Interbank Fees: After the Cheque, the Direct Debit

Olivier Bornecque, Chairman, AFTE – The French Association of Corporate Treasurers

“Paying a fair price for the services rendered”

AFTE welcomes and endorses the decision of the Autorité de la concurrence (French Competition Authority) that the image-cheque exchange fee is anticompetitive. In November 2002, AFTE wrote in an editorial, “Banks want to tax businesses. AFTE says no,” and it reiterated its position in July 2003 with “Image-cheque exchange: illustrating the abuse of a dominant position”. Like the Autorité de la concurrence, AFTE believed the creation of the image-cheque exchange fee did not correspond to any service rendered and bank customers (businesses and consumers) obtained no benefits from paperless cheques.

Beyond cheques, this decision should impact interbank fees for European debits: the SEPA direct debit. As of November 2012, there will be no more interbank fees for debits and SDDs. A longstanding AFTE demand, this principle became a reality in March 2009 thanks to the European Commission and the European Central Bank. Its legal basis was set out on September 16 2009 in Regulation (EC) 924-2009 concerning cross-border payments within the Community. This Regulation introduces provisional rules for multilateral interchange fees: an interbank fee of 8.8 euro cents will apply to cross-border debits but will not affect the current level of fees that exist in certain countries, including France, where the established fee is 12.2 cents for domestic debits. 

European authorities planned to communicate on principles that must govern the future economic model. AFTE believes the authorities should follow the notion of ‘paying a fair price for services rendered’. We outline four specific principles that should guide the replacement of the interbank debit fees: . 

• Every creditor must be able to negotiate bilaterally the terms that apply to him or her with each of his or her banks; 
• Only banks that perform a real service should be compensated;
• The fees assessed must correspond to a real price: the 12.2 cents per euro fee has been used in France for many years, while the number of direct debits has exploded and productivity gains for banks have been significant;
• We must promote modern, effective, and paperless methods of payment.

Only two years remain to present a long-term economic model for direct debits that is in full compliance with competition rules. AFTE firmly believes all stakeholders must be consulted.