UPDATE 1-EU executive softens stance on payment card fees
(Adds more detail, reaction)
By Huw Jones
BRUSSELS, Sept 4 (Reuters) - Banks should press ahead and launch pan-European direct debit services to customers, even if they use a disputed fee structure, the European Commission and European Central Bank said on Thursday.
The European Union executive and the ECB said they would be prepared to support the idea of a so-called multilateral interchange fee (MIF) on cross-border direct debits on condition such fees were justified and temporary.
The fee is paid by retailers to banks that issue the cards.
The move appears to backtrack on earlier Commission statements, underlining concern at the EU executive and ECB over the lack of progress in introducing a pan-European direct debit payments system, seen as a key tool in promoting cross-border competition in goods and services to cut prices for consumers.
In December last year EU Competition Commissioner Neelie Kroes gave MasterCard (MA.N) six months to change its multilateral interchange fee structure on international card transactions, saying they violated EU rules on fair competition.
This decision, which MasterCard is appealing, left banks uncertain about what sort of business model would be profitable for pan-EU payment cards to rival MasterCard and Visa Europe. Visa Europe is also negotiating with the European Commission over its international card fee structure.
On Thursday Kroes appeared to have softened her stance.
"It may prove necessary to have a multilateral interchange fee for cross-border single euro payments area direct debits in the very initial stage," Kroes said in a statement on Thursday.
"But we will have to be convinced that these fees will be strictly limited in time and objectively justified, that is not aimed at providing additional profits to banks," Kroes said.
At the end of the transitional phase there would no longer be any transaction-based multilateral interchange fee at national or cross-border levels, the Commission said.
Retailers say the fee is a tax on consumption.
"EuroCommerce would be very interested to see what justifications could be given for such MIFs," said Cecile Gregoire, an adviser to the EU retailer lobby.
"It is hard to believe that while banks claim to be such an innovative sector, they cannot implement SEPA direct debits in time without interchange," Gregoire said.
ECB Executive Board Member Gertrude Tumpel-Gugerell said it would be unacceptable if banks were not able to offer pan-EU direct debits from the target date of November 2009. (Reporting by Huw Jones, editing by Will Waterman/Elaine Hardcastle)
