Fabian Demicoli

Good News on MIF restrictions

The European Commission and the European Central Bank have just released a joint statement on SEPA direct debits.

In the framework of Regulation 2560/2001, the French presidency, pushed by French and German banks, had tabled an amendment to introduce maximum MIFs on cross-border direct debits for a 3 year period.

GRTU in line with the position adopted by EuroCommerce had made an intense lobbying to ensure that, after these 3 years, any MIF on direct debit would be subject to competition law (article 81).

We are therefore very pleased that the Commission goes a step further and already explains why it will be very difficult for banks to establish that MIFs are justified and necessary for efficiency reasons and that they can fulfil the other conditions required by Article 81(3)EC.

Needless to say we are very pleased with this result!

Below is the Press Release:

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 1 November 2009.  The Commission and the ECB also noted that the forthcoming approval of the revised Regulation on cross-border payments will provide a three-year transitional regime for the SDD business model.

Competition Commissioner Neelie Kroes stated "The Commission will ensure that SEPA will be subject to effective competition so that a fair share of the benefits resulting from the creation of SEPA's direct debit scheme, both on a cross border and domestic level, are passed on to consumers and companies".

Internal Market Commissioner Charlie McCreevy stated "The benefits for companies and consumers of the Single Euro Payments Area are tremendous; with this hurdle crossed, banks and creditor companies can start preparing for migration."

ECB´s Executive Board member Gertrude Tumpel-Gugerell stated "We acknowledge, after having provided clarity on the applicability of MIF during an interim period, this further clarifying position of the Commission now provides a clear scenario also for the long term."

The European Commission considers that a general per transaction 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 1 November 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.

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.

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