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The deal is significant because it clears the way for an ambitious scheme known as the Single Euro Payment Area, or Sepa, to become fully operational by 2010, as originally intended. Bankers had warned repeatedly that the dispute was threatening to delay or even derail one of the EU’s prestige projects.
The European Commission has long argued in favour of ending the current patchwork of national payment regimes, and usher in a new era of speedy, cheap and efficient cross-border payments. Brussels sees the payments initiative as a key plank in its drive to create a pan-European market for financial services, and allow European citizens to conduct cross-border business without national barriers.
Wednesday’s provisional deal means that the proposed EU payment services directive can now be formally adopted by the European Parliament and member states in the coming weeks. The agreement had been held up by a lingering dispute over whether payment providers other than banks should be bound by the same, or similar, capital adequacy rules as normal lenders.
Britain in particular had backed a lighter regime for non-traditional payment providers, arguing that the rigid system currently applied to banks would prevent new payment groups from emerging in the first place. According to several diplomats and officials, the proposal agreed Wednesday’s agreement leaves it largely to member states to decide what capital adequacy rules should be applied.
The European Banking Federation, which represents private sector banks, welcomed the deal. “Customers can now look forward to enjoying more transparency, more competition and more choice by the end of 2009,” said Ruth Wandhöfer, a payment services expert at the EBF.
The draft directive says that from 2012 onwards all cross-border payments will have to be concluded within one day after the order is made. Until that date, payments must be concluded no later than three days after the order is made.
The directive also sets common rules for liability in cases where payments do not arrive or other mishaps. It will apply to all EU currencies and in all 27 markets.