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Brussels, 26 February 2008

EU rules on cross-border euro payments should be extended, says Commission report

EU rules on charges for cross-border euro payments should be modified to improve consumer protection and include direct debit payments, according to a new European Commission report. Revision of these rules should also alleviate the burden of statistical reporting placed on banks and reduce the processing costs of cross-border bank transfers.

Internal Market and Services Commissioner Charlie McCreevy said: "The Regulation on cross-border euro payments has already brought real benefits to consumers. We have seen price reductions in many countries. We now want to build on this by improving consumer protection and by extending the scope of the Regulation to direct debits. We also want financial institutions to provide consumers with clear and transparent information on their payment services which can be easily compared between banks and countries."

About the report

The report analyses how Regulation 2560/2001 on cross-border payments in euro is applied in the Member States and examines the practical problems encountered in its implementation. It concludes that a number of proposals should be made in order to address the identified issues, better reflect developments in retail financial markets and align the Regulation with the recently adopted Payment Services Directive (see IP/07/1914). All proposals would be subject to a prior impact assessment.

The document confirms that the Regulation has achieved its two main objectives. First, it has triggered an important decrease in fees for cross-border payments, in particular for credit transfers. Second, it has encouraged the financial services industry, in the absence of an efficient and integrated European payment services infrastructure, to undertake the necessary efforts to turn the concept of a 'domestic payment area' for non-cash euro payments into reality, creating the Single Euro Payments Area (SEPA).

The report concludes that all Member States should set up competent authorities and adequate out-of court redress procedures to better protect consumer rights in cases of disputes between a bank and a customer, or when an erroneous application of the Regulation is detected. Furthermore, it concludes that the scope of Regulation should be extended to include direct debits, a payment instrument which was previously not available on a cross-border basis. Revision and a subsequent phasing-out of the balance of payments reporting obligations imposed on banks in some Member States are also envisaged. These obligations hamper the development of SEPA, as they differ between countries, prevent fully automated processing of cross-border payments and ultimately lead to higher costs for banks and consumers.

A legislative proposal to amend the Regulation could be expected in autumn 2008, on the basis of appropriate impact assessment and consultation.

About Regulation 2560/2001 on cross-border euro payments

Even after the full introduction of the euro, cross-border euro payments cost considerably more than an equivalent domestic payment. Payment systems were organised by banks nationally and the infrastructures for cross-border payments were inefficient and slow.

In order to improve this situation, the EU introduced rules (in the form of Regulation 2560/2001) giving consumers a guarantee that when they make a payment in euro to an account in another Member State, it will cost the same as it would to make a payment within their own Member State. Consumers need only provide the International Bank Account Number (IBAN) and Bank Identifier Code (BIC) of the person they are transferring the money to. As of 1 January 2006, the Regulation applies to payments of up to EUR 50 000.

The Regulation covers payment card transactions and withdrawals from cash machines since 1 July 2002 (see IP/02/941) and credit transfers since 1 July 2003 (see IP/03/901).

The report is available at:

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