A decade after the EU Interchange Fee Regulation, the central competition problem in European card payments has not disappeared. Fee caps regulate one important price component, but they do not by themselves create a credible merchant-side outside option at the point of sale. Merchants remain exposed to payment methods that are, in practice, difficult to refuse and difficult to steer away from. This Policy Letter argues that the next step in European payments policy should therefore be structural rather than merely pricebased. Building on the German experience with electronic direct debit and its migration into the SEPA direct debit framework, we propose a European right for merchants to initiate direct debit transactions from debit-card credentials. Such a right would discipline card-scheme fees, reduce dependence on non-European payment infrastructures, and strengthen contestability in European retail payments.
Policy Letter No. 117
