EU banks in secret debit card talks: document

By Huw Jones

BRUSSELS (Reuters) - A group of European banks are in secret talks to set up a pan-European debit card to challenge MasterCard (MA.N) and Visa Europe in cross-border business, a document obtained by Reuters said on Friday.

The banks are "believed to be unhappy with the possible emergence of MasterCard's Maestro as the dominant provider of debit card network services in Europe," said the document from banking consultancy Lafferty Group, sent to clients.

The banks involved include Societe Generale (SOGN.PA), Deutsche Bank (DBKGn.DE), Dresdner Bank (ALVG.DE), Commerzbank (CBKG.DE), Unicredito (CRDI.MI), ABN AMRO AAH.AS, ING (ING.AS) and Rabobank, it said.

Some are listed as clients of Lafferty on its website. None of the banks was immediately available for comment.

The European Union has just adopted new rules to create a single euro payments area (SEPA) for the bloc's 490 million consumers to make or receive national or cross-border payments in all EU currencies from a single bank account.

The aim is to have one EU-wide payments system using common technical standards so that existing banks and new payment institutions can compete to cut costs for consumers.

National debit systems will be replaced by a single EU-wide system from 2010, but so far Maestro has a clear run for providing an EU-wide debit card service.

This has triggered concern among European banks that a core service is dominated by a U.S. based company that already has a big chunk of the cross-border credit card market in the EU.

That concern is shared by the executive European Commission -- the EU's top competition regulator.

STRATEGY

"According to one source, a working group has been established to look at the feasibility of using the Euro Alliance of Payment Schemes (EAPS) as a basis for forming the new scheme," the Lafferty document said.

"However, another source says that so far discussions have only occurred at board level within the banks, and that no technical issues have been discussed," the document said.

The document said the V Pay debit scheme, operated by Visa Europe, "does not seem to have gained widespread support from European banks."

"It will also have profound implications for the strategy of MasterCard to establish Maestro as the default debit scheme within Europe," the document said.

EU Competition Commissioner Neelie Kroes and the European Central Bank have called for more competition in the bloc's payment cards sector.