The EU's draft proposal for standardising cross-border payment transfers has received a cautious response from industry bodies, with the European Savings Banks Group stating the new framework "needs improvement".
The EU Commission says the proposals could save the EU economy EUR50-100 billion per year by bringing down legal barriers to the creation of a single payments area (Sepa) with the aim of making cross-border payments - by credit card, debit card, electronic bank transfer, direct debit or any other means - as easy, cheap and secure as domestic money transfers.
But the ESBG says the draft directive needs to be improved if the intended objective of turning the EU into an efficient payment area is to be realised.
"Our members had expected the directive to remove the uncertainties affecting the banking industry's commitment to build Sepa," says Chris De Noose, chairman of the ESBG management committee. "The current proposal unfortunately does not really meet these expectations."
The ESBG adds that the directive misses an important opportunity to discourage the use of cash - by piling up obligations and costs on providers of e-payment services, the Commission reinforces the role of cash – by far the most expensive means of payment.
The framework also risks "weakening public confidence in electronic payments", says the ESBG, as 'payment institutions' will be able to offer transfer services without any protection of consumer funds in case of an institution's default.
The European Payments Council, the association responsible for the creation of Sepa, says the provision of a harmonised legal environment for payments is an essential building block for the creation of Sepa.
Commenting on the draft proposal, Gerard Hartsink, EPC chair, says: "We will closely review the detailed provisions of the proposal to assess whether the new draft directive will meet industry’s expectations."
Meanwhile the European Banking Federation (FBE), which represents 4500 financial firms from 27 countries, underlined the importance of striking the right balance between consumer protection requirements and the associated costs, in order to avoid any adverse effect.
The association says it will closely review the provisions, in order to assess whether they will meet the payment needs of customers.