The European Commission and the European Central Bank (ECB) have issued a joint statement providing further clarification so as to encourage the European Payments Council (EPC) to launch the SEPA Direct Debit scheme (SDD) on November 1st 2009. In particular, the Commission makes clear that a general per transaction multilateral interchange fee (MIF) for direct debit transactions does not seem justified for efficiency reasons and therefore does not appear compatible with EU antitrust rules.

The European Commission considers that a general per transaction multilateral interchange fee (MIF) does not seem necessary for direct debit transactions. Such MIFs paid by creditor banks to debtor banks for direct debits cannot, in general, be justified for efficiency reasons, and it appears unlikely that they would be compatible with EU antitrust rules, either for national or for cross-border transactions. After November 1st 2012 they should therefore have been replaced by other mechanisms, at the national and at the cross border level, for both SEPA Direct Debits and for national 'legacy' Direct Debits.

The Commission and the European Central Bank (ECB) also noted in their statement that the forthcoming approval of the revised Regulation on cross-border payments will provide a three-year transitional regime for the SEPA Direct Debit scheme (SDD) business model. The clarifications provided by both institutions are aimed at the long-term, that is after November 1st 2012 and are based on earlier statements issued by the EC and the ECB.

Both Competition Commissioner and Internal Market Commissioner, highlighted the commitment from the Commission so as to ensure that benefits form SEPA are passed on to consumers and companies both on the cross border and domestic levels. They recognise the need to ensure a fair share of benefits resulting from the creation of such scheme, as those benefits “are tremendous; with this hurdle crossed, banks and creditor companies can start preparing for migration”.

“The launch of SEPA Direct Debit is vital for the success of SEPA”, stated Gertrude Tumpel-Gugerell, member of the ECB´s Executive Board, adding that the ECB “acknowledges that, after having provided clarity on the applicability of multilateral interchange fees during an interim period, this further clarifying position of the Commission now provides a clear scenario also for the long term."

SEPA Direct Debit scheme

Direct debit payments are typically used by consumers to pay for recurring payments, such as rent, mortgage, energy bills, telephone bills and magazine subscriptions. Under the SEPA Direct Debit scheme, bank customers would, for the first time, be able to arrange to pay their bills by direct debit to and from bank accounts in any of the 31 European countries participating in SEPA.

The direct debit market is a two-sided market in which creditors have a clear interest to attract debtors to engage in a direct debit relationship. Creditor companies have effective means to encourage customers directly to make use of direct debit, in particular by granting rebates to them.

A multilateral interchange fee for error transactions could nevertheless be envisaged as it may create an incentive to avoid such error transactions and, therefore, encourages the efficient functioning of the SDD scheme. The Commission and the ECB stand open to discussions on this.