EU to Allow Debit Interchange For Now

With European banks reeling from the credit crisis and other economic woes along with their US counterparts, the European Commission said last week it will relax its position on the issue of interchange bank fees and allow them on a "justified and temporary basis" to smooth the launch the EU's Single Europe Payments cross-border direct debit scheme scheduled to take effect in November 2009.

Despite insisting a year ago that so-called "Multilateral Interchange Fees" are a violation of EU competition regulations, the Commission announced that it would now allow them, although only on a limited basis.

"It may prove necessary to have a multilateral interchange fee for cross-border SEPA direct debits in the very initial stage," EU Competition Commissioner Neelie Kroes said in a Sept. 4 statement. "But we will have to be convinced that these fees will be strictly limited in time and objectively justified--that they are, for example, not aimed at providing additional profits to banks."

Acknowledging that the launch of the SEPA bank debit plan for November of 2009 was in danger, European Central Bank Executive Board Member Gertrude Tumpel-Gugerell said that "a European solution has to be found by the banks which is also agreeable to the competition authorities." Tumpel-Gugerell continued," In this respect the idea of maintaining at national level the same interchange fee for national legacy and SEPA schemes during a limited transitional phase should facilitate the rolling out of the SEPA direct debit scheme."

"This would also ensure the necessary level playing-field in the national context for the SEPA direct debit scheme and the national legacy direct debit schemes," Tumpel-Gugerell added. " ... It would not be acceptable that bankers are not able to deliver the SEPA direct debits by November 2009."