Direct debits across borders to cost less

A cross-border direct debit in euros from a Malta-based bank account to another beneficiary in the EU must not cost more than a domestic transaction, according to new proposals made by the European Commission.

The proposal, in response to the rapid evolution of the EU payments market, aims at extending the principle of equality of charges within the EU, which already exists for ATM cash withdrawals and card payments, to direct debit transfers.

The proposals also contain provisions enhancing the protection of consumer interests and rights and alleviating the statistical reporting burden of banks.

The EU is building a single payments area in euro to boost competition in goods and services and drive down prices for consumers.

EU Internal Market Commissioner Charlie McCreevy said it is essential in an integrated payment market to ensure that payment users see no practical difference between domestic and cross-border transactions.

The new rules will benefit consumers and companies that will see charges lowered as well as banks which will have lower reporting obligations.

The European Commission's proposal has been sent to EU governments and the European Parliament for approval and would come into force on November 1, 2009 when cross-border direct debits in euros are due to be launched.