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Financial services

Banking & Payment systems

Legislation in the payment services area

In recent years much legislation has been adopted to create an integrated and competitive European payments market.

Regulation 924/2009 on cross border payments

Regulation 924/2009 on cross border payments in euros. More particularly, it provides that charges levied by banks on retailers in respect of cross-border payments shall be the same as the charges for corresponding national payments.

Regulation 260/2012 on SEPA credit transfers and direct debits in euro

Regulation 260/2012 on SEPA credit transfers and direct debits in euro has created an integrated market for electronic payments in euro, with no distinction between national and cross-border payments anywhere in the EU. It has also introduced a concept of 'reachability': If a retailer is reachable for national credit transfers or direct debits under a payment scheme, it must be reachable for direct debits or credit transfers initiated by the payee located in any Member State in the framework of the same payment scheme. As of October 2016, all credit transfers and direct debits in euro in the EU take place on the basis of the SEPA credit and direct debit schemes, created by the European payments industry. 

Regulation 2015/751 on Interchange Fees

On 24 July 2013, the Commission adopted a legislative package in the field of the EU payments framework. This package which proposed a revised Payments Services Directive (PSD2) and a Regulation on Multilateral Interchange Fees (MIFs) was intended to help the payments framework to better serve the needs of an effective European payments market, fully contributing to a payments environment which nurtures competition, innovation and security to the benefits of all stakeholders and consumers in particular. Modernisation of the legislative framework for retail payments was also defined as one of the key actions of the Commission Single Market Act II and is inter alia a response to the Commission's Green Paper "Towards an integrated European market for card, internet and mobile payments" of 2012.

In April 2015, Regulation 2015/751 on interchange fees for card-based transactions was adopted with the particular aim of addressing the problem of widely varying collectively-agreed inter-bank fees regarding card and card based transactions. The Regulation takes into account much of the Commission and Member States' work on competition enforcement on inter-bank fees regarding transactions with consumer debit and credit cards. It introduces EU wide ceilings for such interchange fees. It also addresses rules limiting retailers' possibilities to steer consumers to using cards with lower fees.

The final text of the Interchange Fee Regulation, adopted on 29 April 2015, was published in the Official Journal on 19 May 2015. It entered into force on 8 June 2015. On this occasion a Competition Policy Brief was published.

The first set of rules of the Regulation introducing maximum interchange fees for consumer debit and credit cards became applicable on 9 December 2015. The second set of rules, introducing a series of provisions enhancing market transparency, became applicable on 9 June 2016. On this occasion a press release and accompnying Factsheet were published.

Chronology of the legislative process concerning the Interchange Fee Regulation:

  • 24 July 2013: during a joint press conference the legislative package in the field of the EU payments framework was announced by Michel Barnier, Member of the European Commission in charge of Internal Market and Services, and Joaquín Almunia, Vice-President of the European Commission in charge of Competition

o    Frequently Asked Questions

o    Speech by Vice President Almunia

o    Commission Proposal for a Regulation on Interchange Fees

o    Commission Proposal for a revised Payment Services Directive (PSD2)

o    Impact Assessment accompanying the Commission's proposal for a Regulation on Interchange Fees and a revised Payment Services Directive: Executive Summary ; Full text ; Citizen's summary (38 KB)

o    List of national competent authorities under the Interchange Fee Regulation (IFR)

o    Requirements to ensure functional independence of payment card schemes and processing entities

The Interchange Fee Regulation (IFR) sets a requirement for card schemes to separate their processing activities by making them independent in terms of accounting, organisation and decision-making processes. The European Banking Authority (EBA) has been mandated to prepare draft Regulatory Technical Standards (RTS) which specify the requirements with which payment card schemes and processing entities must comply to ensure their independence.

  •  The EBA submitted draft RTS to the Commission on 26 July 2016.

  • On 5 January 2017 the Commission informed EBA of its intention to partially endorse and amend the draft RTS.

  • The EBA sent a formal opinion together with the final draft RTS to the Commission on 16 February 2017.

  •  On 4 October 2017 the Commission adopted RTS establishing the requirements to ensure functional independence of payment card schemes and processing entities.

  • Following adoption, Council and European Parliament scrutinised the Regulation. No further changes were required and on 18 January 2018 the Commission published the RTS establishing the requirements to ensure functional independence of payment card schemes and processing entities. These enter into force on 7 February 2018.
    Press release: Commission welcomes new rules that benefit consumers by promoting more competition in processing of card payments

Support study on the functioning of the Interchange Fee Regulation

To evaluate the impact of the Regulation, the European Commission will submit a report on its application by mid-2020 to the European Parliament and to the Council. The Commission's report will look in particular at the appropriateness of the levels of interchange fees and steering mechanisms. It will further take into account the use and cost of the various means of payments and the level of entry of new players, new technology and innovative business models.

In order to prepare this report, the Directorate General for Competition contracted with Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft (EY) a support study on the functioning and application of the Interchange Fee Regulation. To allow for a comprehensive examination of effects, the contractor will collect information through an online survey, in particular on transaction volumes, fees & charges, cost, and other relevant information related to card-based payments. If you are a stakeholder (merchant, issuer, acquirer, card scheme, consumer association or card user) with an interest to participate in this survey, your participation is encouraged under this link. 

Revised Directive on Payment Services (PSD2)

The Revised Directive on Payment Services (PSD2) was adopted in November 2015. It will inter alia open the European payments market to new players, in particular payment initiation services providers, account information services providers and payment instrument issuers.  It will also introduce common security requirements to authenticate the user of a payment service; secure customer authentication will be required for all remote electronic payment transactions[3] unless a specific exemption has been agreed at EU level (eg for low value payments).

For more information please also see the website of DG Financial Stability, Financial Services and Capital Markets Union (DG FISMA).

Study on the effects of information disclosure on consumers' choice of payment instruments

The European Commission's Directorate-General for Competition and the Directorate-General for Health and Consumers [now Directorate-General for Justice and Consumers] have carried out a joint study into consumer behaviour and payments in the European market. The study aimed at providing data to determine what the effect is on consumers' choice between alternative payment instruments when purchasers are informed about the real costs borne by retailers. The final report of the study can be downloaded here.

The ultimate goal underpinning the study was the promotion of more competition among payment methods and thereby the lowering of payment costs for consumers. This gave rise to the following research question: "Does higher transparency of charges impact consumers' behaviour in a way which fosters more price competition?"

The outcome of the study supports surcharging as an efficient steering mechanism for payment instruments, despite the fact that consumers are generally believed to be opposed to surcharging. According to the study, monetary incentives (rebates) and disincentives (surcharges) are considerably more effective than information-based measures in driving cost-conscious choices. While rebates are six times more effective than mere education, surcharges are twice more effective than rebates.