SUMMARY OF THE FIRST MEETING OF THE SEPA COUNCIL 7 JUNE 2010, BRUSSELS

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1 EUROPEAN COMMISSION Directorate General Internal Market and Services SUMMARY OF THE FIRST MEETING OF THE SEPA COUNCIL 7 JUNE 2010, BRUSSELS GENERAL The meeting was co-chaired by Ms Gertrude Tumpel-Gugerell, member of the Executive board of the European Central Bank (ECB) and Mr Jőrgen Holmquist, Director General of the Internal Market and Services Directorate General of the European Commission. The Commission and the ECB explained that the purpose of the SEPA Council is to bring together the supply and demand sides of the European retail payments market and to foster consensus for the next steps ahead in the SEPA project. They also stressed that the SEPA Council will not replace or take away the responsibilities of any of the existing bodies. Its purpose is to fill the existing vacuum regarding the political involvement of users at European level. Furthermore, it was emphasised that the SEPA Council members should speak on behalf of the sector they represent and are therefore expected to co-ordinate the position with their association or organisation before each meeting. Finally, it was explained that it had not been possible to have a representative of payment institutions in the first meeting because there is no EU association of payment institutions so far. SPECIFIC ITEMS OF THE AGENDA 1. SEPA COUNCIL MISSION, DESCRIPTION AND FUNCTIONING All participants warmly welcomed the establishment of the SEPA Council and unanimously expressed their commitment to the success of the newly established body. Members raised the expectations that the SEPA Council should provide a new momentum to the SEPA migration by way of identifying weaknesses and concerns, sponsoring solutions and fostering consensus and cohesion among all stakeholders. All members stressed that communication is key for the timely SEPA migration and that there is an urgent need to increase SEPA awareness for certain categories of stakeholders, such as SMEs and consumers. Furthermore, it was stressed that strong exchange of information needs to be ensured between the SEPA Council and national SEPA committees, both ex-ante and ex-post. National central banks should play a key role in facilitating the communication between the European and the national level. This includes direct communication to all stakeholders (demand and supply side) on national level and in national fora. 1

2 In parallel, it was stressed that the EPC bodies involving users, such as the Customer Stakeholders Forum 1, should continue to operate. The SEPA Council Member representing BEUC requested that the Customer Stakeholders Forum should become a technical sub-group of the SEPA Council. Several members stressed the important role to be played by public administrations, as early movers to SEPA products and as providers of appropriate communication on SEPA. Members considered that the SEPA Council could play an important role in cases where divergent views occur at national and/or EU level on SEPA migration. Some members requested that the SEPA Council should act as a mediator on issues where no agreement exists between the demand and supply sides of the market. Members agreed that the SEPA Council should be open and transparent about its agenda and deliberations. 2. SEPA INSTRUMENTS: PUBLIC PERCEPTION AND MIGRATION The SEPA Council members shared the view that while SEPA is intended to improve retail payments across SEPA countries, low awareness among the public and also some negative publicity have harmed the project and are at the root of the slow migration towards the SEPA instruments. Therefore, public awareness of the SEPA project and trust in the SEPA instruments has to be enhanced. The SEPA Council recognised the need to intensify communication efforts by emphasising the benefits of SEPA. It was emphasised that the contribution by national public authorities, mainly the Ministries of Finance, is considered to be a key element for the success of communication efforts at national level. Reference was made to the information campaign undertaken in the case of the euro changeover. It was, however, concluded that the SEPA project is not as concrete as the euro changeover; hence, the same degree of user awareness cannot be expected. Of course, communication efforts alone are not enough to ensure SEPA migration. SEPA instruments need to respond to the degree possible to users needs and users should be facilitated in the transition process to SEPA instruments. On this specific point, the SEPA Council agreed that further and more efficient dialogue between users (in particular consumers) and providers is required so as to reach a common understanding on what the SEPA instruments currently offer. Furthermore, the SEPA Council Member representing BEUC raised the issue of how changes proposed by end-users will be put into place. The ECB informed the SEPA Council members that the 7th Progress Report which is a key source of information on SEPA topics for the public is under preparation. It was concluded that the ECB and the European Commission will prepare for the consideration of the SEPA Council members a document on how SEPA communication currently takes place at different levels and how it can be further improved, in particular regarding the co-ordination of the various stakeholders involved, including the national SEPA committees. 1 co-chaired by the EPC and the End Users Committee 2

3 3. SEPA MIGRATION END-DATE FOR SCT AND SDD The SEPA Council members were informed about latest developments on the establishment of an end-date for SEPA migration. The European Commission highlighted the importance of establishing a migration end-date (or end-dates) for SCT and SDD and confirmed that it plans to come forward with a legislative proposal this autumn. It was added that an informal market consultation had just been launched and would close on 23 rd June SEPA Council members were invited to express their views, focusing in particular on the framework conditions, which, according to the Commission's analysis, include: making greater communication efforts to facilitate migration, especially for consumers; ensuring no deterioration in the price-performance characteristics of payment products; addressing the concerns of users; achieving continued legal validity of existing direct debit mandates; and obtaining clarity on a long-term SEPA Direct Debits business model. In the discussion SEPA Council members agreed with this analysis and expressed their strong support for establishing end-date(s) for migration towards SCT and SDD by an EU legislative proposal. They highlighted the following points: Considerable importance is attached to early migration by public authorities. This could provide momentum and help to rapidly achieve critical mass; There is a general need for greater involvement of all users, whose participation is not ensured in all national SEPA coordination committees. At EU level, the SEPA Council Members representing BEUC and the EPC agreed to strengthen their dialogue through subsequent bilateral meetings regarding some features of the SEPA Direct Debit; It is also important to keep in mind the benefits SEPA could help bring about in the full financial value chain linked to payments; A long-term business model for the SEPA Direct Debits that provides a return on investment for the supply side was considered necessary by some members. User members stressed that this business model must not raise prices for end-users and should be economically viable; The challenge caused by the lack of continued legal validity of existing direct debit mandates in one Member State. The SEPA Council Members also discussed whether there should be a single end-date or separate ones for SEPA Credit Transfers and SEPA Direct Debits. From a communication and investment perspective a single date was considered by some members as advantageous. On the other hand, there was recognition of the twin needs to maintain migration momentum for SEPA Credit Transfers and the longer time required for preparing SEPA Direct Debits migration. If two end-dates were favoured, they should not be too far apart. The SEPA Council Members agreed to publish a formal declaration on the establishment of SEPA migration end-date(s) (attached in Annex 2). 3

4 4. FUTURE OF SEPA FOR CARDS: ORIENTATION DEBATE The SEPA Council members had a general exchange of views on how the payment cards market is evolving in the SEPA context. The ECB and the European Commission reiterated that an additional European card scheme is needed, so as to enhance competition. Members of the SEPA Council, and in particular the representatives of users, expressed their support to this objective. Some participants raised the need for further clarity on the interchange fees level. This was considered to be a prerequisite for the establishment of an additional European card scheme. Furthermore, the discussion took place on whether cards are the most suitable instrument for internet payments. The SEPA Council members concluded that work on standardisation, card terminal certification and security of card payments are key elements in the area of SEPA for Cards that will promote integration and competition; new standards in particular need to be embraced by all market stakeholders, including technology providers. 4

5 Annex 1: List of participants attending the meeting of 7 June 2010 Co-chairs: Ms Gertrude Tumpel-Gugerell, Member of the Executive Board of the ECB Mr Jörgen Holmquist, Director General of the Internal Market and Services Directorate General of the European Commission 1st SEPA Council 07/06/2010 Room: JREY Berlaymont SECTOR MEMBER Consumers Ms Monique Goyens (BE) (European Consumers Organisation BEUC) (Representing Mr Paolo Martinello President BEUC) Retailers Mr Pierre Bouchut (FR) (Eurocommerce & ERRT) CFO Carrefour Corporates Mr Richard Raeburn (UK) (EACT & BusinessEurope) Chair EACT Mr Andrea Benassi (IT) SMEs (European Association of Small and Mid-sized Secretary General UEAPME Enterprises UEAPME) (Representing Mr Georg Toifl President UEAPME) Ms Rocío Sanchez Barrios (ES) Deputy Director General, Ministry of Economy and Finance National public administrations (Representing Mr Grilli, FSC chair) Mr Gerard Hartsink (NL) European Payments Council EPC Chair EPC, Senior Executive Vice-President ABN AMRO Saving banks Mr Carl Eric Stålberg (SE) (European Savings Bank Group ESBG) Chair ESBG Mr Carl-Ludwig Thiele (DE) Deutsche Bundesbank* Member of the Executive Board Mr Robert Ophèle (FR) Banque de France* Director General Operations Mr Javier Alonso (ES) Banco de España* Director General Operations Markets and Payment Systems Mr Lex Hoogduin (NL) De Nederlandsche Bank* Executive Director * The participation of National Central Banks will be on a rotating basis. 5