The EC has stopped its investigation into possible cartel practices by banks cooperating in the EPC. Apparently there is not enough evidence for an explicit cartel. (Note: an explicit cartel is where parties intentionally conspire for their own benefit.)
The banks were invited by the EC to create SEPA together. It was expressly intended that this would be done in the interest of all stakeholders. The cooperation of banks on setting market practices is institutionalized by the EC itself. The EC therefore has to climb a high hill if they want to prove that in addition to this mandate, which favored the banks heavily over other stakeholders, the banks have actually willfully formed a cartel prejudicial to third parties. (NB Payments are complicated stuff and it is difficult for the non-initiated to see the possible drawbacks of often small detailed choices. Politics has asked the banks to take the lead becoming dependent on their good will to indeed create an open environment in the interest of all.)
Years ago the banks began the big SEPA challenge with three handicaps:
- the goal itself but also the technology and frameworks to be used were unfamiliar terrain causing all sorts of sub-optimal architectural and standardization choices during the initial phase
- contributing banks often unconsciously, but also awarely, wanted, to maintain.the old order and the associated business models. In combination with the first handicap and the mandatory caracter of SEPA, this makes difficult for other parties parties wishing to join the market from different angles or want to do things differently hen the established order of banks.
- banks at European and national level by their very nature have been weighing in on their own business interests and power factors in payments.
These factors have led to a number of barriers in SEPA harming the original purpose of providing an open, innovative and (therefore) competitive payments and payments processing market. A few examples:
- Spotlight: number portability is effectively blocked through the incorporation a specific bank code into the IBAN bank account number of businesses, citizens and institutions. The account number has become a bank-related number with free publicity every time a Dutch BAN bank number is mentioned. NB (I find it unbelievable that both the central bank in its role as oversight and politics have allowed for this travesty)
- Power behind the curtains: other payments processors are held effectively outside the door by EBA Clearing as they are not considered banking institutions by EBA. For the inter bank exchange of payments via Target 2 based on the EPC CSM framework this is not necessary at all. Actually a bank is not even defined in SEPA but Payment processors, payment providers and CSMs are.
- Small details matter: By abuse of the “originating party” field that in the eys of EBA Clearing and the banks supporting it can only be a bank (NB in the role of a CSM actually) the actual exchange has been made technically impossible for non bank CSM’s. This has the other payment processors effectively cut off from the reach of EBA clearing and prevents a level playing field.
These examples indicate that an implicit cartel is locked up in the technical development of SEPA leading to market distortions and externalities to citizens and corporates. These “architectural” choices are made consciously by the cooperating banks. At least one could argue that SEPA for SCT and SDD is an implicit cartel. In other markets’ an implicit cartel was enough reason to impose measures.For further reading on SEPA at Red Planet Dust: