To spur new services and remove barriers to commerce in the region, regulators have given European Union banks temporary permission to charge fees for a new type of international payment to become available next year.
The "transitional" levy would compensate banks for offering direct debits across borders, a service that is expected to become available in November 2009, the European Union's executive arm and central bank said Thursday. Bankers expressed concern that the fees would be temporary, and said they will not be able to support the payment service for free.
Direct debits are the final part of the Single Euro Payments Area initiative to let people do business in 31 countries from a single account. The regulators said banks must develop a new price structure other than a "multilateral interchange fee," which is similar to the type of levy the commission has already said is inappropriate for credit cards.
"We will have to be convinced that these fees will be strictly limited in time and objectively justified," Neelie Kroes, the European Union's competition commissioner, said in a press release. The levy cannot be aimed solely "at providing additional profits to banks."
Uncertain of their revenue sources from the direct debits, bankers said they cannot invest in the technology now to prepare for offering the service as planned next year.
"We will have to look for other systems of pricing," Chris De Noose, the managing director of the European Savings Banks Group, said in an interview. "It will have to be the consumer that pays, which will have the reverse effect" of discouraging use of new services.