A Step Forward For A Single European Payments Area

5.40.52pm UTC (GMT +0000) Tue 12th Sep 2006

Sharon at an ATM

A Single European Payments Area (SEPA) took a step forward today as the Economic and Monetary Affairs Committee voted through the Payment Services Directive (PSD). The directive sets out clear rules giving consumers and businesses alike greater levels of protection and guarantees on all payments made within the UK and cross border in the EU. It will cover all payments (including direct debits) whether made from a bank, a corner shop money remitter, a credit card or your mobile phone.

Sharon Bowles, Liberal Democrat Economic Affairs Spokesperson and shadow rapporteur for the dossier, said "This is a welcome advancement in the development of SEPA. As more and more trade and business is conducted cross border in the EU a single European payments area will give greater certainty, more competition and lower prices.

In the run up to the vote in the economics committee one area of particular contention had revolved around capital requirements for payment service providers. Sharon Bowles has expressed some reservations about the result of the vote "Keeping the level of capital requirement low is vital if new payment systems and medium sized remitters are not to be squeezed out of the market by the big banks. Such payment service providers, particularly in smaller economies will simply find it too difficult to compete. I am disappointed that more was not done. Setting the levels too high can stifle competition as seen from the e-money directive which as a consequence is now under review.

"However, there is much to pleased about. I particularly welcome the inclusion of 'ring fencing' of customers' money so that it is safe in the event of insolvency. Of course this is still a work-in-progress and hopefully we can rectify the issue of excessive capital requirements at the plenary vote."

It is hoped that the directive will be agreed in a single reading and discussions with the Finnish Presidency will continue up to the plenary vote currently scheduled for October. Sharon Bowles said "A first reading agreement is necessary so payment service providers can start making preparations for implementation in 2010."

Ends