European Commission publishes proposals to review the legislative framework for paymentsUpdated 26 July 2013 - The European retail payments market is one of the largest in the world. The European Central Bank calculated that in 2009 almost 58 billion retail payment transactions were conducted in the Euro area alone. The European Commission recognises the economic importance of integrating this market, however the current degree of payment integration at European level varies substantially between the various payments instruments (such as credit transfers, direct debits and payment cards) and channels (e- or m-payments).
To achieve a more integrated market and to promote more competition, efficiency and innovation in the field of e-payments, the European Commission – following intense consultation with the stakeholders – decided to modernise the current regulatory framework. To that extent, the revision of the already existing Payment Services Directive (PSD) and the introduction of a legislative proposal on multilateral interchange fees (MIFs) for card payments were seen as a priority.
The revision of payments legislation
- Governance: To reinforce the SEPA project and empower all stakeholders – including consumers – to take a more active role in the governance of the retail payments policy;
- Standardisation: To facilitate standardisation via an adequate governance framework and via better involvement of the European Standardisation Organisations;
- MIFs: to ensure legal certainty in the field of interchange fees for card-based payments and provide clarity on an acceptable business model for current and future payment initiatives based on cards;
- MIFs flanking measures: To abolish restrictive business rules for card payments which lead to market distortion
- Surcharging: harmonise surcharging policies across the EU;
- Scope: define conditions of access to the information on the availability of funds for third party providers, including payment initiation services;
- Implementation: improve the national implementation;
- Consumer rights: better protect consumer rights.
- Maximum levels of interchange fees will be imposed for cross-border transactions or cross-border acquired transactions for two years following the adoption of the Regulation by EU decision-makers;
- A maximum interchange fee of 0,20% will be set for all debit card transactions (cross border and domestic transactions) two years after the Regulation is adopted by EU decision-makers;
- A maximum interchange fee of 0,30% will be set for all credit card transactions (cross border and domestic transactions) two years after the Regulation is adopted by EU decision-makers;
- The application of the ‘Honour All Cards Rule’ will be limited to ensure that that no discrimination is allowed on the basis of the issuing bank or the provenance of the card holder and between the cards carrying the same multilateral interchange fee level;
- Rules preventing or limiting merchants from steering customers to more efficient payments instruments are prohibited
- Acquiring payment service providers (i.e. merchant banks) will be obliged to provide monthly statements of fees to merchants. These reports will specify the fees paid by the merchant over the relevant month concerning each category of cards and each individual brand for when the acquirer provides acquiring services;
- Rules which prevent merchants from disclosing information regarding customer fees paid to payment service acquirers are prohibited;
- The provisions relating to interchange fees will not apply to transactions with cards issued by three party payment schemes as they do not have explicit interchange fees. The European Commission has however stated that there are “implicit” charges so any such scheme using payment service providers to issue cards or handle retail business will be covered by the same cap.
- The organisational separation between payment schemes and entities which are processing the transactions.