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Payment Matters: No. 8 - Europe and beyond

    • Financial services
    • Financial services - Payment services


    Commission accepts commitments from Visa Europe about credit card inter-bank fees

    On 26 February 2014, the European Commission announced that it has decided to make legally binding commitments offered by Visa Europe to address concerns about its MIFs for credit card payments in the EEA. Visa Europe has agreed to cut its inter-bank fees for these transactions to a level of 0.3% of the value of the transaction. In addition, it has agreed to measures to address concerns about the effect of its "cross-border acquiring" rules and further measures to improve transparency. The commitments will apply for four years.

    What this means for you

    The Commission considers that Visa Europe's commitments represent an important step towards the creation of a level playing field in the payments card market and in ensuring the success of the Single Euro Payments Area. Like the MasterCard undertakings, the commitments provide a benchmark for setting MIFs that appears to allow consumers and retailers to enjoy a fair share of the benefits they generate. The commitments on cross-border acquiring and cross-border MIFs come into force on 1 January 2015, but there will be a two year delay before entry into force of the commitments relating to domestic MIFs.

    Current status of the proposed PSD2 and MIF Regulation

    The European Commission adopted its proposal for both the proposed Directive on payment services in the internal market (PSD2) and the proposed Regulation on multilateral interchange fees for card-based payment transactions (MIF Regulation) in July 2013. The European Parliament’s Committee on Economic and Monetary Affairs (ECON) proposed amendments for PSD2 and the MIF Regulation  (ECON report on PSD2 & ECON report on MIF Regulation) were considered at the European Parliament’s plenary session on 2 - 3 April 2014, and on 3 April 2014 the Parliament published a press release announcing that in the plenary session it voted on the proposed PSD2 and the proposed MIF Regulation.

    On 4 April 2014, the European Parliament published a document that contains the texts of amendments to PSD2 and the MIF Regulation that it adopted at its plenary session.

    What this means for you

    It will be interesting to observe the industry’s reaction to  the Parliament’s amendments. The European Banking Federation (EBF - made up of 32 national banking association members from Europe) stated in a prompt press release on 3 April 2014, that in its view, the payment package still needs further work.  

    The EBF believes that some aspects on access to consumer on-line accounts by third-party providers, remain to be addressed and in relation to the MIF Regulation, the EBF believes the proposal by the parliament to further lower the cap that was initially proposed by the Commission, would have a significant impact as banks may be forced to pass on payment costs directly to consumers in other ways.

    Fiona Ghosh, a partner and retail payments specialist at Eversheds LLP, has assessed ECON’s amendments in the following article.

    The Parliament’s press release states that the Parliament voted on its amendments to the draft rules in order to consolidate the work done so far and hand it over to the next Parliament. It explains that this ensures that the MEPs newly elected in May 2014 can decide not to start from scratch, but instead build on work done during the current term.

    Regulation amending SEPA Migration Regulation published in Official Journal of the EU (OJ)

    On 20 March 2014, the text of the Regulation amending the SEPA Migration Regulation was published in the OJ. The Regulation applies, with retroactive effect, from 31 January 2014. The Regulation was adopted by the European Parliament and the Council of the EU at first reading on 4 February and 18 February 2014 respectively.

    What this means for you

    The SEPA Migration Regulation had set 1 February 2014 as the deadline for euro area migration to SEPA credit transfers (SCT) and SEPA direct debits (SDD). The Regulation allows an additional transition period of 6 months during which non-SEPA payments can still be accepted in the eurozone.

    Council confirms agreement with European Parliament on payment accounts

    On 20 March 2014, ECON published a press release announcing that it has reached political agreement with the Council of the EU on the proposed Directive on payment accounts (the Payment Accounts Directive or PAD). On 28 March 2014, the Council published an "I" item note relating to PAD, inviting the Permanent Representatives Committee (COREPER) to:

    • approve the final compromise text of PAD, which is set out in the Annex to the note; and
    • confirm that the Presidency of the Council can indicate to the European Parliament that, should the Parliament adopt its position at first reading as regards PAD (in the form set out in the Annex), the Council would approve the position and PAD would be adopted accordingly.

    On 4 April 2014 the COREPER approved, on behalf of the Council, the agreement reached with the European Parliament on PAD.

    What this means for you

    The agreement between Parliament and the Council will allow the PAD to be adopted at first reading, before the Parliament adjourns for elections at the end of May. The Council will subsequently adopt the Directive without further discussion.

    Outcome of EU consultation on security of payment account access services

    On 18 March 2014, the European Central Bank published a public note on security of payment account access services in which it outlined the main outcome of a November 2013 consultation, carried out by the European Forum on the Security of Retail Payments (Forum), on recommendations for the security of mobile payments. Generally, respondents have welcomed the Forum's recommendations - in particular that third-party providers (TPPs) should be licensed, supervised and ensure that customers are appropriately authenticated.

    The Forum notes that PSD2, which was published after the consultation was launched, includes a mandate for the European Banking Authority (EBA) to develop guidelines on security measures. The Forum has decided not to publish the final text of the recommendations as it was concerned that this could create confusion in the market. The Forum will instead transmit its final text to the EBA.

    What this means for you

    The Forum expects that, in practice, the EBA will draw heavily on the Forum’s own work. The core elements of this work are reflected in the public note.

    Bitcoin not a currency says Japanese government

    Japan's government has said that Bitcoin, a virtual currency created, or mined through complicated computer algorithms, is not a currency but that some transactions using the virtual unit should be taxed. Japan also said banks cannot provide Bitcoin as a product to customers. The Japanese government is trying to determine the total volume and value of Bitcoins in circulation around the world.

    What this means for you

    Countries and their tax authorities have been grappling with how to regulate Bitcoin, with some seeing it as a route for tax evasion or money laundering. Russia has declared Bitcoin transactions illegal, China has banned its banks from handling Bitcoin trades and there have been calls for the US to do the same, and Singapore has imposed a tax on Bitcoin trading and using the currency to pay for services. In Europe, consumers have been warned of the possible risks of buying, trading or holding virtual currencies such as Bitcoin by the EBA, the European financial regulator.