Europe's banks were last night given until July 1st to end discrimination between cross-border and domestic charges on euro-denominated transfers within the European Union.
The European Commission, which has repeatedly accused the banks of excessive charges on cross-border transfers, wanted an EU regulation to take effect from January 1st, the date when euro notes and coins will be introduced, obliging banks to charge the same for transnational euro payments as they charge for domestic transactions. The regulation would apply initially to electronic payment transactions - by cards and Automated Teller Machines - and would be extended a year later to credit transfers, such as cash payments over a bank counter.
But after fierce lobbying from the banking industry, the council of internal market ministers of the European Union's 15 states decided yesterday to delay the introduction of the regulation, even beyond the March 1st date suggested by the European Parliament. They dismissed a proposal from Germany that the European banks should be given another chance to come up with a proposal for self-regulation. Instead they agreed that the regulation should come into effect from July 1st, 2002, for electronic payments and from July 1st, 2003, for credit transfers. The maximum size of transaction covered by the regulation will initially be €12,500 (£9,845), rather than the €50,000 ceiling that was first proposed by the Commission.
Mr Jonathan Todd, a spokesman for the European Commission, said last night that the regulation would drive down unnecessarily high charges. A commission survey earlier this year identified the average charge as €24 on a transfer of €100. In the worst case, the transfer of €100 from Greece to Denmark incurred charges of €47.
Ireland was identified by the commission study as one of the countries having particularly high charges for cross-border payments. But at yesterday 's meeting the Irish Government opposed introduction of the regulation earlier than July 2002. The Irish deputy ambassador to the EU told the meeting that while he supported the Commission's objective, he feared that earlier introduction of the regulation might force up domestic charges rather than drive down cross-border charges. He also feared that banks might withdraw their services.
Afterwards a Government spokeswoman expressed satisfaction with "a realistic and workable compromise". Partly to satisfy Irish concerns, the Belgian government, which brokered the compromise, also inserted a requirement that the Commission should review the impact of the regulation and report back by July 2004.
Ireland also wanted the regulation to apply not just to transfers in euro but to cover all EU currencies, i.e. to include transfers in Swedish and Danish kroner and sterling. Denmark and Sweden and Austria supported this idea but the UK did not. The compromise agreed will allow Sweden, Denmark and the UK to "opt in" if they so wish. The effect is that the charges levied on transfers denominated in euro between the UK and Ireland will have to be the same as those levied on euro payments within the UK. But charges levied on payments denominated in sterling between the UK to Ireland will not have be the same as those imposed on domestic transfers, unless the UK opts in.
The European Banking Federation expressed disappointment that the banks had not been given more time to put an infrastructure for EU-wide transfers in place.
