Consumers will be able to set up direct debits to pay bills abroad and use their debit cards anywhere in the EU under new rules sanctioned by European finance ministers.
They should also benefit from increased competition in the European banking and payment services sector as new entrants offer cheaper payment options to customers.
In Brussels yesterday ministers adopted the Payment Services Directive, which aims to create a single euro payments area in the EU by November 2009. This will create a new legal framework boosting consumer protection for cross-border payments. The system will also be based on common technical standards, which will make it easier for mobile firms, supermarkets and other businesses to enter the payments market.
German finance minister Peer Steinbrueck said the deal, which must be voted on by MEPs, was "practical progress on the way to financial integration in Europe".
Until now, a series of national regulations have restricted the ability of companies to offer competitive and fast cross-border payment services within the EU. These rules often delay the processing of electronic bank transfers and add significant cost to consumers and businesses that seek to make payments across national borders.
Internal market commissioner Charlie McCreevy said the rules would cut the annual cost of electronic payments, with the European Commission estimating it will save €50-€100 billion annually.
It will also bring practical benefits to consumers, he said. For example, under the legislation banks will be forced to process cross-border electronic payments within the EU in three days up until 2012. From 2012 banks and other payment services providers will have just one day to process the payments.
The deal was unanimously agreed and ends months of deadlock over how easy it should be for new entrants such as mobile operators or supermarkets to compete with banks in payment services.
France and Finland were won over to the directive when ministers agreed to insert a substantial review clause after three years of operation.
Minister for Finance Brian Cowen said it was a good compromise for consumers and evidence of what the EU could provide for consumers.
Mr Cowen said it meant businesses and consumers would not have to open multiple bank accounts in several states just to make direct debit payments to other EU bank accounts.
The new rules will apply to all EU states and currencies and should be ready for adoption by member states in January 2008. Each state will have 18 months to transpose the directive into national law.
