success  of  SEPA.  The  resources  required  for 
rapid  and  full  migration  in  non-euro  Member States  would  not  be  proportional  with  the 
achieved benefits. 

in 

Moreover, the approach of a deferred application in non-euro Member States has previously 
the  payments  policy  area.  For  example,  Article 8  of  Regulation 
been  used 
(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  has  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 

Sub-option 

Effectiveness in terms of relevant criteria 

Degree of 
market 
integration 

Speed of 
migration 
process 

Proportionality 

Efficiency 

0. Baseline scenario ('do nothing') 

1. Individual end-dates 

2. One common EU end-date 

3. Two end-dates; one for 
euro area and one for 
non-euro area 

0 

+ 

+++ 

++ 

0 

+ 

+ 

++ 

0 

++ 

+ 

+++ 

0 

0 

+ 

++ 

It  is  therefore  recommended  to  pursue  the  sub-option  with  a  common  end-date  for  the 
euro area  and  a  later  common  end-date  for  the  non-euro area.  Under  the  option  of  common 
end-dates,  individual  Member States  would  in  principle  still  be  free  to  establish  an  earlier 
end-date  for  migration.  This  would  allow  for  a  quicker  migration  in  those  Member States 
whose migration is already well advanced. 

EN 

42 

   EN 

6.5.5.  Deadlines 

Different approaches could be taken into account when setting (a) concrete end-date(s). There 
could be separate end-dates for credit transfers 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 mid term (two years after entry into force of the 
Regulation at the latest), or the long term (three years after entry into force of the Regulation). 
This results in the following timing options: 

Sub-option 1 – common end-date for credit transfers and direct debit 

Sub-option 2 – separate end-dates for 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 parallel 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 more 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 services. The estimated financial 
resources  required  for  direct  debit  migration  exceed  that  for  credit  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  migration  efforts  on  one 
product only and better management of each migration. Migration to the SDD scheme would 
fully build on the requirements which have been fulfilled through migration to the SCT – the 
use of IBAN (and BIC) and of the ISO 20022 standards, as discussed earlier. The SCT and the 
SDD  are  two  instruments  which  are  clearly  distinct  in  the  mind  of  payment  users.  In 
particular, two separate deadlines were also supported by the majority of stakeholders58 in the 
public  consultation  on  SEPA.  It  is  therefore  recommended  to  set  individual  deadlines  for 
credit transfers and direct debits respectively. 

58 

Cf. footnote 47. 

EN 

43 

   EN 

                                                 
Table 11: Deadlines 

Sub-option 

Effectiveness in terms of relevant criteria 

Degree of 
market 
integration 

Speed of 
migration 
process 

Proportionality 

Efficiency 

0. Baseline scenario ('do nothing') 

1. Common deadline 

2. Separate deadlines 

0 

+++ 

++ 

0 

+ 

+++ 

0 

+ 

++ 

0 

+ 

++ 

In  terms  of  concrete  deadlines,  several  factors  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  stakeholders  as  shown  in  the  CapGemini  study.  On  the 
other hand, SEPA migration requires the changing of payment systems and processes within 
an organisation. The usual IT investment cycle 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  migration  end-date  EU  Regulation.  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 end-date for SCT migration (e.g. one year after entry into force of 
the  Regulation)  and  a  slightly  longer,  mid-term  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  start  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 migration 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  prepare  and  concentrate  on  SDD  migration.  At  the 
same  time  it  would  appear  unnecessary  and  counterproductive  to  prolong  SCT  and  SDD 
migration  beyond  the  time-lines  discussed  above.  Longer  migration  deadlines  could,  in 
theory, allow some reduction of the financial and organisational impact of the changeover, as 
the  necessary  investments  and  organisational  changes  could  be  budgeted  and  spread  over 
additional  years.  It  is,  however,  much  more  likely  that  those  investments  will  simply  be 
postponed until the end of the migration process (see 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 quick end-date for SCT migration, which could 
be achieved by end-2012 in their opinion. As regards 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 

44 

   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  sub-option  of  separate  end-dates,  with  more 
specifically  a  short  term  deadline  for  credit  transfers  (for  instance,  one  year  after  entry  into 
force  of  the  Regulation  at  the  latest)  and  a  mid  term  deadline  (for  instance,  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  migration  end-date  aims  at  creating  a  fully 
integrated  payments  market  with  effective  competition  for  credit  transfers  and  direct  debits. 
An  end-date  establishing  the  necessary  technical  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 migration, 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, these differences must be directly justified by 
objective criteria. Such an approach has also been taken in the Services Directive60. 

There is a strong economic logic in placing cross-border opening of bank accounts within the 
context  of  an  EU  legislative  proposal  facilitating  SEPA.  On  the  one  hand,  SEPA  and  the 
passporting rights for payment institutions established by the Payment Services Directive are 
designed  to  strengthen  competition  and  allow  payment  institutions  (in  addition  to  existing 
credit and electronic money institutions) to provide payment services on a cross-border basis. 
However,  if  the  reality  is  that  a  European  citizen  is  unable  to  benefit  from  this  possibility, 
specifically  established  by  the  European  co-legislators,  because  of  restrictive  commercial 
practices  which  unnecessarily  foreclose  cross-border  access  to  a  payment  account,  it  is 
entirely  logical  that  this  deficiency  be  remedied  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, proportionality and necessity tests. In terms of 
necessity and proportionality the prohibition is clearly connected to the right of establishment 
and the cross-border mobility of the EU citizens (Art. 49 of the 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  direct  debits  is  often  restricted  or  simply 

60 

See Article 20(2) of the Directive on services in the internal market (2006/123/EC). 

EN 

45 

   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. Continuing the current practice 
(Sub-option 1)  would  restrict  effective  competition  and  hinder  the  attainment  of  the  full 
economic benefits of SEPA. In the CapGemini 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  pressure  on  bank  fees  basically  stems  from  two 
drivers to market integration: increased cross-border mobility firstly by PSPs and secondly by 
customers.  The  CapGemini  study  did  not  quantify  separately  how  much  of  the  overall 
economic  gain  from  more  competition  specifically  relates  to  the  second  effect,  i.e.  the 
possibility for customers to access payment services on a cross-border basis as compared to 
PSP  market  entry.  On  general  grounds,  it  seems  reasonable  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  Single  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 Internal Market and necessary for full competition. 

In  contrast,  Sub-option 2  would  ensure  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 freedom. The reasons which are most 
often mentioned as justifications by PSPs declining the opening of payment accounts by non-
residents relate to preventing fraud and money 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 continue to be allowed provided these differences 
are  directly  justified  by  objective  criteria  as  mentioned  above.  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 either 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 the 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 integration of the EU payments market should be 
positive, as consumers from both euro and (in particular) non euro-area Member States will 
have the opportunity to benefit 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 

46 

   EN 

Table 12: Cross-border bank account opening 

Sub-option 

1. Baseline scenario ('do nothing') 

2. Non-discriminatory opening 
of bank accounts 

Effectiveness in terms of relevant criteria 

Degree of 
market 
integration 

0 

+ 

Potential for 
competition 

Meeting user 
requirements 

Efficiency 

0 

+ 

0 

+++ 

0 

+ 

Given the benefits for the competitive environment mentioned above and the limited impact 
on  PSPs,  it  is  therefore  recommended  to  pursue  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 for migration to SEPA credit transfers. 

6.5.7.  Clarity on the long term business model for pan-European direct debits 

As discussed in the problem definition the perceived lack of clarity on the long term business 
model is one of the factors holding up migration to pan-European direct debits. 

It  turned  out  impossible  to  solve  this  perceived  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 competition 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  analysis  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  justifications  for  the  proposed  MIF. 
Further  to  this,  to  encourage  migration  to  SDD  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 March 2009 clarified that MIFs per transaction 
were  not  acceptable  but  opened  the  door  to  the  exploration  of  a  MIF  for  R  transactions 
compatible with competition rules. However, the industry was unable to agree on the mandate 
and composition of a working group of the EPC dedicated to this at the EPC Plenary of 24 
June 2009. The EPC decided however that EPC scheme’s participants can agree on bilateral 
agreements. In the framework of the SEPA Roadmap61, the industry was again encouraged to 
undertake "the design and implementation 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), three possible approaches 
have  been  identified  for  providing  clarity  on  a  business  model.  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  transaction  MIFs  (or  measures  of  an  equivalent 
object of effect), whereas R-transaction MIFs could be allowed under certain conditions (3). 

61 

62 

EN 

from 

Communication 
COM(2009) 471, 10.9.2009. 
'R-transactions' are direct debit transactions that cannot be properly executed or are being reclaimed by 
a payment service provider because the payment order is rejected, refused, returned or reversed 

the  Commission,  Completing  SEPA:  a  Roadmap 

for  2009-2012, 

47 

   EN 

                                                 
Sub-option 1 – Continuation of current practice (absence of regulatory intervention) 

If  current  practice  will  be  continued,  MIFs  for  direct  debit  transactions  will  continue  to  be 
analysed only under competition rules, without prejudice to their being banned or reduced as a 
result. This would mean in particular that proceedings 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 competition rules could also be provided. 

MIFs per transaction are currently in place only in a handful of Member States.63 In addition, 
MIFs for R-transactions (i.e. direct debit transactions 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  all  transactions)  are  in  place  in  five  Member 
States, three of which also have a MIF per transaction in place64. 

Country 

France 

Spain 

Italy 

Portugal 

Belgium 

Germany 

Austria 

MIF per transaction 

R-transaction MIFs 

12 cents 

3 cents 

25 cents 

23 cents 

2 cents 

0 

0 

72 cents 

065 

0 

n.a. 

n.a. 

300 cents 

500 cents 

However,  it  has  to  be  underlined  that  business  models  with  MIFs  for  R-transactions  which 
have  been  set  up  as  a  financing  mechanism  tend  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  transactions)  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  charged  directly  to  consumers  or  companies  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 

64 

65 
66 

67 

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 cents), France (12 cents), Portugal (23 cents), and Italy (25 cents) with a 
clear trend towards a decreasing or zero MIF. 
R-transaction  MIFs  of  varying  sizes  exist  in  Austria,  France,  Germany,  Portugal.  In  Spain,  such 
R-transaction MIFs only apply to non STP direct debit transactions. 
R-transaction MIFs are only of application for manual transactions. 
See  the  Commission  Working  Document  on  the  Applicability  of  Article  81  of  the  EC  Treaty  to 
multilateral interbank-payments in SEPA Direct Debit, published 3.11.2009, p. 11. 
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' transactions, or transactions between accounts at the same bank. Even in 

EN 

48 

   EN 

                                                 
In  terms  of  impact,  consumers,  companies  and  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  needs  however  to  be  taken  into  account  that 
competition  rules  are  applied  on  a  case-by-case  basis.  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 debit market may consist of a variety of different systems with 
different levels of sustainability 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  substantially  delay  the  true 
achievement of a level playing field. The clarification 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  SDD68.  Failing  this,  the 
emergence  of  different  groups  of  banks  agreeing  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  result  in  market  fragmentation  and  uneven  and 
incomplete migration to SDD. 

The direct debit market is a market with network 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  jeopardizing  effective  migration.  It  has  to  be  underlined  in  this 
respect  that  whilst  both  at  the  public  consultation  on  the  working  document  of  November 
2009  and  at  the  Hearing  of  17  November,  stakeholders  concentrated  their  comments  on  the 
substance  of  the  issue  (i.e.  on  whether  interchange  fees  should  be  allowed  and  if  so  under 
which conditions), it can be inferred from the repeated calls for further guidance, from some 
banks and banking communities, but also from users, that a status quo situation would not be 
satisfactory from this perspective. 

Sub-option 2 – Imposing a MIF/Setting a cap for MIFs per transaction at a certain level as of 
an end-date for migration to SDD 

Under  sub-option  2,  a  positive  MIF  per  transaction  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 positive MIF per transaction, hence the 
analysis  below  would  apply  mutatis  mutandis).  Alternatively,  a  cap  would  be  defined, 
allowing  MIFs  per  transaction  provided  they  stay  below  a  certain  maximum  fee  ('capping 
MIFs'). In terms of impact, regulating 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 practice 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  markets  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 MIF revenues would then amount to about 12 % of 
direct banking fee income for direct debit. 
Cf. footnote 21. 

49 

   EN 

68 

EN 

                                                                                                                                                         
consumers and corporates, as expressed in the public consultation on the working document 
of November 2009 and at the Hearing of 17 November are generally supportive of a ban on 
MIF per transaction. However, specific banking 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 fees that cannot be influenced by consumers and 
companies  and  thereby  prevents  them  from  making  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  has  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 Document of November 2009 – which articulates 
the  principles  underpinning  the  relevant  provisions  of  Regulation  924/2009  and  the  Joint 
Statement of the European Commission and the ECB on the compatibility of business model 
for SDD with competition rules – the current market information therefore does not suggest 
that a per-transaction MIF would be necessary or indispensible for the efficient use of direct 
debit schemes69. On top of the reasons mentioned above, the option of setting a cap for MIFs 
per  transaction  and/or  R-transaction  at  a  certain  level  would  therefore  be  contrary  to  the 
guidance already provided by the Commission and the ECB on this topic. 

Sub-option 3 – Prohibiting per transaction 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 would be prohibited for national 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 been reclaimed by a payment service provider), 
MIFs  could  be  allowed,  if  indispensable  for  the  efficient  handling  of  R-transactions  and  if 
appropriately  designed.  In  particular,  these  fees  should  be  strictly  and  unequivocally  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  their  operations  would  be 
limited, as they could align fully or at least partly – in the case of average costs being used – 
on  the  costs  of  less  efficient  providers.  These  MIFs  should  be  aimed  at  incentivizing  an 
efficient use of the scheme and not at financing its operation. 

Their  level  should  not  exceed  the  actual  costs  of  an  R-transaction  to  avoid  that  scheme 
participants are overcharged relative to the actual 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  controls  before  settlement  and  pre-checks  of 

69 

Commission Working Document, p. 9. 

EN 

50 

   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  playing  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  would  constrain  the  parties  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  and  European  level  and  to  the 
relevant courts and judicial bodies. Therefore, these would contribute to the creation of a level 
playing field through a regulation setting clear rules for financing models for SDD compatible 
with  competition  rules,  hence  avoiding  circumvention  of  the  prohibition  of  MIFs  per 
transaction e.g. through MIFs for R transactions 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 industries: faced with enduring inconsistencies in the telecoms 
sector  the  Commission  adopted  a  Recommendation  on  fixed  and  mobile  termination  rates 
recommending  a  specific  cost  methodology  to  be  applied  by  telecommunication  regulators. 
"Ex ante" regulatory tools can sometimes provide an efficient solution compared to traditional 
"ex post" antitrust enforcement action – which 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 the direct debit scheme, in particular through 
the  incentives  on  banks  and  payment  service  providers  to  improve  the  functioning  of  their 
systems as they would no longer be in a position to pass on their inefficiencies or irrelevant 
costs to other players through MIFs. This should lead to a level playing field between market 
players and to an improvement of the competitive 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 instruments to the benefit 
of  society  as  it  will  incentivise  parties  to  the  direct  debit  transactions  to  minimise  the 
occurrence of R-transactions as they will be directly faced with the costs attributable to them. 
This should enhance the transparency of costs. It would mean for 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  inflationary  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 reasons, 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 avoid 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 

51 

   EN 

would be clarified. As a result, they could enjoy stronger bargaining power 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 processing costs. As regards the overall impact of 
prohibiting  MIFs  per  transaction  and  allowing  MIFs  for  R-transactions,  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  quantitative  impacts  which  can  be  expected.  A  more 
elaborate qualitative assessment is contained in Section 1 of Annex 11a. 

First, if hidden fees are abolished payment service 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 debit 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 lower bills and/or higher 
discounts to consumers. 

With  an  integrated  European  market  there  will  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  discounts  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 abolishing MIFs per transaction in the countries where 
they are still in place would lead to a lower use 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 their 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 countries 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 application), it could be 
the case that on the consumer side the costs of direct 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 general bank account fees for consumers (that may 
include consumer fees for direct debit transactions) (see Section 4 of Annex 11a). 

EN 

52 

   EN 

A  distinction  might  therefore  need  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  measures  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 expected 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 other payment instruments), competition between 
payment  instruments  would  also  act  as  an  incentive  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 monitor 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 interchange fees before. 

It has to be noted that sub-option 3 would not result in an increased administrative burden or 
in  the  creation  of  additional  administrative  costs  to  payment  service  providers  as  no  formal 
notification, information or reporting requirements 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, the resulting obligations and costs would be similar to the ones 
resulting  from  self-assessment  of  compliance  with  competition  rules  (the  'status  quo'  or 
baseline scenario). The requirement that interchange fees applied for R-transactions shall be 
aimed  at  efficiently  allocating  costs  to  the  party  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 bank fees going in two directions,  dependent  on 
which  bank  made  the  error.  Provided  they  take 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 error 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 realised by practical solutions, taking into account the functioning 
of the arrangement, the possibilities for parties to obtain compensation for damages and the 
stream of costs and revenues 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  stakeholders,  and  in  particular  consumers  and 
companies supported the approach in terms of a ban on MIF per transaction and of allowing 
interchange  fees  for  R-transactions  under  certain  conditions.  However,  in  particular  the 
banking communities currently benefiting from high MIFs per transaction took a firm stance 
in  favour  of  MIFs  per  transaction  being  maintained.  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 which are set out in Annex 14a), 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  directly  confronted  with  costs,  such  as  for 

EN 

53 

   EN 

R-transactions, are likely to lead to more efficiencies 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 

1. Continuation of current 
practice 

2. Impose a MIF/ Set capped 
MIFs 

3. Partial prohibition of MIFs 
/ Regulation 

0 

+ 

++ 

Potential for 
competition/ 
level playing 
field 

Speed of 
migration 
process 

Efficiency 

0 

– 

++ 

0 

– 

++ 

0 

– 

++ 

On  the  basis  of  this  analysis  it  can  be  concluded  that  any  form  of  competition  enforcement 
action  or  competition  guidance  is  likely  to  provide  less  certainty  to  the  market  and  a  more 
fragmented  level  playing  field  than  a  binding  community  instrument.  It  is  therefore 
recommended  to  go  forward  with  the  legal  instrument  of  the  regulation,  that  would  at  the 
same time provide clarity on MIFs and other interchange fees prohibiting 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 

2. Transaction domain 

End-to-end 

3. Product specification 

Staggered approach 

Existing international standards + 
defined requirements for pan-
European payment instruments 

Full SEPA migration: customer-to-
PSP, PSP-to-PSP and PSP-to-
customer domain 

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 

6. Cross-border account opening 

Non-discriminatory access 

SCT: one year after entry into force
SDD: two years after entry into 
force 

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 

54 

   EN 

6.6. 

Other impacts 

The recommended option of setting a SEPA migration end-date does not have any perceived 
impacts  on  European  Community  resources.  Nonetheless,  it  should  be  noted  that  once  the 
SEPA  migration  is  achieved  the  Community  institutions  should  benefit  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  expected 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 potentially more affordable and broader choice of 
basic  payment  services  through  different  payment  initiation  channels  could  also  positively 
contribute to financial inclusion of under-banked consumers. On the other side, the economic 
benefits  from  centralisation  and  automation  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  attractiveness  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 favourable carbon footprint by eliminating the required 
transport  of  paper  documents.  For  example,  the  Department  of  Environmental  Strategies 
Research  at  the  Royal  Institute  of  Technology  in  Sweden  estimates  that  the  total  effect  of 
replacing  paper  with  electronic 
to  annual  carbon  reductions 
corresponding  to  39 000  to  41 000  tons  of  CO2-equivalents  in  Sweden  alone,  depending  on 
the electricity mix used.70 If this number is extrapolated based on invoice volumes, the carbon 
reduction potential for the EU would be around 1 million tons of CO2-equivalents annually. 

invoices  would 

lead 

An impact on third countries is possible, if the proposed binding law is extended to the three 
European Economic Area countries which are not members of the EU. The decision on such 
extension  would  need  to  be  taken  by  the  EEA  Joint  Committee  and  would  require 
an amendment  to  the  Annex XII  of  EEA  Agreement.  In  such  a  case  the  same  impacts  as 
described  in  Chapter 6  would  affect  the  relevant  stakeholders  in  Iceland,  Liechtenstein  and 
Norway.  No  direct  impact  on  other  countries  is  to  be  expected.  While  banks  in  two  other 
countries participate voluntarily in SEPA under its current geographic scope (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 

55 

   EN 

                                                 
 
7. 

CONCLUSIONS 

This impact analysis concludes that only a rapid and comprehensive migration to SEPA credit 
transfers  and  direct  debits  will  generate  the  full  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  demand  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 considered to be most appropriate for defining 
pan-European  payment  instruments.  Furthermore,  these  essential  requirements  should  apply 
to the whole payment service transaction domain, from payment user to payment user through 
their respective PSPs. This ensures the reaping of the full potential SEPA benefits which are 
primarily generated on the demand side of the market. An end-date 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  transitional  period,  whose  duration  should  be  sufficiently  long  to 
minimise the impact on users. The impact analysis 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 payment systems, an end-date 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  years  after  entry  into  force  of  the  Regulation). 
These  end-dates  should  apply 
to  euro area  Member States,  while  non-euro area 
Member States  would  be  granted  a  longer  transitional  period,  based  on  their  limited  euro 
payment transaction volumes. Discriminatory treatment of non-residents and non-nationals as 
regards the opening of payment accounts in other Member States should also be abolished. In 
order  to  facilitate  the  implementation  of  SEPA  DD  clarity  should  be  provided  on  the 
multilateral interchange fees. 

8. 

MONITORING AND EVALUATION 

The  proposed  Regulation  would  enter  into  force  20 days  after  its  publication  in  the  Official 
Journal of the European Union. However, the operative part of the Regulation would clearly 
depend  on  the  concrete  end-date  chosen.  In  accordance  with  the  implementing  options, 
discussed  in  Chapter 6.5,  different  end-dates  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  the  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,  among 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,  published  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  relation  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 establishing an end-date for SEPA migration. 

EN 

56 

   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 transactions is initiated by the payer on the basis 
of the consent given to his payment service provider 

'direct  debit'  means  a  payment  service  for  debiting  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  the  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 and/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  legal  and  natural  persons  referred  to  in  Article 26  of  that 
Directive,  but  excludes  those  institutions  listed  in  Article  2  of  Directive  2006/48/EC  of  the 
European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit 
of the business of credit institutions 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 making use of a payment service in 
the capacity of either payer or payee, or both 

'payment  transaction'  means  an  act,  initiated  by  the  payer  or  by  the  payee  of  transferring 
funds, irrespective of any underlying 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  because  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 

57 

   EN 

'IBAN' means an international payment account number 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 Organization for Standardisation 
(ISO) 

'ISO  20022'  means  a  standardised  process  for  electronic  finance  messages  set  by  the 
International Organization for Standardisation (ISO) 

EN 

58 

   EN 

10. 

ANNEXES 

Annex 1: Key statements by European 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  implementation  of  the  Single  Euro  Payments  Area 
(SEPA) of 12 March 2009 

The  European  Parliament  (1) Emphasises  its  continued  support  for  the  creation  of  SEPA,  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 2012,  for  migrating  to  SEPA  products,  after  which  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  implementation  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 implementation of SEPA of 12 March 2009 since its adoption; …and calls again 
on the Commission to set a clear, appropriate and binding end-date, which should 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  Commission  on  completing  SEPA:  a  Roadmap  for 
2009-2012 of 10 September 2009 

The Communication identifies six priority areas for action, where 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  instruments.  In  particular,  priority  1C  calls  for 
an agreement on the migration end-date: 

EN 

59 

   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 banks to change their processes 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/payments/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/singleeuropaymentsarea200811en.pdf 

The idea of a binding SEPA migration 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 partly preferred a market-driven approach. 

in 

its  recommendations  of  31 March 2009, 

The need for an end-date was however not only raised at political level. Stakeholders of the 
payments market have repeatedly called for end-date to be set by regulation at EU level. For 
example, 
that 
"…mandating  the  end-date  requires  EU  regulation…".  A  public  statement  by  payment 
infrastructures  on  14 April 2009  stated  that  "…not  only  a  self-regulated  migration  date  but 
also  a  regulated  one,  based  on  consideration  of  market  feedback,  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. 

the  EPC  plenary  stated 

EN 

60 

   EN 

Annex 1a: Key statements by European Institutions requesting clarification for 
Multilateral Interchange Fee (MIF) for SEPA Direct Debit 

The main 'calls for clarity' were the following: 

– 

– 

– 

– 

– 

71 

A  demand  for  guidance/clarification  regarding  the  compatibility  of  collective 
agreements  relative  to  MIFs  with  competition  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 term 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 states that: "within the framework of a 
sustained dialogue with the banking industry and on the basis of contributions made 
by the relevant market actors, (the Commission)  intends to provide, as a matter of 
urgency, guidance as to the objective and measurable criteria for the compatibility of 
such  multilateral  inter-bank  remuneration,  which  could  include  among  others 
multilateral  interchange  fees,  with  competition  rules  and  the  community  regulatory 
framework." 

This  Recital  has  to  be  read  in  conjunction  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  received  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  eventual  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)  for  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  September  2010,  based  on  the  outcome  of  the 
respective  consultation,  including  all  the  stakeholders,  the  issue  of  a  harmonised 

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 recently 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 market 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 direct 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  establish  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 

61 

   EN 

                                                 
long-term economic model for SEPA direct debits […]; insists on the need for this 
model  to  be  developed  in  close  cooperation  between  the  payment  sector  and  the 
Commission  and  in  line  with  EC  competition  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  financial  industry  expects  the  European 
Commission, …, to provide guidance on the long-term charging principle for SDD in 
order to avoid concerns over competition." 

72 

http://www.ecb.int/pub/pdf/other/singleeuropaymentsarea201010en.pdf 

EN 

62 

   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 consultative paper on SEPA Next Steps73 

April 2006 

May 2006 

April 2007 

August 2007 

November 2007 

January 2008 

January 2008 

November 2008 

April 2009 

A tender for SEPA study is launched 

Joint Statement from the European Commission and the European Central Bank 
A common vision for the Single Euro Payments Area (SEPA) 

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) 

The ECB publishes a study on the economic impact of the Single euro area74 

A  feedback  statement  to  the  consultative  paper  on  SEPA  Next  Steps  is 
published75 

SEPA: Implementation and deployment, launch of SEPA Credit Transfer Scheme 
on 28 January 2008 

A  study  on  benefits,  opportunities  and  costs  of  migration  to  SEPA  is  published 
(Cap Gemini study)76 

Eurosystem’s  6th  Progress  Report  on  SEPA,  calling  for  a  realistic  but  ambitious 
end-date for the migration to SCT and SDD77 

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 the Impact Assessment is established 

October 2009-March 
2010 

Meetings of Payments Committee, Payment Systems Market Expert Group and 
of  EU  Forum  of  national  SEPA  committees  –  end-date  for  SEPA  migration 
discussed 

November 2009 

November 2009 

November–December 
2009 

Deadline  for  implementation  of  Directive  2007/64/EC  and  Regulation  924/2009 
enter into force in the Member States 

SEPA: Implementation and deployment, launch of SEPA Direct Debit Scheme on 
2 November 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 Group on the Impact Assessment 

73 
74 
75 
76 
77 
78 
79 
80 

http://ec.europa.eu/internal_market/payments/docs/sepa/sepa-2006_02_13_en.pdf 
http://www.ecb.int/pub/pdf/scpops/ecbocp71.pdf 
http://ec.europa.eu/internal_market/payments/docs/sepa/feedback_statement-2007_11_30_en.pdf 
http://ec.europa.eu/internal_market/payments/docs/sepa/sepa-capgemini_study-final_report_en.pdf 
http://www.ecb.int/pub/pdf/other/singleeuropaymentsarea200811en.pdf 
http://ec.europa.eu/internal_market/payments/docs/sepa/feedback_migration-2009_09_29_en.pdf 
http://ec.europa.eu/internal_market/payments/docs/sepa/com_2009_471_en.pdf 
http://ec.europa.eu/yourvoice/ebtp/consultations/sepa3/statistics_en.pdf 

EN 

63 

   EN 

 
                                                 
Annex 3: Summary of the public consultation 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 migration and invited stakeholders to comment by 3 August 2009. The 
purpose of this consultation was to collect stakeholders’ views on this important issue and to 
identify general trends for the possible way forward. 

This  document  is  a  summary  of  the  contributions  received.  Its  objective  is  to  present 
an overview  of  the  opinions  expressed  and  arguments  presented  by  stakeholders  in  their 
contributions. The views expressed in this document 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 document. 11 specific sets of issues were raised. 

Not all contributors answered all questions. For instance, those who did 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  questions  were  sometimes  not  answered  by 
respondents. 

The  responses  to  the  individual  questions  will  not  be  presented  in  quantitative  terms. 
A qualitative  analysis  of  the  responses  and  of  the  main  arguments  put  forward  will  be 
presented. 

3. 

NUMBER 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 responses came from payment service providers, as well as technical 
providers,  such  as  card  processors  or  IT  providers.  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  responses 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 implementing the SEPA project at national level, 
also  replied  to  the  consultation.  The  composition  of  these  SEPA  Committees  varies  from 
Member States to Member States, but they normally 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 

64 

   EN 

                                                 
Graph  1:  Number  of  contributions  by  stakeholder  category  (stakeholders  or  organisations 
representing them) 

Total
105 answers

National SEPA 
coordination committee
6%

Consultants
4%

Other
3%

Payment service 
providers
27%

Consumers
6%

Merchants
2%

Businesses
26%

Technical providers
8%

Finance ministries
9%

Central banks
5%

Public sector
4%

In total, contributions were received from contributors 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-euro area Member States. The following graph 
gives a breakdown of the number of submissions received by territory. 

Graph 2: Number of contributions by territorial origin 

UK
8%

SE
3%

RO
1%

LV
1%

HU
2%

EU
11%

AT
3%

BE
4%

Total
105 answers

LT
1%

EE
1%

CZ
2%

SI
1%

DK
1%

SK
2%

PT
1%

NL
8%

DE
28%

IT
6%

IE
2%

FR
9%

FI
2%

ES
5%

EN 

65 

   EN 

 
 
4. 

CONTENT OF THE RESPONSES 

The consultation document set out 11 specific questions pertaining to the end-date issue. The 
responses to these questions are analysed 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 circumstances there is a need to support SEPA 
migration by setting (a) deadline(s) for migration 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  migration  to  SCT  and  SDD.  A  number  of  reasons  were  put  forward. 
Setting  (a)  deadline(s)  is  considered  necessary  to  accelerate  SEPA  migration  which  is 
currently  too  slow.  Some  respondents  felt  that  it  would  provide  incentives  or  even  put 
pressure  on  those  who  were  reluctant  to  migrate  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  systems  for  credit  transfers  and  direct  debits  are 
managed in parallel for too long a period of time. This would also provide certainty and allow 
for the appropriate planning of SEPA migration and the attribution of the necessary budgets. 
Such  deadlines  were  also  felt  necessary  in  order  to  raise  awareness  regarding  the  SEPA 
project.  Some  indeed  considered  that  SEPA  was  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  transposed  in  all  Member States  before  (an) 
end-date(s)  could  be  set.  Other  had  concerns  regarding  the  legal  continuity  of 
existing  direct  debit  mandates  during  the  migration  to  the  SDD  and  required  legal 
solutions  to  smoothen  such  migration.  Several  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 these schemes should first be enhanced to 
fully  meet  users’  needs  before  (an)  end-date(s)  could  be  set.  Regarding  SCT, 
improvements  mostly  related  to  message  formats,  in  particular  to  the  possibility  to 
have  an  enlarged  remittance  information  field.  Regarding  SDD,  improvements 
concerned more fundamental schemes’ rules, 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,  especially  regarding  SDD.  On  the  users’  side, 
several respondents also underlined the need for more clarity regarding the fees that 
would be charged for these new payments. 

EN 

66 

   EN 

– 

Fourth, many respondents underlined that users should be given some time to use the 
new SEPA products. Some therefore considered that deadlines for SEPA migration 
should  not  be  set  before  SDD  products  are  made  available  by  payment  services 
providers in the different Member States and before users had the opportunity to use 
them  during  a  reasonable  period  of  time.  Several  respondents  also  underlined  the 
critical role public administrations would have in the migration to SEPA instruments, 
given the volume of payments they represented in each Member State. 

While a sizeable majority of respondents expressed 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 service providers on the supply  side. On the demand 
side,  some  corporate,  public  administrations  from  three  Member States  and  two  national 
consumer  organisations  also  expressed  reservations.  The  reasons  mentioned  concerned  the 
legal  issues  already  mentioned  previously  (PSD  transposition,  mandate  migration)  and  the 
necessity  to  improve  the  quality  of  the  products.  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 service 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  products,  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 organisation/business 
(e.g.  on  your  IT  systems,  organisation,  human  resources,  communication,  or  any  other 
area)? Please provide quantitative and financial analysis if available. 

Question 3: What deadline(s) would you see as feasible for the replacement of legacy euro 
credit transfers and direct debits by SCT and SDD? 

Not  all  respondents  provided  answers  to  these  two  questions.  Consumer  organisations  in 
particular  did  not  reply,  since  SEPA  migration  does  not  imply  changes  of  organisation  for 
them. Some other respondents did 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 should 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  answers  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  contrary,  a  few  others  expressed 
the need for a longer period 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 given 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  terms,  respondents  underlined  the  impact  SEPA 
migration would have on their IT systems and applications, as well as on their communication 
to clients. A few also mentioned organisational impact as well as a human resources impact. 

EN 

67 

   EN 

Among  the  deadlines  mentioned  as  feasible  for  the  migration  to  SCT  and  SDD,  a  majority 
favoured either end-2012 or end-2013 when both  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 schemes’ rules as well? Please 
explain why. 

Almost all respondents indicated their preference for an end-date covering 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  process.  This  would  moreover  fit  better  with  the 
overall  objective  of  the  SEPA  project  to  achieve  a  true  harmonisation  of  the  European 
payment market and would therefore trigger more benefits for all. There was indeed a risk of 
different implementation of the SCT and SDD schemes within the area if only standards were 
made  mandatory.  Some  also  pointed  out  that  some  of  these  standards  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  only  the  SEPA  standards  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 also fixed the scheme’s conditions. 

Three  stakeholders  also  suggested  a  phased  approach  as  a  compromise  solution,  whereby 
standards  could  first  be  made  mandatory,  allowing  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  communication)  or  the  complete  end-to-end  payment 
chain (including customer/bank communication)? 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 straight through processing 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 conversion services on a temporary basis in order to 
allow for a smooth SEPA migration at the beginning. 

On  the  contrary,  some  respondents  expressed  a  preference  for  a  possible  end-date  covering 
only the interbank space. This was the case for some payment service providers’ and technical 
providers’  organisations,  a  few  public  authorities  and  two  national  SEPA  coordination 

EN 

68 

   EN 

committees.  Two  main  reasons  were  mentioned:  first,  to  leave  room  for  competition  and 
innovation in the relationships between the payment service providers and their users; second 
to let users choose whether and at what 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  end-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 others suggested a phased approach, 
whereby the end-date could apply to the interbank 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)  migration  end-date(s)  should  imply  that  all 
legacy  payments  migrate 
some  products  be 
maintained/developed  on  the  market  besides  the  SEPA  products?  Please  explain  why  and 
specify the conditions which would have to be met by such products. 

to  SEPA  payments  or  could 

A large majority of respondents were of the view that a migration end-date should not mean 
that  all  legacy  payments  should  migrate.  In  some  markets,  some  legacy  instruments  indeed 
present  specific  functionalities,  due  to  historical  or  legal  reasons,  which  are  not  available 
within  SEPA  schemes.  This  is  the  case  for  some  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 innovation and competition on the payment market. 

In their answers, many of these respondents nevertheless underlined that there was a need to 
define  precisely  the  payment  products  that  would  be  authorised  to  remain  on  the  market. 
Some suggested in this respect to use the definition of corresponding payments provided in 
the  new  Regulation  on  cross-border  payments.  Others  suggested  to  define  a  quantitative 
threshold (such as 10 % of payment 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 reasons and making it mandatory to justify why such 
payments could not migrate. Some respondents also 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  should  always  remain  possible  on  the  market 
according to a few respondents. 

Some  respondents,  especially  corporate  representatives,  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-invoicing service or a possibility of payment initiation by mobile. 

EN 

69 

   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 expressed 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  given  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 mind of users. Given that SCT migration involved 
fewer changes than SDD migration and therefore 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 only 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-date 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 migration would be clearer to the public. It would moreover 
induce fewer costs as the two migration could be handled in one go and could 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 would be regarding the territorial scope of 
(a) migration end-date(s)? Please explain why. 

In terms of territorial approach, a large majority of respondents 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  also  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 area would be costly and difficult for those 
companies and banks doing business across the EU. 

Most of these respondents however considered that 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 the end of the migration period. Such flexibility 
should however fulfil two main conditions according to the respondents: first, the end-dates 
should  be  set  in  such  a  way  as  not  to  penalise  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 those countries which were already quite advanced 
in terms of dematerialization of payment transactions, 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 switch over to SEPA at their own pace. 

EN 

70 

   EN 

A  last  set  of  respondents,  among  which  many  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 adapt 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-dates? Please explain why. 

Views  were  rather  mixed  on  this  question.  A  first  set  of  respondents,  mostly  from  the 
euro area Member States,  considered  that the same approach  should be followed throughout 
the  European  Union  for  the  reasons  already  mentioned  above  regarding  the  need  for 
a European  end-date.  They  also  considered  it  easier  to  migrate  when  payments  volume  are 
low.  These  respondents  however  pointed  out  that  the  end-date  should  only  concern  euro 
payments  (as  indicated  in  the  question),  provided  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  payments  indeed  represent  small  volumes  in 
non-euro area  Member States,  as  well  as  in  the  total  of  euro  payments  in  the  EU.  These 
respondents  therefore  considered  that  such  migration  was  not  necessary  to  the  success  of 
SEPA.  Regarding  the  modalities  of  the  end-date  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 explain why and elaborate on the modalities (e.g. 
if regulation is preferred, who would should be the regulating body?). 

A  large  majority  of  respondents  indicated  their  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  clear  signal  to  market  participants  that  SEPA  was 
irreversible.  Respondents  also  indicated  that  a  regulation  would  have  the  advantage  to  be 
enforceable within all the area. This was seen as necessary to force stakeholders to migrate to 
SEPA and to avoid competition issues that such migration may raise if implemented only by 
market participants. Almost all respondents favoured a EU legislation, 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  respondents  however  emphasised  that,  in  the  case  of 
a regulation,  it  would  be  of  primary  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 European level, while leaving the possibility for 
national  communities 
through  balanced  solutions  between 
self-regulation and regulation. 

to  set  earlier  end-dates 

EN 

71 

   EN 

A few respondents, mostly on the demand side of the market and from one Member State, on 
the  contrary  indicated  their  preference  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  divided  on  whether  such  process  should  in  that  case  only 
involve the supply side of the market 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 developments. 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 end-date(s)? If yes, please explain why and elaborate on these 
criteria. 

A majority considered that 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 reached 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  introduce  some  uncertainties  in  the  process 
and could make the planning necessary for SEPA migration more difficult. A few respondents 
however considered that some quantitative criteria could be usefully followed, without them 
to be prerequisite for the end-date. 

On the other hand, a significant number of those who provided an answer were of the view 
that  a  certain  volume  of  payments  should  migrate  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  primarily  a  market  driven  project. 
Most  of  these  respondents  mentioned  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 

72 

   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 dialogue 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 arisen of how to assess under the EU competition rules whether 
there  is  a  justification  for  a  MIF  per  transaction.  As  a  result,  a  dialogue  with  the  EPC  took 
place during most of 2008. In this dialogue it was signalled that a general per transaction MIF 
does not seem necessary nor justified 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 SDD system, the Commission acknowledged the need to incentivise 
banks, in particular the ones which currently receive high MIFs, to migrate towards SDD. To 
cater  for  this  need,  under  the  clarification  provided  by  the  Commission  and  the  ECB  in 
September  200882,  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  short  and  well  defined  transitional  period,  unless 
competition proceedings at national level would lead 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 envisaged 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 review of Regulation 2560/2001 on the equivalence 
of  charges  for  national  and  cross  border  payments  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  transactions.  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 the 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. Recital 11 of Regulation 924/2009 mentioned in this respect that the 
industry  could  make  use  of  the  legal  certainty  provided  during  the  transitional  period  to 
develop and agree a common, long-term business model in line with EC competition law and 

82 

83 

Press Release: Payments: Commission and ECB support launch of pan-European SEPA Direct Debit; 
provide guidance to industry, IP/08/1290, 4.9.2008. 
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 

73 

   EN 

                                                 
the Community  regulatory framework.  Also, the 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  long  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 envisaged, 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 relevant market actors, the Commission 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 scheme85  

Consequently, the dialogue on (an) acceptable model(s) for collective financing arrangements 
regarding  SDD  could  not  be  completed.  Notwithstanding  this,  to  assist  the  industry,  the 
Commission subsequently adopted a Commission Working Document, setting out the general 
principles  to  be  applied  under  competition  rules  when  analyzing  collective  agreements  on 
interchange fees which was followed by a public consultation86. 

The  Commission  Working  Document  focuses  on  general  principles  concerning  MIF 
arrangements  –  applied  on  a  per  transaction  basis  and  concerning  R-transactions  –  and 
alternative  payment  arrangements.  It  outlined  the  principles  applied  under  competition  law 
when analyzing such systems, with a view to provide greater clarity and predictability within 
the  general  analytical  framework  used  to  determine  whether  MIFs  in  the  context  of  direct 
debit markets comply with competition law, in particular as regards Article 101(3) TFEU. 

The  Document  explained  that  MIFs  result  from  a  collective  agreement  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  customers.  Companies  will  have  to  pass  on  these 
inflated fees to their consumers through their own bills. Since the consumer’s own bank – the 
payer bank – receives its revenues from the payee bank it might not charge the consumer, who 
thinks he receives the service for free. This is however not true as costs are being passed on 
by  the  company  to  their  customers,  the  final  consumers.  The  consumer  has  no  way  of 

84 

85 
86

Joint statement by the European Commission and the European Central Bank 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. 
Answer by the EPC to the November 2009 consultation, p. 2. 

http://europa.eu/rapid/pressReleasesAction.do?reference=IP/09/1666&format=HTML&aged=0

&language=EN&guiLanguage=en 

EN 

74 

   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 charged for the transaction and if he would know 
the level of the fee, the collective character of the fees prevents the consumer from looking 
around  and  switching  to  a  bank  that  will  charge  less  for  retail  banking  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  sector,  either  from  individual  banks  (4),  national  (7)  or 
European  banking  federations  (3).  Eight  user  organisations  responded  to  the  consultation, 
three  European  and  five  national  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  European  banking  federations  representing  mostly 
payer banks recipients of MIFs (savings and cooperative banks) responded. 

The  EPC,  whilst  acknowledging  the  previous  clarifications  provided  through  Regulation 
924/2009  and  the  Joint  Statement  of  the  European  Central  Bank  and  the  European 
Commission of 24 March 2009, recalls the decision of the EPC Plenary of 26 June 2009 not 
to pursue the case for a possible MIF for R-transactions under the core SDD scheme. Whilst 
not  making  a  substantiated  contribution,  it  considers  that  some  communities  of  scheme 
participants  may  want  to  continue  to  support  the  case  for  a  MIF  for  R-transactions.  This 
suggests that there is no majority within the EPC to request a MIF for R transactions. 

The contributions on the substantial aspects of MIFs can be summarized as follows: 

– 

– 

– 

Opinions  are  polarised  with  regard  to  the  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.  However,  end-users  argue 
that it does. Some banks argue that large invoicers have sufficient bargaining power 
to pay only part of the MIF, or even no MIF at all. On the other hand, most users’ 
respondents  disagree  with  the  respondents  from  the  banking  side  and  support  the 
conclusions  of  the  consultation  document  on  this  issue.  Some  are  of  the  view  that 
MIFs  are  a  form  of  collective  price  fixing  by  banks  in  an  untransparent  way  that 
distorts competition and raising barriers to entry. 

The  working  document  highlights  the  fact  that  card  payments  and  direct  debit 
payments  are  different  –  notably  in  terms  of  the  (higher)  potential  for  payees  to 
incentivise  the  use  of  direct  debit  by  payers.  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  payer,  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  related  to  direct  debit  is  fixed  and  does  not 
depend on the number of transactions. On the other side, some respondents from the 

EN 

75 

   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  diluted  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,  some  of  the  French 
end-user respondents argue that different payment instruments in France, each with 
their own MIF, do not exhibit a positive correlation 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 mentioned 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 payees 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 independent commercial decision to be made 
by each bank. 

In contrast to this, most end-users emphasize 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 the 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 minimal, 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  benefit  in  terms  of  cost  reduction  to  their 
clients.  Some  argue  that  the  unequal  bargaining  power  between  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  compared  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 provide 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 efficient 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 the use of direct debit have been provided 
by some users. Banking respondents on the other side seem to be largely unaware of 
the  existence  of  rebates.  A  banking  respondent  states  that  it  does  not  know  of  any 
rebates given by payees to payers in Spain. Some French respondent banks are also 
very  critical  of  the  effectiveness  of  rebates.  In  complete  contradiction  with  these 
though,  a  French  respondent  bank  argues  that  incentivization  is  very  common  in 
France: through publicity and rebates for clients that pay via DD. 

– 

– 

– 

– 

– 

– 

Some respondents from the banking 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 

76 

   EN 

an association of payers pleads for an obligation for payees to offer various means of 
payment. The inability of consumers to choose between payment instruments, would 
make  superfluous  the  incentivising  of  the  use  of  SDD  or  surcharging  for  using 
an alternative  instrument,  as  this  can  only  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 are 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  distinguished  from  the  costs  of  normal 
transactions or the operational costs of banking business. This view does not seem to 
be  shared  by  other  banking  respondents  supporting  a  cost-based  multilateral 
R-transaction fees option. 

Opinions  are  polarised  otherwise.  Some  end-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 model without MIFs for R-transactions. 

The working document raises doubts as to whether R-transaction MIFs as a financing 
mechanism  could  be  compatible  with  competition  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 efficient business model, as R-transactions 
should happen only rarely. Given the small part of R-transactions in the total number 
of transactions, either R-transaction MIFs would not compensate 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-transaction  MIFs  imply  that  the  costs  for  regular 
transactions  will  not  be  compensated  this  way.  On  the  other  hand,  some  other 
(banking)  respondents  –  although  supportive  of  R-transaction  MIFs  –  have  a  wide 
interpretation of the meaning of 'cost based', 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  several  respondents  is  how  to  find  out  who  caused  the 
R-transaction.  Some  respondents  argue  that  it  is  not  always  possible  for  banks  to 
determine whether the origin of the R-transaction 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 has 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  objective  of  increasing 
efficiency:  R-fee  reimbursement  in  exceptional  cases  should  therefore  be  settled 

EN 

77 

   EN 

between  payer  and  payee  outside  SDD.  With  the  same  objective  of  increased 
efficiency  in  mind,  an  association  of  payees  pointed  out  that  prior  checks  by  the 
payer  bank  of  the  mandate  and  of  the  availability  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  alternative  to  pure  R-transaction  MIFs,  the 
payer bank should fix and publish the handling fee for R-transactions 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  competition  rules.  Instead  of  addressing  this 
though,  most  of  the  responses  restrict  themselves  to  squarely  rejecting  BIFs  as 
a financing  mechanism’s  option,  on  the  basis  of  the  number  of  BIFs  agreements 
which would allegedly have to be concluded 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 mandatory 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  handle  the  DD  anyway,  it  is  seen  as  not 
appropriate to leave to the market the conclusion 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 the fee for R transactions. The idea was that 
each bank unilaterally set its own fees (interchange fee) for R –transactions to be paid by the 
payee’s banks. Under this proposal, all the payer banks should display on their website the fee 
they request for an “R” transaction. All payees’ bank could thereby know in advance whether 
the consumer’s banks take fee for that kind of transaction. 

National Competition Authorities (NCAs) have been continuously involved and consulted in 
the Dialogue between DG Competition and the EPC, 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, there 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 Portuguese Direct Debit system. 

EN 

78 

   EN 

Annex 4: Integrating a fragmented market – the background of the SEPA project 

The European payments market after 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 introduction 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. Furthermore, 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  payment  services  at  the  best  possible  prices  and  service  levels 
throughout Europe. 

However,  because  of  the  previous  existence  of  different  national  currencies  and  major 
differences  in  national  legislations,  payment  systems  in  the  Member States  historically 
evolved  independently  of  each  other  and  within  the  scope  of  their  national  boundaries. 
Consequently,  Member States  had  developed  and  implemented  different  technologies, 
payment  message  formats,  payment  services  and  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 introduction, pure market forces in themselves did 
not  create  sufficient  momentum  to  overcome  this  fragmentation.  It  therefore  soon  became 
clear that only a concerted effort of the payment services industry, supported 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 described 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 distinction 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 citizens and businesses with low cost, user-friendly, and reliable 
payment services. Moreover, SEPA payment instruments 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  initiative  ever  to  be  carried  out  in  Europe  and 
a project which many consider even surpasses the euro cash change-over in terms of its scale 
and complexity. In return, the SEPA project has the potential to provide tremendous benefits 
improving  business 
to 
competitiveness  and  providing  a  platform  for  future  innovation  in  fields  such  as  mobile 
payments, online payments, and e-invoicing. 

increasing  payments  efficiency, 

the  EU  economy 

through 

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 continued support for the creation of SEPA, which 
is subject to effective competition and where there is no distinction between cross-border and 

EN 

79 

   EN 

national  payments  in  euro…".  The  following  chronology  includes  key  statements  for  the 
general support of SEPA by the Council, the Commission, and the ECB. 

4 May 2006 

22 January 2008 

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# 

Economic and Financial Affairs 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 payment 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 Affairs 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 efforts 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  development  and  implementation  of 
common payment formats, messaging and communication standards to ensure interoperability 
and adequate security. 

The regulatory framework 

The first Regulation on Cross-Border Payments  (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  payments  as  for  corresponding  domestic  euro 
payments. 

It was followed by the Payments Services Directive (2007/64/EC) which 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 

80 

   EN 

be  implemented  in  Member States  by  1 November 2009,  facilitated  in  particular  the 
development of common rules for cross-border direct debit transactions. 

Finally,  the  second  Regulation  on  Cross-Border  Payments  (EC) No 924/2009  facilitated  the 
implementation  of  a  pan-European  direct  debit  scheme  by  setting  temporary  rules  for 
inter-bank  remunerations  for  the  execution  of  direct  debit  transactions.  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 Debit (SEPA DD) under the 
European competition rules has arisen. 

Initially, introducing a collectively agreed interbank fee for SEPA DD had been contemplated 
by  the  organisation  that  has  set  up  the  SEPA  Direct  Debit  system,  the  European  Payment 
Council  or  'EPC'.  This  so-called  Multilateral  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 payer for each SEPA DD transaction. Such MIFs per 
transaction exist in the legacy schemes of some Member States. Currently, 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  collectively  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 participating in the direct 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  executed.  Depending  on  the  type  of 
transaction,  the  letter  'R'  can  stand  for  rejection,  refusal,  return,  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 country, R-transactions cover between 0.1 % and 
3 % of all transactions. 

At  present  the  direct  debit  schemes  of  only  six  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  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  direct  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 

81 

   EN 

                                                 
R-transaction fees exist in five euro countries, two of which are also among the countries in 
which per transaction MIFs are applied.88 

The technical framework 

In  June  2002,  the  banking  industry  established  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 and standards for pan-European payment instruments. 

In this context, the EPC developed common schemes for credit transfers and direct debits in 
euro  which  are  defined  by  so-called  rulebooks.  In  January  2008,  the  SEPA  Credit  Transfer 
(SCT) scheme was launched, enabling payment services providers to offer a common credit 
transfer  service 
throughout  SEPA,  currently  encompassing  all  EU  Member States, 
Switzerland, Norway, Iceland, Liechtenstein and Monaco. This was followed by the launch of 
the SEPA Direct Debit (SDD) scheme in November 2009. This scheme created, for the first 
time, a direct debit instrument for euro payments that can be used both 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  use  the  SCT  and/or  SDD  schemes.  Adherence  to 
SEPA  schemes  does  not  imply  the  mandatory  phase-out  of  national  legacy  payment 
instruments  for  the  adhering  PSPs.  As  a  consequence,  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 instruments in the different Member States. 

88 

R-transaction  MIFs  of  varying  sizes  exist  in  Austria,  France,  Germany  and  Portugal.  In  Spain,  such 
R-transaction MIFs only apply to non STP direct debit transactions. 

EN 

82 

   EN 

                                                 
Table 1: Volume of transactions per payment instrument, in millions (2008) 

Annex 5: Payment data EU 

Member State 

Credit transfers 

Direct debits 

Cards (except 
e-money cards) 

Cheques 

Other 

Belgium 

Germany 

Ireland 

Greece 

Spain 

France 

Italy 

Cyprus 

Luxembourg 

Malta 

Netherlands 

Austria 

Portugal 

Slovenia 

Slovakia 

Finland 

929.5 

5 624.6 

168.1 

36.6 

780.4 

2 697.3 

1 062.9 

16.9 

63.0 

4.9 

1 479.7 

961.0 

136.2 

171.0 

212.2 

748.0 

247.9 

7 982.2 

104.0 

15.9 

2 308.9 

3 023.6 

554.1 

12.4 

14.1 

1.1 

1 225.5 

794.0 

190.7 

41.5 

101.8 

82.0 

Euro area sub-total 

15 092.2 

16 699.6 

934.1 

2 244.4 

317.9 

84.7 

2 098.4 

6 542.5 

1 395.9 

30.2 

50.2 

10.1 

1 874.1 

344.3 

893.6 

108.6 

87.3 

1 011.0 

18 027.3 

8.8 

65.2 

117.2 

28.8 

136.0 

3 487.4 

384.9 

26.8 

0.2 

11.9 

– 

3.0 

173.3 

0.3 

0.1 

0.6 

81.4 

48.8 

– 

1.8 

62.1 

142.6 

418.4 

– 

2.2 

– 

176.1 

37.1 

0.9 

– 

– 

– 

4 444.6 

971.4 

EN 

83 

EN 

 
  
Bulgaria 

Czech Republic 

Denmark 

Estonia 

Latvia 

Lithuania 

Hungary 

Poland 

Romania 

Sweden 

United Kingdom 

Total EU27 

56.7 

n.a. 

287.7 

100.1 

121.9 

109.7 

569.5 

1 144.2 

187.3 

890.0 

3 185.1 

21 744.3 

0.4 

n.a. 

193.2 

17.8 

4.4 

10.9 

67.7 

20.4 

7.3 

229.0 

3 076.9 

20 327.6 

12.7 

147.5 

935.9 

148.3 

95.1 

88.9 

166.3 

576.7 

69.3 

1 634.0 

7 595.0 

29 497.1 

– 

0.3 

13.7 

0.0 

0.0 

0.3 

– 

0.0 

10.6 

1.0 

1 403.0 

5 873.5 

– 

84.9 

– 

0.0 

0.9 

– 

13.2 

– 

0.4 

– 

– 

1 070.8 

Other payment instruments include e-money purchase transactions and specific national instruments. 
Source: ECB Payment Statistics, September 2009 

EN 

84 

EN 

 
  
 
 
Table 2: Volume of transactions per payment instrument, in % of Member State total (2008) 

Member State 

Credit transfers 
% 

Direct debits 
% 

Cards (except e-money cards)
% 

Cheques 
% 

Other 
% 

Belgium 

Germany 

Ireland 

Greece 

Spain 

France 

Italy 

Cyprus 

Luxembourg 

Malta 

Netherlands 

Austria 

Portugal 

Slovenia 

Slovakia 

Finland 

Euro area sub-total: 

42.2 

35.2 

23.8 

21.8 

14.5 

17.0 

27.9 

19.5 

48.6 

17.6 

31.1 

44.9 

9.8 

53.2 

52.9 

40.6 

27 

11.3 

50.0 

14.7 

9.5 

42.9 

19.0 

14.5 

14.4 

10.9 

3.7 

25.8 

37.1 

13.7 

12.9 

25.4 

4.5 

30 

42.4 

14.1 

44.9 

50.5 

39.0 

41.2 

36.6 

35.0 

38.7 

36.1 

39.4 

16.1 

64.1 

33.8 

21.8 

54.9 

33 

0.4 

0.4 

16.6 

17.2 

2.5 

21.9 

10.1 

31.1 

0.2 

42.6 

n.a. 

0.1 

12.4 

0.1 

0.0 

0.0 

8 

3.7 

0.3 

n.a. 

1.1 

1.2 

0.9 

11.0 

n.a. 

1.7 

n.a. 

3.7 

1.7 

0.1 

n.a. 

n.a. 

n.a. 

2 

EN 

85 

EN 

 
  
Bulgaria 

Czech Republic 

Denmark 

Estonia 

Latvia 

Lithuania 

Hungary 

Poland 

Romania 

Sweden 

United Kingdom 

Total EU27 

81.2 

n.a. 

20.1 

37.6 

54.8 

52.3 

69.7 

65.7 

68.1 

32.3 

20.9 

28 

0.6 

n.a. 

13.5 

6.7 

2.0 

5.2 

8.3 

1.2 

2.6 

8.3 

20.2 

26 

18.2 

63.4 

65.4 

55.7 

42.8 

42.4 

20.4 

33.1 

25.2 

59.3 

49.8 

38 

n.a. 

0.1 

1.0 

0.0 

0.0 

0.1 

n.a. 

0.0 

3.8 

0.0 

9.2 

7 

n.a. 

36.5 

n.a. 

0.0 

0.4 

n.a. 

1.6 

n.a. 

0.2 

n.a. 

n.a. 

1 

Other payment instruments include e-money purchase transactions and specific national instruments. 
Source: ECB Payment Statistics, September 2009 

EN 

86 

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 

Germany 

Ireland 

Greece 

Spain 

France 

Italy 

Cyprus 

Luxembourg 

Malta 

Netherlands 

Austria 

Portugal 

Slovenia 

Slovakia 

Finland 

4 447.0 

61 898.0 

199.0 

654.0 

10 681.0 

19 446.0 

7 364.0 

351.0 

1 130.0 

19.0 

5 803.0 

2 404.0 

1 061.0 

278.0 

1 294.0 

4 573.0 

64.0 

11 330.0 

106.0 

10.0 

860.0 

1 054.0 

345.0 

4.0 

7.0 

0.2 

301.0 

308.0 

35.0 

2.0 

542.0 

45.0 

53.0 

152.0 

26.0 

9.0 

102.0 

332.0 

137.0 

3.0 

4.0 

0.6 

87.0 

21.0 

31.0 

4.0 

5.0 

36.0 

50.0 

408.0 

797.0 

456.0 

778.0 

2 070.0 

1 093.0 

43.0 

– 

15.0 

– 

17.0 

355.0 

0.1 

0.1 

26.0 

2.7 

0.2 

– 

1.1 

360.0 

473.0 

825.0 

– 

– 

– 

0.5 

1.7 

11.0 

– 

– 

– 

Euro area sub-total: 

121 602.0 

15 013.2 

1 002.6 

6 108.2 

1 675.2 

EN 

87 

EN 

 
  
Bulgaria 

Czech Republic 

Denmark 

Estonia 

Latvia 

Lithuania 

Hungary 

Poland 

Romania 

Sweden 

United Kingdom 

Total EU27 

137.0 

n.a. 

634.0 

167.0 

519.0 

538.0 

1 595.0 

876.0 

1 750.0 

1 154.0 

102 823.0 

231 795.0 

0.2 

n.a. 

81.0 

1.6 

0.3 

0.7 

2.2 

4.2 

1.8 

47.0 

1 174.0 

16 326.2 

1.0 

10.0 

47.0 

3.0 

2.0 

2.0 

5.0 

19.0 

4.0 

74.0 

– 

1.5 

29.0 

– 

– 

0.8 

– 

– 

24.0 

7.0 

512.0 

1 681.6 

1 886.0 

8 056.5 

– 

– 

– 

– 

– 

– 

7.0 

– 

1.8 

– 

– 

1 684.0 

Other payment instruments include e-money purchase transactions and specific national instruments. 
Source: ECB Payment Statistics, September 2009 

EN 

88 

EN 

 
  
 
 
Table 4: Value of transactions per payment instrument, in % of Member State total (2008) 

Member State 

Credit transfers 
% 

Direct debits 
% 

Cards (except e-money cards)
% 

Cheques 
% 

Other 
% 

Belgium 

Germany 

Ireland 

Greece 

Spain 

France 

Italy 

Cyprus 

Luxembourg 

Malta 

Netherlands 

Austria 

Portugal 

Slovenia 

Slovakia 

Finland 

Euro area sub-total: 

96.3 

83.9 

17.6 

57.9 

83.6 

83.2 

75.4 

87.5 

99.0 

54.6 

93.7 

87.4 

71.1 

97.9 

70.3 

97.7 

84 

1.4 

15.4 

9.4 

0.9 

6.7 

4.5 

3.5 

1.0 

0.6 

0.6 

4.9 

11.2 

2.3 

0.7 

29.4 

1.0 

10 

1.1 

0.2 

2.3 

0.8 

0.8 

1.4 

1.4 

0.7 

0.4 

1.7 

1.4 

0.8 

2.1 

1.4 

0.3 

0.8 

1 

1.1 

0.6 

70.7 

40.4 

6.1 

8.9 

11.2 

10.7 

n.a. 

43.1 

n.a. 

0.6 

23.8 

0.0 

0.0 

0.6 

4 

0.1 

0.0 

n.a. 

0.1 

2.8 

2.0 

8.4 

n.a. 

n.a. 

n.a. 

0.0 

0.1 

0.7 

n.a. 

n.a. 

n.a. 

1 

EN 

89 

EN 

 
  
Bulgaria 

Czech Republic 

Denmark 

Estonia 

Latvia 

Lithuania 

Hungary 

Poland 

Romania 

Sweden 

United Kingdom 

Total EU27 

99.1 

n/a 

80.2 

97.3 

99.6 

99.4 

99.1 

97.4 

98.2 

90.0 

96.6 

89 

0.1 

n.a. 

10.2 

0.9 

0.1 

0.1 

0.1 

0.5 

0.1 

3.7 

1.1 

6 

0.7 

87.0 

5.9 

1.7 

0.4 

0.4 

0.3 

2.1 

0.2 

5.8 

0.5 

1 

n.a. 

13.0 

3.7 

n.a. 

n.a. 

0.1 

n.a. 

n.a. 

1.3 

0.5 

1.8 

3 

n.a. 

n.a. 

n.a. 

n.a. 

n.a. 

n.a. 

0.4 

n.a. 

0.1 

n.a. 

n.a. 

1 

Other payment instruments include e-money purchase transactions and specific national instruments. 
Source: ECB Payment Statistics, September 2009 

EN 

90 

EN 

 
  
 
 
Annex 6: Overview of national SEPA migration plans 

Table 1: National target dates by Member State 

Country 

Euro area 

Austria 

Belgium 

Cyprus 

Finland 

France 

Germany 

Greece 

Ireland 

Italy 

Luxembourg 

Malta 

Target date 

Detailed comments 

No 

Yes 

Yes 

– Credit transfers: end 2010 
– Direct debits: end 2012 

– Credit transfers: end 2012. 
– Direct debits: November 2014 

SCT: yes 
SDD: under discussion 

– Credit transfers: end 2010 

Conditional 

Will only be fixed once 'critical mass' has been reached for SEPA instruments 

No 

Partly 

Under discussion 

No 

SCT: completed 
SDD: No 

SCT: yes 
SDD: n.a. 

– Credit transfers: No target date 
– Direct debits: implicit once transposition of PSD implemented 

– Credit transfers: end 2010. 
– Direct debits: no legacy direct debit scheme existing 

Netherlands 

Under discussion 

Conditional 

Will only be fixed once 'critical mass' has been reached for SEPA instruments 

Partly 

– Credit transfers: end 2012 
– Direct debits: under discussion 

Conditional 

Will only be fixed once 'critical mass' has been reached for SEPA instruments 

Under discussion 

SCT: no 
SDD: n.a. 

No 

No 

(for payments in euros) 

– Direct debits: no legacy direct debit scheme existing 

Under discussion 

Depending on accession to euro 

No 

Under discussion 

Depending on accession to euro 

Portugal 

Slovakia 

Slovenia 

Spain 

Non-euro area 

Bulgaria 

Czech Republic 

Denmark 

Estonia 

Hungary 

Latvia 

Lithuania 

Poland 

Romania 

Sweden 

No 

No 

SCT: conditional 
SDD: no 

SCT: partly completed 
SDD: n.a. 

United Kingdom 

SCT: partly 
SDD: n.a. 

Source: European Commission, 2009 

Will only be fixed once 'critical mass' has been reached for SCT 

– 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 

– Credit transfers: November 2010 for domestic euro direct credit scheme 
operated by Bacs 
– Direct debits: no legacy direct debit scheme existing 

EN 

91 

   EN 

 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
Annex 7: SEPA migration progress in the Member States 

The  tables  shown  below  present  the  share  of  SEPA  Credit  Transfer  (SCT)  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 situation in all euro area 
countries (below) and some non-euro area EU countries (next page, euro transactions  only). 
The indicators are compiled semi-annually by the NCBs and the first set of results refers to 
the first half of 2008; the last 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 

92 

   EN 

 
 
 
Lessons to be drawn for setting an end-date for migration: 

– 

– 

– 

– 

SEPA  migration  progress  at  the  national  level  demonstrates  that  only  well  planned 
migration  effort,  centrally  organised  and  strongly  supported/lead  by  Member State 
authorities,  with  binding  deadlines  assigned  for  all  stakeholders  results  in  a  quick 
adoption  of  SEPA  payment  instruments  (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  largely  due  to  the  migration  of  certain  types  of  state 
payments to the new SEPA instruments. 

Large  utility  companies  (telecoms,  energy  and  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  payment  formats  by  banks  (e.g.  automatic 
conversion of all permanent orders into SCT 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 

93 

   EN 

 
Annex 8: Reasons for slow migration to SEPA 

The  problem  of  slow  migration  results  from  a  number  of  different  drivers,  with  uncertainty 
behind the completion of SEPA being the root cause.  

Root cause: Uncertainty of SEPA completion and phase-out of legacy products 

Based on the original EPC timetable, SEPA was 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  constituted  this  'critical  mass'.  Nor  has  it  been 
determined  by  when  so  called  'legacy'  products,  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 migration rate, the original objective of the EPC 
has now become unrealistic. 

Market  participants  facing  the  potential  decision  whether  to  migrate  to  SEPA  products 
therefore  harbour  reasonable  doubts  as  to  if  and  when  a  critical  mass  for  SEPA  will  be 
attained  and  whether  SEPA  instruments  will  indeed  be  the  only  available  choice  of  credit 
transfer and direct debit instruments at a later 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  new  SEPA  instruments  early  and 
actively  have  a  major  first  mover  disadvantage  in  the  current  environment.  During  the 
transitional period when customers 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 legacy 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 resulting in duplicate costs are difficult to justify, as 
the  savings  from  the  new  payment  instruments  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  offer  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 high number of payer banks. This majority has allowed payer 
banks  in  several  countries  to  impose  to  the  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 

94 

   EN 

 
approach pending the outcome of (national or European) proceedings on the compatibility of 
collective financing arrangements 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 payment services. This risk of a slower take up 
as  a  consequence  of  a  perceived  lack  of  clarity  has  in  particular  been  highlighted  by  the 
its  7th  SEPA  Progress  Report  published  on 
European  Central  Bank  ('ECB').  In 
21 October 201089  the  ECB  signals  that  although  the  launch  of  SDD  was  a  major 
achievement, the figures on the take up of the system in the first few months after the launch 
have  been  fairly  modest,  amounting  to  well  below  1%  of  transactions.  Identifying  the  long 
term economic model as a remaining stumbling 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 Commission to provide guidance 
on the long term charging principles for SDD which are compatible with competition rules. 

Missing incentive for PSPs to develop SEPA products fully meeting user needs 

Implementing  SEPA  does  not  only  represent  a  significant  challenge  for  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  customers  and  do  not  have  a  sufficient  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  format90.  User  concerns  for  the 
SDD  mainly  relate  to  the  management,  security,  notification  and  checking  of  direct  debit 
mandates,  which  entitle  the  creditor  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  for  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 market. Two implications arise from this situation. 

First, there is a significant difficulty and complexity 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  widespread  SEPA  information  and  marketing 

89 

90 
91 

7th Progress report on SEPA, p. 42, 
http://www.ecb.int/pub/pdf/other/singleeuropaymentsarea201010en.pdf, p. 17. 
In other cases the SCT has significantly expanded the existing remittance field. 
These concerns are currently being addressed by the EPC. 

EN 

95 

   EN 

 
                                                 
campaigns from the supply side. As a result, market 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  number  of  users.  Especially  for  consumers  and 
SMEs,  these  benefits  are  therefore  more  limited  on  an  individual  basis.  This  effect  is 
magnified by strong consumer inertia regarding basic payment services. The potential benefits 
of  pan-European  payment  instruments  may  at  first  sight  appear  less  tangible  for  consumers 
than  the  change  of  habit  which  the  new  payment  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  for  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;  while  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 withdrawing existing payment products, 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 

96 

   EN 

 
Annex 9: National differences of payment characteristics 

The following table presents some of the principal characteristics of the national payment systems in the EU and illustrates some of the differences and 
fragmentation of the EU payments market. 

Table 1: Selected differences between national payment systems 

e
t
a
t

S
r
e
b
m
e
M

AT 

BE 

CY 

BBAN* 

BBAN 

BBAN 
IBAN for 
government 

Main account 
identifier in use for 
domestic 
payments 

Main bank 
identifier in 
use for 
domestic 
payments 

Further 
account 
identifiers 
which can 
be used 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? 

If domestic DD scheme are 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, DD 

CMF, DMF 

no 

yes 

CT and/or DD instruments 
which for technical 
reasons might be difficult 
to migrate to SCT and/or 
SDD (and their estimated 
market share) 

Payments with truncated 
image (17 %) 

IBAN 

IBAN 

National 
bank code 

National 
bank code 

BIC 

EDIFACT 

ISO20022, 
SWIFT MT 

BIC 

Proprietary 

SEPA CT 

CT, DD 

DMF 

yes (by law) 

none 

Mandate 
is stored 
by debtor 
bank 

IBAN 

National 

BIC 

National 
electronic 
format 

proprietary 
formats 

SWIFT MT 
SEPA 

CT 

No national direct 
debit scheme 

CT, DD 

x 

yes 

FI 

BBAN 

FR 

BBAN 

IBAN 

Bank code 
in the 
account 
number 

National 
bank code 

BIC 

National 
electronic 
format 

ISO 20022 

CT/DD 

CMF 

no 

Banks will be 
offering e-
invoicing 
instead 

Old domestic payments 
system will be discontinued 
The banks will be using 
STEP2 services 

yes 
(by law) 

Specific legacy instruments: 
TIP, télérèglement (0.90 % 
of cashless payment 
transactions) 

EN 

97 

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) 

no 

no 

CMF 
(collection 
authorisation 
procedure, similar 
to SDD Core) 
DMF  
(debit 
authorisation 
procedure, 
comparable to 
SDD B2B) 

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 

98 

EN 

 
  
IE 

BBAN 

none 

National 
Sort Code 
(NSC) 

none 

yes (both) 

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). 

no 

yes, through 
legislation 

none 

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. 

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 

MT 

IBAN 

– 

– 

BIC 

– 

ISO20022 

Nationally 
agreed 
format for DD 

BIC 
(8-digit) 

Bank Sort 
Code 

MT103 

– 

DD (without 
clearing 
and 
settlement 
mechanism
) 

No CT and 
DD 
schemes 

DMF 

mandate 
is stored 
by debtor 
bank 

no 
(contractual 
issue) 

No national direct 
debit scheme 

None for technical reasons. 

EN 

99 

EN 

 
  
 
 
NL 

BBAN 

NA 
(domestic 
payments is 
interpreted 
as 
payments 
with legacy 
instruments
) 

PT 

SI 

SK 

ES 

BBAN 

IBAN 

IBAN 

none 

BBAN 

– 

BBAN 

IBAN* 

BG 

IBAN 

National 
Bank Code 

National 
bank code 

National 
bank code 

NRBE 
(National 
Bank Code 
assigned by 
Banco de 
España) 

BIC 

N.A. (via 
BBAN) 

NA 

Betopd 

Netherlands 

BBAN 

NA (via 
BBAN) 

NA 

NA 
(domestic 
payments 
is 
interprete
d as 
payments 
with 
legacy 
instrumen
ts) 

BIC 

Proprietary 

ISO 20022 

CT, DD 

DMF and CMF 

yes 

yes 

BIC 

– 

BIC* 

ISO20022, 
Proprietary 

National 
format 

SWIFT MT 
(large 
payments) 

CT, DD 

DMF 

- 

CT, DD 

DMF 

CMF 

Proprietary 
format 

SEPA 
standards* 

CT/DD 

no 

– 

no 

In principle 
yes 

not yet 

yes 

none 

none 

– 

none 

CZ 

BBAN 

none 

National 
bank code 

none 

National 
format 

none 

SWIFT MT 
Proprietary 

CT and DD 
in national 
currency 
BGN 

Yes CT and 
DD 

DMF 

no 

DMF 

Not 
relevant 
for DMF 

no 

SIPO DD 

EN 

100 

EN 

 
  
 
 
 
 
 
 
DK 

BBAN 

National 
bank code 

UDUS 
(national data 
format) 

yes, both 

DMF 

No estimates 

No (only 
relevant if 
Denmark 
joins the 
euro area) 

Yes 
(before 
the expiry 
of a 
month, 
PBS 
notifies 
debtors 
about all 
their 
direct 
debits for 
the 
following 
month, 
including 
recurrent 
direct 
debits) 

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 

LT 

IBAN 

– 

BIC 

– 

Proprietary 
format 

– 

CT, DD 

DMF 

– 

yes 

(no formal 
schemes) 

The impact of SDD are 
changes in payment habits 
and the need to update 
creditor identifier 

Some specific national 
instruments: 
– debit payment instructions 
for agricultural production 
– debit payment instructions 
according to executive 
documents 
(negligible market share) 

EN 

101 

EN 

 
  
 
 
 
BIC 

BIC 

NA 

Proprietary 
EDIFACT 

Proprietary 
(XML-based) 

ISO20022, 
SWIFT MT 

ISO 20022 

NA 

Domestic 
Swedish 
bank-formats, 
SWIFT-
formats 

CT, DD 

CT and DD 
in national 
currency 
(RON) 

Yes, both 
CT and DD 
for 
payments in 
SEK 

BMF 

DMF 

yes 

yes 

no 

NA 

Tax and social security 
payments (appr. 5 %) 

NA 

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. 

PL 

RO 

BBAN (based on 
IBAN format)/IBAN 

none 

National 
bank code 

IBAN 

IBAN 

BIC 

SE 

Bank account 
number 

Swedish, 
domestic 
bank 
clearing 
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. 

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 

Source: ECB / ESCB / National Central Banks, February 2010 

EN 

102 

EN 

 
  
 
Annex 10: Overview of national payment systems in the EU 

The  following  table  lists  national  payment  systems  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) 

Austria 

STEP.AT 

Oesterreichische 
Nationalbank 

euro 

RPS, BI-
COMP/ICBPI, 
Equens 

CZ, DE, HU, 
MT, SK 

SCT, SDD 
(via EBA 
STEP2) 

Belgium 

CEC 

National Bank of 
Belgium 

euro 

none 

none 

SCT only 

Bulgaria 

Cyprus 

Czech 
Republic 

Denmark 

BISERA 
BISERA7-EUR 
BORICA 
SEP 

Cyprus 
Cheques 
Clearing 
House 
JCC Transfer 

Bankservice AD 
Bankservice AD 
BORICA AD 
SEP BULGARIA 
AD 

Committee of 
CCCH 

JCC Ltd 
(interbank joint 
venture co) 

lev (BGN)
euro 
lev (BGN)
lev (BGN) 

euro 

euro 

no 
no 
no 
no 

no 

no 

CERTIS 

Česká národní 
banka 

koruna 
(CZK) 

none 

none 

PBS (both) 

euro 

no 

no 

Sumclearingen 
euro 
Sumclearingen 
DKK 

no 
no 
no 
no 

no 
SCT, SDD 
no 
no 

N/A for 
cheques 

N/A for 
cheques 

Open to 
Cypriot 
branches of 
foreign banks 
Open to 
Cypriot 
branches of 
foreign banks 

no / no 
intention 

no 

no 

Estonia 

ESTA 

Bank of Estonia 

Finland 

POPS 
PMJ 

individual banks 

EN 

– 

no 

– 

– 

Sweden 

Not compliant 

krone 
(DKK) 

kroon 
(EEK) 

euro 
euro 

103 

Processed 
legacy 
formats 
(credit 
transfer 
and/or 
direct 
debit 

EDIFACT 
(CT, DD) 
SWIFT MT 
(CT) 

proprietary 
CT in 
CIRI01 
format 
proprietary 
DD in 
DOM80 
format 

SWIFT MT 
(CT, DD) 

National 
electronic 
format 

yes – CT, 
DD 

EDIFACT 

UDUS 
(national 
data 
format) 

Proprietary 
formats 

urgent 
credit 
transfers 
and 
cheques, 
CT, DD, 
repetitive 
payments, 
POS and 
bank card 
settlements 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
N/A 
All 
transaction 
data 
between 
participants 
is 
exchanged 
in XML ISO 
20022 
format 

DTA (CT, 
DD 
including 
card 
collections, 
cheque 
collections )
SWIFT MT 
103+ (CT) 

Proprietary 
format 
(CT,DD) 
Cheques 

France 

CORE 

STET 

euro 

none 

SCT 

No foreign 
direct 
participant 
Indirect 
participants 
from the EU: 
BE, DE, ES, 
IT, LU, NL, 
PT, SE, UK 

Germany 

RPS 

Deutsche 
Bundesbank 

euro 

EBA STEP2, 
STEP.AT of 
OeNB, 
Iberpay 

Yes, but only 
indirect ones 

SCT, SDD 
Core and 
SDD B2B 

Greece 

DIAS 

DIAS SA 

euro 

EQUENS 

ACO 

Bank of Greece 

euro 

none 

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) 

CY, UK, FR, 
DE (direct 
participants) 
CY, FR, UK, 
DE, IE 

none 

Ireland 

IPCC 

IRECC 

Irish Paper 
Clearing 
Company Limited
Irish Retail 
Electronic 
Payments 
Clearing 
Company Limited 

euro 

none 

none 

euro 

none 

none 

Italy 

BI-COMP 

Banca d’Italia 

euro 

Equens, 
STEP.AT 

Latvia 

EKS 

Latvijas Banka 

lat (LVL), 
Euro 

– 

Lithuania 

LITAS-MMS 

Bank of Lithuania

litas (LTL)

KUBAS 

Lithuanian 
Central Credit 
Union 

litas (LTL) 

Luxembourg 

– 

– 

Systems 
LITAS-MMS 
and KUBAS 
are linked 

BE, DE, FR, 
UK, SM 
(the country 
has been 
intended as 
that whose 
code is 
embedded in 
the 
participant’s 
BIC) 

– 

no 

no 

SCT, SDD 

none 

none (only 
HUF 
payments are 
processed) 

proprietary 
('GIRO') 
format 

none, not 
SEPA 
compliant 
none, not 
SEPA 
compliant 

Proprietary 
paper CT, 
Cheques 
Proprietary 
CT, DD 

CT, DD 

SCT, SDD 
(also via 
Banca 
d’Italia’s 
intermediation 
to EBA 
STEP2) 

– 

no 

no 

SWIFT MT 
(CT) 

Proprietary 
format (CT, 
DD) 
Proprietary 
format (CT, 
DD) 

EN 

104 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Malta 

Malta Clearing 
House (MCH) 

The Central Bank 
of Malta 

euro 

no 

no 

N/A 
Only clearing 
of local 
cheques. 

Netherlands 

ZVS 
CSS 

Equens 

euro 

Poland 

ELIXIR 
EUROELIXIR 

Krajowa Izba 
Rozliczeniowa SA 

zloty (PLN)
euro 

Portugal 

SICOI 
92

SLOD

SIBS 

euro 

VocaLink 
OeNB 
DIAS 
Iberpay 
ICBPI 

EBA Clearing 
(via National 
Bank of 
Poland) 

EBA XCT, 
EBA Step-
SCT 

UK, NL, DE, 
BE, LU, SE, 
FI, EL, IT 

SCT 
SDD 

N/A 

SCT 

AT, BE, CH, 
ES, FR, EL, 
LU, LV, MT, 
UK 

SCT and 
SDD (from 
Nov 2010) 

Proprietary 
(CT and 
DD) 

N/A. 
Only 
clearing of 
local 
cheques. 

German 
CT DD 
Dutch CT 
DD 

Proprietary 
(CT, 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 

Slovenia 

SEPA IKP 
SEPA EKP 

Bankart d.o.o. 
Bankart d.o.o. 

Collection 
Centre 

Bankart d.o.o. 

Spain 

SNCE 

Iberpay (private 
company owned 
by banks) 

euro 

euro 
euro 

euro 

euro 

– 

no 
no 

no 

no 

no 

CT, DD 

SCT 
SCT 

no 

SCT / SDD 

no 
no 

Proprietary 
(CT, DD) 

Proprietary 
format 

– 

no 
yes (EBA 
STEP2-SCT)
no 

Equens, RPS
STEP2 (as 
technical 
facilitator for 
the direct 
participation 
of Banco de 
España) 

Sweden 

Bankgirot 

Dataclearingen 

Privatgirot 

Plusgirot 

Bankgirocentralen 
BGC AB 
Bankgirocentralen 
BGC AB 
Privatgirot AB 

Nordea 

United 
Kingdom 

BACS 

Bacs Company 

Cheque and 
Credit Clearing 

Cheque and 
Credit Clearing 
Company 

krona 
(SEK);euro
krona 
(SEK) 
krona 
(SEK) 
krona 
(SEK);euro 

Sterling 
(GBP) 

Sterling 
(GBP) 

Source: ECB / ESCB / National Central Banks, February 2010 

US, DK, NO, 
FI, BE, UK 

N/A 

N/A 

no 

no 

no 

no 

no 

no 

N/A 

N/A 

CT, DD 
(only SEK)
CT 

CT 

CT, DD 
(only SEK) 

Direct 
Debit/Credit 
transfer 
Credit 
transfer 

92 

SLOD ceased operations in February 2009. 

EN 

105 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
The  European  Commission  report  on  the  retail banking  sector  inquiry  of  2007  has  assessed 
the  operating  efficiency  of  existing  European  clearing  and  settlement  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 provide 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  confirmed  that  payments  processing  is  subject  to  significant 
economies of scale: there was a strong correlation between the operating cost per transaction 
on one side, and the underlying transaction 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 

106 

   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 number of banking operations per capita 

Member State 

Austria 

Belgium 

Bulgaria 

Cyprus 

Czech Republic 

Denmark 

Estonia 

Finland 

France 

Germany 

Greece 

Hungary 

Ireland 

Italy 

Latvia 

Lithuania 

Luxembourg 

Malta 

Netherlands 

Poland 

Portugal 

Romania 

Slovakia 

Slovenia 

Spain 

Sweden 

United Kingdom 

EU27 

Payment service user profile (average prices in EUR/year) 

Average 

Basic 

Passive 

Active 

Number of 
payment 
transactions 
per capita 
(yearly) 

140.47 

58.15 

26.94 

84.59 

95.37 

74.27 

50.51 

104.42 

154.11 

89.13 

53.98 

76.20 

81.85 

253.14 

115.24 

34.76 

56.64 

71.85 

45.95 

73.21 

44.89 

82.59 

73.68 

100.40 

178.21 

61.84 

103.20 

111.62 

83.95 

16.28 

9.30 

48.74 

54.81 

38.91 

46.98 

94.04 

91.21 

78.92 

45.06 

64.08 

37.17 

143.19 

107.33 

14.69 

25.64 

45.38 

28.85 

50.55 

13.19 

69.79 

55.59 

70.13 

134.06 

53.35 

28.34 

61.47 

99.54 

29.05 

17.14 

6.52 

39.65 

37.92 

25.57 

44.65 

91.35 

62.85 

14.81 

28.39 

56.40 

134.99 

63.26 

11.20 

40.37 

53.21 

30.13 

45.97 

26.01 

30.28 

44.49 

43.50 

104.72 

25.16 

94.99 

74.41 

197.46 

82.07 

42.83 

184.99 

156.52 

128.41 

93.08 

206.56 

232.15 

114.71 

111.67 

144.42 

118.39 

401.72 

192.28 

112.92 

95.99 

99.47 

55.60 

114.01 

81.97 

141.90 

125.08 

200.76 

303.57 

128.21 

111.40 

159.18 

175 

132 

6 

65 

59 

229 

96 

268 

217 

129 

11 

48 

84 

48 

52 

43 

121 

52 

193 

56 

119 

11 

45 

125 

103 

165 

225 

130 

Four consumer usage profiles are identified 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 are 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 

107 

   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 Bulgaria. The analysis showed that in absolute 
terms  Austria,  France,  Italy  and  Spain  are  among  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 

108 

   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  carried out through (an) entirely 
new  system(s)  that  will  replace  a  variety  of  presently  existing  domestic  systems  the  likely 
transaction  MIFs  and  conditionally  allowing  MIFs  for 
impact  of  prohibiting  per 
R-transactions can only be assessed on the basis of certain qualitative and quantitative impacts 
which can be expected. The present annex contains 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 payees will handle the mandate 

Under direct debit, the payer gives a mandate to the payee to request the payment of a (often 
recurring)  transaction.  However,  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.  In  turn,  this  might  call  into  question  at  least  partly  the  necessity  of  financing 
models currently in place, based on a different mandate handling and related features of direct 
debit transactions. 

– 

Under  a  transparent  charging  system,  payees  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 effective 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 collectively 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  debit  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 longer 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 payee 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 

109 

   EN 

 
In contrast, if the payer bank’s costs of providing the direct debit 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, MIFs 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 companies, 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  does  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  business  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 used and in terms of competition for companies 
and  consumers,  as  the  latter  would  be  faced  with  a  transparent  price  signal  on  the  basis  of 
which efficient choices can be made. Under a transparent 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 expectation that the elimination of MIFs would lead to lower usage 
of  direct  debit  does  not  seem  to  be  corroborated  by  the  existing  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  transaction  are  Spain  (3  cents),  France  (12  cents),  Sweden 
(10 cents), Belgium (2 cents) Portugal (23 cents) 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  infer  a  link  between  the  existence  of 
a MIF per transaction and the usage of DD on that basis. 

EN 

110 

   EN 

 
Graph: Share of direct debit transaction in the non-cash payments in the EU in 2009 

Direct Debit as % share in national payments

Source: ECB Blue Book figures 

This table shows that in countries such as Germany, Spain, Austria and the Netherlands Direct 
Debit represents more that 25 % of the non-cash payments (credit transfer, direct debit, cards, 
cheques). 

Graph: Number of direct debit transaction in the EU in 2009 by inhabitants 

EN 

111 

   EN 

 
 
Direct Debit Transactions per capita in 2009

EU Average=43

Source: ECB Blue Book figures 

The  countries  with  a  MIF  per  transaction  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 MIF 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 quantitative impacts which can be expected. 

The  countries  with  a  MIF  per  transaction  are  Spain  (3  cents),  France  (12  cents),  Sweden 
(10 cents)95,  Belgium  (2  cents)  Portugal  (23  cents)  and  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 existence 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 because it works with an authorisation request for each 
transaction (as for card schemes). 

EN 

112 

   EN 

 
                                                 
there appears to be no evidence that the existence of MIFs results 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  between  the  existence  of  (high)  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 bank 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 1st 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 

2 cents 

3 cents 

10 cents 

12 cents 

23 cents 

25 cents 

5 

25 

3 

22 

6 

27 

24 

53 

26 

51 

21 

10 

Belgium 

Spain 

Sweden 

France 

Portugal 

Italy 

EN 

113 

   EN 

 
 
 
4. 

SEPA  DIRECT  DEBIT:  RELATIONSHIP  BETWEEN  MIFS  CHARGED  FOR  DIRECT 
DEBIT AND CONSUMER FEES CHARGED FOR DIRECT DEBIT 

There  is  no  clear  evidence  that  consumers  are  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 figures related to the costs charged to consumers 
for the use of direct debit and to the costs charged to consumers for rejection 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  debit  (in  Spain),  for  installing  a  direct  debit 
instruction (in France) and in case of a reject of a direct debit (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 level) of a MIF per transaction and consumers’ 
fees for using direct debit on that basis. 

4.1. 

Study carried out on request of DG Health and Consumers regarding prices of 
current accounts provided to consumers 

http://ec.europa.eu/consumers/strategy/docs/prices_current_accounts_report_en.pdf 

Table: Overview of fees for the rejection of direct debits for consumers in Europe 

Country 

Belgium 

France 

Germany 

Netherlands 

Ireland 

Spain 

United Kingdom 

Costs for DD in general 
% / EUR 

Costs for rejection of a DD 
% / EUR 

0.0 % 

0.0 % 

0.0 % 

0.0 % 

0.0 % 

0.267 % 

0.0 % 

0.00 

0.00 

0.00 

0.00 

0.10 

1.05 

0.00 

0.0 % 

0.0 % 

0.0% 

0.0 % 

0.0 % 

0.425 % 

0.0 % 

4.68 

9.94 

0.00 

0.00 

9.96 

1.54 

22.4897 

Note: The average is based on a non-weighted average of the possible amounts or percentages 
for each country. In case of a variable price (like in Spain), we have chosen the lowest price. 

96 

97 

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. 
Exchange rate GBP 1.00 = EUR 1.07. 

EN 

114 

   EN 

 
                                                 
4.2. 

Informal survey by Commission services 

The  Commission  services  have  in  the  meantime  also  carried  out  an  informal  survey 
identifying, through internet research and phone calls, the fees applicable to ordinary private 
customers for a number of major banks in countries with a relatively high number of direct 
debit transactions, that has delivered the following results: 

Spain 

– 

– 

– 

– 

– 

– 

Italy 

– 

– 

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 
transactions.  For  R-transactions, 
a percentage  fee  is  applicable  from  a  minimum  amount  that  varies  from  EUR 0  to 
EUR 6. 

the  rejected  DD 

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-transaction  is  0.5 %  from  the  minimum  amount  of  the 
transaction that on average is EUR 2.21. 

There are no fees for setting up, modification 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 

– 

– 

– 

France 

– 

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 copy 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. 

Clients do not pay fees per direct debit transaction 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 bank account package. In this case the client 
can pay a bank account annual fees but no for the DD transactions. 

EN 

115 

   EN 

 
– 

– 

Nevertheless  the  clients  pay  a  high  fee  for  R-transactions.  If  the  direct  debit  was 
rejected due to a lack of funds, the account holder has to pay a fee 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 order. Compared with 
the  2007  figures  for  which  the  average  was  close  to  0,  the  average  for  setting  up 
a direct  debit  is  now  EUR 4.63  for  financial  institutions  (e.g.  consumer  credit)  and 
EUR 2.52 for 'normal' direct debits. 

United Kingdom 

– 

– 

Ireland 

– 

– 

– 

There  are  no  fees  per  DD  transaction  charged  in  UK.  Neither  for  setting  up, 
modifying nor closing a DD order. 

The average fee for an R-transaction is GBP 17.2. 

There are fees per DD transaction and the average fee is EUR 0.0975. 

There are no fees charged for the modification or the closure of a DD order. 

Regarding R-transaction, clients must pay in average a EUR 9.76 fee. 

Germany 

No fees are of application to payers in Germany. It has to be underlined however that even if 
under German case-law, the payer bank cannot charge the payer for a R-transaction, the payer 
–  if  responsible  for  the  R-transaction  –  would  have  to  face  the  costs  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 payee, 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 for the rejection of a direct 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 charged in Portugal. Neither for setting up, for 
modifying or for closing a DD order. 

Regarding  R-transactions,  two  banks  apply  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 

116 

   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 footnotes, are accrued of Stamp Duty (currently 
4 %). 

98 

99 

100 

101 

102 

Caixa Geral de Depósitos charges the following unauthorized overdraft fees: no fee 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. 
Millenniumbcp charges a EUR 7.50 unauthorized overdraft fee. 
Banco Espírito Santo charges a EUR 10 unauthorized overdraft fee. 
BPI charges an unauthorized overdraft fee varying between EUR 5 and EUR 20. 
Santander Totta charges a EUR 9.75 unauthorized overdraft fee. 

EN 

117 

   EN 

 
                                                 
Annex 12: Cost-benefit analysis – scope 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  transaction  volume,  and 
99 %  of  the  corresponding  value.  These  countries  are  Austria,  Belgium,  Germany,  Spain, 
Finland, France, Greece, Ireland, Italy, Luxembourg, 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 defines the following groups: consumers (individuals over fifteen 
years old), SMEs (companies with less than 250 employees), merchants (companies that trade 
goods  or  services  and  have  more  than  250  employees),  corporates  (companies  that  are 
producing goods or services and have more than 250 employees); public entities (irrespective 
of size), and banks. 

Only  the  direct  effects  of  SEPA  have  been  included  (that  is,  prices,  operational  costs,  and 
investments).  All  indirect  effects  (such  as  mobile  payments  and  replacement  of  cash)  are 
excluded, as are non-payments-related effects (such as increased cross selling, lower interest 
rates, and increased cross-border trade). 

E-invoicing has been addressed as an additional related item 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  framework  (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  essentially  the  setting  of  a  migration  end-date 
policy option). Each of these four 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 without SEPA is used as the baseline for comparing 
the effects  of SEPA. To evaluate the  quantitative effects  on stakeholders over  time, the 'net 
SEPA effect' is defined as the logical sum of the necessary investments, change in operational 
costs, and change in bank fees. 

103 

See explanation in footnote 9 of the impact assessment for differences between this document and the 
CapGemini study. 

EN 

118 

   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, databases, news reports, independent studies, 
stakeholder and other interest group publications. A complete list of sources used is 
detailed in the study. 

EN 

119 

   EN 

 
Annex 13: SEPA end-date objectives 

Table 1: The link between the identified problems and objectives 

Problems 

Objectives 

Untapped economies of scale 

General 
('Europe 2020' level) 

Restriction of competition 

Hindering of innovation 

Continuation of fragmented 
payments market 

Specific 

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 

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 

To establish a pan-European 
platform from which innovative and 
value-adding payment services and 
products can be launched 

To achieve full operational 
integration of the payments market 
in Europe for credit transfers and 
direct debits 

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 

120 

   EN 

 
 
Annex 14: Benefits of an end-date and rapid migration to SEPA 

Increased standardisation leading to complexity reduction and economies of scale 

With  full  SEPA  migration,  multi-national  businesses  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  would  be  able  to  rationalise  their  banking  relationships. 
A survey  undertaken  by  payment  processor  VocaLink  among  almost  250  corporates104 
showed  that  this  is  perceived  as  a  key  benefit.  51 %  of  respondents  named  single-bank 
relationships  among  the  top  three  desired  features  of  efficient  payment  services.  Payment 
format  simplification  is  another  area  of  great  potential  benefits.  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  based.  A  complete  SEPA  would  enable  enterprises  to  centralise 
and  automate 
in  Shared  Service  Centres. 
Straight-through-processing of payment transactions and automatic  reconciliation with other 
processes  of  the  financial  supply  chain  would  also  be  facilitated.  This  would  lead  to  better 
treasury  management,  reduced  banking  fees  and  improved  liquidity.  The  recent  financial 
crisis is an eloquent witness to the importance of liquidity management. 

their  payment  activities,  for  example 

Furthermore,  SEPA  should  help  SMEs  not  having  the  same  cash  management  resources  as 
large  corporates  to  operate  across  borders.  Pan-European  standardisation  would  make  the 
processing of payments simpler and cross-border 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 2009105. Of the more 
than 250 businesses responding to this question (85 % of which were SMEs), more than 50 % 
believed that SEPA would drive down payment processing cost while less than 10 % thought 
that  cost  would  actually  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 standardised banking software as well as simpler 
and therefore more affordable integrated accounting and reporting applications. 

Similarly, Public Administrations as heavy users of payment instruments should benefit from 
SEPA  in  that  it  simplifies  their  payment  processes  and  allows  for  more  efficient 
straight-through-processing  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  solutions  and  SEPA  as  an  underlying  payment 
platform would also facilitate the automatic reconciliation of invoices and payments. 

104 
105 

http://www.gtnews.com/feature/338.cfm 
Results of the 2009 EBTP survey on payments, 
http://ec.europa.eu/yourvoice/ebtp/consultations/sepa3/statistics_en.pdf. 

EN 

121 

   EN 

 
                                                 
Similarly  for  consumers,  who  are  becoming  increasingly  mobile  in  professional  and  private 
terms  standardised  cross-border  payments  would  eliminate  the  need  for  several  payment 
accounts  in  different  countries.  This  would  be  of  particular  importance  for  the  11 million 
EU27  citizens  who  live  permanently  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  secondary  residence,  and  internationally  mobile 
students, whose number will continuously increase 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 
landscape107.  This  shows  the  further  consolidation  potential  amongst  payment  processors  to 
achieve  efficient  size  while  banks  could  choose  to  outsource  payment  services  to  remain 
competitive – all leading to a lower cost base and hence potentially more competitive pricing 
to  customers.  The  potential  social  dimension  of  such  consolidation  efforts  on  the  payment 
supply side is not considered to be significant. 

Increased competition in an open and more transparent playing field 

For PSPs, an integrated payments market would lower entry barriers across borders, thereby 
attracting new market players and intensifying competition. 

Furthermore,  standardised  Pan-European  payment  instruments  under  SEPA  would  allow 
consumers, businesses, and public administrations to more easily compare payment products 
proposed by different PSPs and thus allow users to benefit from the more intense competition 
in  payments  markets.  The  magnitude  of  the  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 users if prices for payment services were to converge downwards 
through the integration of the EU payment market. 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 
107 

http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-SF-09-094/EN/KS-SF-09-094-EN.PDF 
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/AboutUs/Press%20room/2010pressreleases/2007archive/Pages/VocaandL
INKmergeandlaunchpan-Europeanclearingservice.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 

122 

   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  based  on  international  standards.  Similarly, 
SEPA  would  improve  straight  through  processing  of  electronic  invoices  with  respect  to 
payment  and  reconciliation  processes.  It  would  thereby  accelerate  the  replacement  of  paper 
invoices  by  more  efficient  and  environmentally  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 services at European level. 

EN 

123 

   EN 

 
Annex 14a: Benefits of Prohibiting 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  enforcement  is  relied  upon.  In  the  light  of  the  various  calls  for 
guidance from the Parliament, the ECOFIN Council and the relevant provisions in Regulation 
924/2009 this option would however not seem to provide sufficient certainty creating a level 
playing field between banks across the SEPA. 

It is clear, indeed, that such a scenario would represent the lowest level of legal certainty and 
predictability.  In  this  case  only  the  draft  working  documents  published  earlier  by  the 
Commission,  the  Joint  Statement  of  the  ECB  and  of  the  Commission  of  2009  and  the 
transitional provisions under Regulation 924/2009 would offer guidance to stakeholders. The 
result  may  be  a  series  of  enforcement  actions  by  NCAs  and  less  legal  certainty  and 
predictability  for  market  players  and  consumers.  The  impact  of  such  an  option  would  risk 
substantially delaying – or decreasing – the benefits that could be achieved by providing more 
comprehensive clarity through a binding Community instrument on SEPA direct debit MIFs 
(such as transparency, more competition, more 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 instrument 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 service providers would in first instance remain 
free  to  establish  their  business  models  and  assess  their  compliance  with  competition  rules 
individually.  Subject  to  their  assessment  and  the  consecutive  measures  they  take,  national 
competition  authorities  and  DG  Competition  would  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 crucial for reaping the full benefits of SEPA. 

– 

Delaying the full benefits of SEPA 

The  process  described  in  the  foregoing  paragraph  could  be  lengthy,  and  there  would  be  an 
increased  risk  of  divergence  and  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  the  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 

124 

   EN 

 
A  certain  level  of  uncertainty  with  respect  to  the  compatibility  of  certain  industry 
arrangements  with  public  regulation  and,  more  specifically,  competition  rules  is  a  regularly 
occurring  and  often  inevitable  element  of  business  risk.  However,  in  view  of  the  network 
effects of comprehensive European systems 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 companies 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, limited transparency and choice for users 

Due  to  the  delays  and  uncertainties  associated  with  this  option,  consumers  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-based  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 playing field between market players 

This solution would also create legal uncertainty as regards the financing regime applying for 
cross  border  SDD  under  the  general  reachability  clause  in  Regulation  924/2009,  which 
obliges banks offering direct debit at national level to also offer SEPA DD. This could result 
in  the  cross  border  functionalities  of  SEPA  DD  being  curtailed,  whilst  SEPA  wide 
reachability was intended as an important contributing factor in realising the full potential of 
SEPA for consumers and companies. 

Therefore the choice of adopting a non-binding Community instrument 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 migration 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 providing urgent and unequivocal guidance on 
long-term  business  models.  A  binding  Community  instrument  is  a  better  choice  to  achieve 
these goals. 

Moreover, as is also true for the migration, and as set out above, substantial benefits can be 
achieved with setting clear rules, and such benefits can diminish if guidance is delayed and 
there is no clarity in the market as a result. 

EN 

125 

   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  clarification  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  benefits  of  SEPA  will  only 
materialise once the transition to pan-European payment instruments is completed at domestic 
level  in  all  EU  Member States  under  uniform  conditions.  Potentially  differing  national 
implementations run the risk of perpetuating the current payment market fragmentation. Also, 
economies of scale will not materialise in the absence 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 fragmented level playing field than a binding community 
instrument.  It  is  therefore  recommended  to  use  the  legal  instrument  of  the  regulation  to  be 
proposed for providing clarity on MIFs 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  enforcement  only  or  a  non-binding 
guidance  will  put  significantly  less  pressure  on  payment  service  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  regarding  business  models  and  the  charging  structure 
resulting from these. In a framework of persisting fragmentation of markets, 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.  The  benefits  of  SEPA  for  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  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 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  regards  the  financing  regime 

EN 

126 

   EN 

 
applying), which could result in the cross border functionalities of SEPA 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 consumers products or services’ markets, ceteris paribus). 

Under  the  binding  regulation  option,  consumers  will  also  face  more  direct  and  transparent 
price  signals,  due  to  the  certainty  on  the  business  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 recuperate the costs they incur and make a reasonable margin on the 
services they provide, including in the Member States where no MIFs are currently in place. It 
can therefore not be excluded that when faced with the disappearance of per transaction MIFs 
as a source of revenue, (some) payers’ banks may start charging consumers directly. 

The findings based on current direct debit transactions in the EU suggest 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  place  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 trigger 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 could pass on the benefits they reap from SEPA 
DD to payers as they can incentivise the use of SEPA DD through rebates and thereby reduce 
the effective consumer charges. 

– 

(Banks) 

It is to be expected that under an 'anti-trust enforcement only' – or a 'competition guidance' 
option, banks in countries where MIFs are in place will maintain their 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 applying), which could result in the cross border functionalities 
of  SEPA  DD  being  limited.  As  a  result,  the  competitive  pressure  from  consumers  and 
companies as explained above would be more limited, which allows the less efficient banks to 
maintain un-transparent and high pricing structures, to the detriment of more efficient market 
actors. 

Under a binding regulation, the most efficient banks will be in a position to offer competitive 
offers  to  companies  and  consumers,  resulting  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 

127 

   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 other 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 and 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 Impact Assessment, this 
revenue  reduction  is  primarily  in  relative  terms.  In  absolute  terms,  bank  profitability  for 
payments is still estimated to rise from EUR 10 billion in 2006 to EUR 21 billion in 2012. 

Table 1: Costs and benefits to demand side 

Baseline scenario 
slow migration 
(EUR billion) 

Setting SEPA end-date 
scenario rapid migration 
(EUR billion) 

Demand 

Investment cost 

Operational cost savings 

Net SEPA benefit before price effect 

Competition impact on payment fees 

Net SEPA benefit 

Source: CapGemini study 

Table 2: Costs and benefits to supply side 

Baseline scenario 
slow migration 
(EUR billion) 

Supply 

Investment costs 

Operational cost savings 

Net SEPA benefit before price effect 

Competition impact on payment fees 

Net SEPA benefit 

Source: CapGemini study 

-10 

-25 

-35 

+8 

-27 

-7 

0 

-7 

-8 

-15 

-17 

+101 

+84 

+91 

+175 

Setting SEPA end-date 
scenario rapid migration 
(EUR billion) 

-10 

+49 

+39 

-91 

-52 

Cost-benefit analysis at Member State level  

The two graphs and the table below present the economic impact of setting an end-date at the 
Member State level. On average, in the period analysed 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  benefits  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 value of between 0.12–0.14 % of their GDP. 

EN 

128 

   EN 

 
One of the more prominent results of the cost-benefit analysis is the fact that the supply side 
of the market (the banks) is expected to lose part of its potential payment profits when a full 
SEPA migration occurs, in comparison to the baseline 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 assumption 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  important  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 end-date at the EU level. 

EN 

129 

   EN 

 
Graph 1: Full SEPA migration benefits at the Member State level as a % of the national GDP 
(2006) 

0,17%

0,17%

0,16%

0,16%

0,16%

0,15%

0,15%

0,14%

0,14%

0,14%

0,14%

0,14%

0,14%

0,12%

0,12%

0,12%

0,08%

-0,05%

-0,05%

-0,05%

-0,05%

-0,05%

-0,05%

-0,05%

-0,05%

-0,04%

-0,04%

-0,07%

-0,07%

-0,05%

-0,05%

-0,05%

-0,04%

-0,08%

DE

LU

BE

NL

UK

FI

EU

FR

IE

PT

PL

ES

IT

SE

AT

SL

GR

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 

0,25%

0,26%

0,25%

0,18%

0,20%

0,16%

0,13%

0,15%

0,21%

0,20%

0,18%

0,17%

0,17%

0,16%

0,33%

0,32%

0,03%

0,00%

0,00%

-0,01%

-0,03%

-0,10%

-0,06%

-0,06%

-0,05%

-0,03%

-0,04%

-0,04%

-0,12%

-0,12%

0,10%

-0,01%

DE

LU

BE

NL

UK

FI

EU

FR

-0,19%
PT

IE

PL

ES

IT

SE

-0,20%
SL

AT

GR

Net SEPA Effect Supply side

Net SEPA effect Demand side

Source: CapGemini study 

EN 

130 

   EN 

 
 
 
Table 3: Full SEPA migration with an end-date: impact at the Member State level 

Member State 

Germany 

United Kingdom 

France 

Italy 

Spain 

Netherlands 

Belgium 

Poland 

Sweden 

Austria 

Ireland 

Finland  

Portugal 

Greece 

Luxemburg 

Slovenia 

EU16 

Net effect supply side 
(EUR billion) 

Net effect demand side 
(EUR billion) 

Net effect country 
(EUR billion) 

-1.847 

-13.791 

-16.842 

-3.310 

-10.238 

+1.073 

+0.029 

-1.139 

-1.025 

-0.779 

-0.982 

+0.023 

-2.263 

-0.236 

-0.090 

-0.483 

-51.900 

30.641 

35.362 

36.067 

18.507 

22.030 

5.382 

3.902 

4.346 

3.907 

3.215 

3.171 

1.908 

3.880 

1.713 

0.550 

0.780 

28.794 

21.571 

19.226 

15.197 

11.791 

6.455 

3.931 

3.207 

2.882 

2.436 

2.190 

1.932 

1.617 

1.477 

0.460 

0.296 

175.362 

123.462 

Source: CapGemini study 

EN 

131 

   EN 

 
Annex 16: Essential requirements for pan-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 

Full reachability of PSPs 

Mandatory use of IBAN (and 
BIC where necessary) at a 
domestic level 

Ensures that every payment account in 
the EU can be reached through pan-
European payments 

IBAN and BIC are the only international 
standards for bank account numbers and 
bank identification which are currently in 
use throughout the EU 

none 

none 

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 

Pan-European payment 
instruments must allow for 
straight-through processing 
in all stages 

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 

Maximises possible benefits of efficient 
and fully automated electronic payment 
processing 

Erroneous transactions, such as 
rejects, returns, or recalls could be 
out-of-scope for full STP 

EN 

132 

   EN