Annexes to SEC(2010)1583 - SUMMARY OF THE IMPACT ASSESSMENT Accompanying document to the Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL establishing technical requirements for credit transfers and direct debits in euros - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | SEC(2010)1583 - SUMMARY OF THE IMPACT ASSESSMENT Accompanying document to the Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF ... |
|---|---|
| document | SEC(2010)1583  |
| date | December 16, 2010 |
4.Objectives
In accordance with the identified problems, the following policy objectives are identified:
General:
- To increase the efficiency and competitiveness of the EU payments market by realising economies of scale and operational synergies on both the supply and demand side.
- To create an open and level playing field for competition in the payment service market at European level and facilitate downward price convergence for payment services in Europe.
- To establish a pan-European platform from which innovative and value-adding payment services and products can be launched.
Specific:
- To achieve full operational integration of the payments market in Europe for credit transfers and direct debits.
- To eliminate excess complexity and the duplicate cost resulting from the need to maintain multiple payment platforms on the supply and demand side.
Operational:
- To create transparency and market certainty regarding SEPA completion for credit transfers and direct debits and the phase-out of corresponding national legacy payment instruments.
5.Policy options
Three main scenarios can be envisioned:
No intervention – baseline scenario. Under this scenario, SEPA migration would be left to market forces.
Give new impetus to SEPA migration by additional incentives. In this scenario the SEPA migration process could be accelerated and reinforced by a series of measures at the level of Member States.
Setting a SEPA migration end-date. Under this scenario, an end date for SEPA migration would be set by a Regulation. National legacy payment instruments would need to be phased‑out and replaced by pan-European instruments.
6.Analysis of impacts and comparison of options
6.1.Impact of additional incentives
Slow SEPA migration process could be in principle boosted by a series of measures undertaken by or aimed at different SEPA stakeholders at the national level. On the supply side a full scale communication and awareness-raising campaign, addressed to the payment service users would be useful. On the demand side these measures could be complemented by investment support for companies, for example relaxed amortisation rules, write-off of the cost of personnel training or even tax rebates. In addition, public authorities could play an avant-garde role in the migration processes and actively promote SEPA payment instruments. Some forms of coordination at the EU level could be also contemplated.
A major advantage of such an approach would be the fact that it does not require lengthy legislation procedures and remains quite flexible. A fundamental weakness of such approach is that any set of non-binding measures aimed at simply accelerating SEPA migration will not resolve the root problem, as discussed in 2.1. Besides, such measures may be simply too costly in the current economic climate and their added value difficult to measure in terms of increased welfare.
The option of additional incentives is therefore discarded.
6.2.Impact of setting a SEPA migration end-date
A study by CapGemini estimates that the benefits of a swift migration from legacy payment instruments to SEPA instruments could reach EUR 123 billion over a six-year period. According to the study, the estimated total benefit results from an even higher gain on the demand side (EUR 175 billion) offset by a loss on the supply side (EUR 52 billion). Benefits on the demand side are driven by two factors:
- operational cost savings due to optimisation of payment operations;
- a positive effect from the reduction of bank fees resulting from more intense competition.
The study predicts that the benefits on the demand side would be spread fairly evenly across all stakeholders, i.e. consumers, businesses and the public service. These benefits are just the direct effects of migrating to SEPA rapidly.
In more qualitative terms, an end-date for SEPA credit transfers and direct debits accelerates benefits for the stakeholders in the following areas:
Increased standardisation leading to complexity reduction and economies of scale. With full SEPA migration, businesses would be able to centralise their euro cash management and simplify/automate their payment procedures. For consumers, who are becoming increasingly mobile standardised cross-border payments would eliminate the need for several bank accounts in different countries.
Increased competition in an open and more transparent playing field. For PSPs, an integrated payments market would lower entry barriers across borders, thereby attracting new market players and intensifying competition. Furthermore, standardised payment instruments would allow consumers, businesses, and public administrations to more easily compare payment products and thus allow users to benefit from more intense competition and better prices.
Opportunities for pan-European innovation. Through common standards and the creation of a European level playing field, a completed migration to SEPA would foster payments modernisation and the development of new services such as mobile and online payments, or e-Invoicing, on a pan-European basis.
6.3.Comparison of baseline scenario versus setting an end-date
6.3.1.Comparison in terms of achieving the specific objectives
| Objective/Option | Effectiveness | Efficiency | |
| Integration of the European payments market for credit transfers and direct debits | Elimination of duplicate cost and excess complexity of payment systems | ||
| Base scenario 'do nothing' | 0 | 0 | 0 |
| Setting an end-date | +++ | ++ | ++ |
Contribution to objectives:
+++ (Strong); ++ (Moderate); + (Weak) positive contribution
– – – (Strong); – – (Moderate); – (Weak) negative contribution; 0 neutral contribution
6.3.2.Comparison in terms of stakeholder impact
| Stakeholder | Benefits | Costs | Overall effect |
| Businesses | Improved cash/treasury management Greater liquidity Reduced banking fees and internal payments admin costs Straight-through-processing Development of added value services | Migration effort – new or upgraded payment systems and processes Staff training | +++ |
| Public Administrations | Reduced banking fees and admin costs Straight-through-processing Development of added value services Increases the benefits of public tendering of payment services, since offers could be better compared and inefficiencies caused by national payment formats should disappear. | Migration effort – new or upgraded payment systems and processes Staff training | ++ |
| Consumers | Reduced banking fees/wider range of services due to increased competition More innovative, user-friendly, secure, and convenient payment instruments | Change of habits – IBAN (and BIC where necessary) | ++ |
| Banks/PSPs | Scale economies/Operational savings New business opportunities as competition barriers reduced | Investments for SEPA payment platform Revenue impact for incumbents due to increased competition | + |
Overall effect compared to the baseline scenario
Based on this comparison, it is recommended to pursue the option of setting an end-date.
6.4.Technical sub-options for the implementation of a SEPA migration end-date
In order to be effective an end-date needs to be clearly defined at technical level. A number of sub-options for the end-date implementation exist in six relevant areas. These sub-options have been compared against the sets of criteria deriving directly from the policy objectives.
Reference basis for adopting pan-European credit transfers and direct debits. The recommended option is to establish an end-date on the basis of general essential requirements which need to be fulfilled by pan-European credit transfers and direct debits. The essential requirements will also include the existing international and non-proprietary standards. Two other alternatives were assessed and rejected, in particular an approach based on existing schemes and rulebooks as developed by the EPC and an approach limited to existing technical standards.
Transaction domain. It is recommended to follow an approach where the essential requirements would apply throughout the whole payment transaction domain. An estimated EUR 84 billion of operational savings on the demand side depends entirely on payment market integration extending beyond the inter-bank space. Consequently, the option of limiting essential requirements to the inter-bank space has been assessed and rejected for the above reasons.
Cross-border opening of bank accounts. It is recommended to abolish any discriminatory treatment of non-residents and non-nationals as regards the opening of payment accounts. This would ensure that the full benefits of SEPA in terms of increased competition (EUR 91 billion) could be reaped. A continuation of the current practice has been assessed and rejected for the above reasons.
Product specification. It is recommended to apply an-end date also for niche products i.e. credit transfers and direct debits which represent low volume payments and offer specific functionalities. However, in order to allow for the necessary adaptations in the pan-European schemes, a transitional period in the range of 3–5 years shall be granted. Two other alternatives were assessed and rejected, namely an all-inclusive approach applying to niche products in the same way as to standard products, and a permanent exclusion of niche products from the essential requirements.
Member States scope. It is recommended to pursue the sub-option with a common end-date for the euro area and a later common end-date for the non-euro area, since euro payment volume shares in non‑euro area represent only an estimated 2 % of all euro payments. Two other alternatives were assessed and rejected, in particular individual end-dates by Member State, and a common unique end-date for euro and non-euro area Member States.
Deadline. It is recommended to pursue the sub-option of separate end-dates: one year after entry into force of the Regulation at the latest for credit transfers and two years for direct debits. The sub-option of a common end-date for credit transfers and direct debits was assessed and rejected.
Clarity on the long term business model for pan-European direct debits. It is recommended to prohibit the general application to every direct debit transaction of multi-lateral interchange fees (MIFs) between PSPs (and measures of equivalent object or effect) and to allow MIFs only under certain conditions for direct debit transactions which cannot be properly executed or which are being reclaimed by a PSP. To ensure a level playing field, bilateral and unilateral interchange fees for these transactions should also only be allowed if cost based and aiming at an efficient allocation of costs to the entity having caused these transactions. The alternatives of continuing the current practice or imposing a positive or a capped MIF for every direct debit transaction have been assessed and rejected as they would not address the currently perceived lack of clarity which slows down migration to SEPA.
7.Monitoring and evaluation
An evaluation is recommended three years after the entry into force of the regulation so as to assess how effective and efficient it has been in terms of achieving the objectives presented in the impact assessment and to decide whether new measures or amendments are needed.
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