Direct Debit Scheme To Benefit Consumers

Current account customers will benefit from new direct debit systems being introduced, it has been claimed.

According to the European Payments Council (EPC), banks' decision to allow both companies and individuals with current accounts to make direct debits in any of the 32 Single Euro Payment Areas (SEPA) from a single bank account will bring significant perks.

The regulations are designed to make it easier for commercial and domestic parties to make payments across Europe.

The chair of the EPC, explained that the new scheme follows on from the SEPA credit transfer scheme that was piloted at the beginning of this year and already has 2,600 participants signed up.

He said: "It has two flavours; one for the consumers, vis-a-vis businesses and public administration, and the other flavour is business to business."
"It has benefits for consumers and it has corporate benefits for businesses and public administration. Currently, if direct debits are being collected by corporate or public administration, you have different formats for each of the member states. What will change is that there will be one format for all member states for euro payments."

The finance expert added that this will simplify the whole collection process and encourage more pan-European trade.

"In the end, SEPA is an EU integration initiative. They were very keen that the banks are delivering these SEPA services, so we did for direct debit, credit and also for cards."

The European Commission has backed the scheme in passing the Directive on Payment Services (PSD), which provides the legal foundation for the creation of an EU-wide single market for payments. It aims to make cross-border payments as easy, efficient and secure as national payments within a member state for current account holders.

The PSD also seeks to improve competition by opening up payment markets to new entrants, thus fostering greater efficiency and cost-reduction. At the same time the directive provides the necessary legal platform for the SEPA.

After the formal adoption by the EPC and the European Parliament, the provisions of this directive will need to be implemented by all member states by November 1st 2009.

If you would like to know more about current accounts why not ask AnswerBank Business and Finance.