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A group of Europe's leading banks are engaged in discussions that could lead to the launch of their own debit card payments system to rival Visa and Mastercard.
The banks, which include Societe Generale of France, Commerzbank, Deutsche Bank and Dresdner Bank of Germany, Italy's Unicredito, plus ING, Rabobank and ABN Amro of Holland, want to end the US companies' control of Europe's debit card transactions.
A spokesman for Commerzbank yesterday confirmed the talks, but said they were at a very early stage.
"There are ideas being exchanged, but we do not have concrete plans yet," he said.
James Buckley, head of research at Lafferty Group, the banking analyst, said the talks represented a breakthrough for European attempts to break the stranglehold of Visa and Mastercard on debit card payments.
"While regional and savings banks within the eurozone have long supported the idea of developing an alternative European scheme, it had been believed that there was not enough support amongst the big commercial banks to make it a reality," he said.
"The news that some of Europe's largest banks are now looking into the idea makes the emergence of such a scheme much more credible."The group's proposals are timed to take advantage of the European Commission's plan to launch a single European payments area in November 2009, a scheme that finally received clearance in Brussels in March after several years of wrangling.
Many European Union countries have their own debit card systems that work only in their home nation.
The local banks that operate the networks decide what fees are paid by retailers and customers when debit cards are used to settle a transaction.
French debit cards that operate through the Carte Bleue payments system, for example, cannot be used elsewhere in the EU.
Ireland's Laser system works on a similar basis.
Cardholders in most countries usually have the option of applying for debit cards that also come with Mastercard or Visa compatibility, so that they can be used overseas.
But when overseas transactions are settled in this way, the cardholder's home banking networks have to negotiate revenue sharing agreements with the two US giants.
Most national networks are expected to close once the single European payments area comes into force.
European banks had been expected to rely on Mastercard or Visa instead, but could now join the new network.
Mastercard's international payments system, Maestro, is widely seen as the market-leading cross-border settlement network, with Visa's V Pay debit scheme, launched last year, currently its only competitor.
While European banks setting up a new debit card system would have to be sure it could generate as much revenue as they currently earn from Visa and Mastercard, the European Commission is keen to encourage competitors.
Charlie McCreevy, the EU commissioner with responsibility for implementing the single European payments area, has claimed it will save business and consumers around 100bn a year.
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