EPC response to the European Commission Green Paper – By Gerard Hartsink

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In January 2012, the European Commission (the Commission) published its Green Paper ‘Towards an integrated European market for card, internet and mobile payments’ for a three month consultation. The aim of the Green Paper, according to the Commission, is to identify the obstacles that potentially prevent integration in this area.

The Commission stated that the contributions to the consultation will determine the need for European Union (EU) action on the various issues raised in the Green Paper and the form this action should take. Gerard Hartsink, Chair of the European Payments Council (EPC), outlines key policy considerations which, in the view of the EPC, should be observed when determining the need for EU action to address ‘gaps’ perceived by the Commission with regard to competition, choice, innovation and other ‘market integration drivers’.

The EPC does not support a number of related assumptions and suggestions put forth in the Green Paper. Consequently, the EPC believes that many of those suggestions will not help achieve the stated objectives and may even undermine their realisation. A thorough factual analysis of the EU payment landscape is however, a prerequisite for any conclusion that further regulatory action may be required.

This analysis should recognise the following market realities: Europe is not a fully integrated market in terms of economic development, cultural background, customer preferences or regulatory framework; Europe and its payment markets cannot be considered in isolation as they are part of an increasingly integrated global economy; payments do not act as a main barrier to the development of e-commerce otherwise e-commerce would not have experienced continuous fast growth as evidenced by several market studies. The EPC regrets that the Green Paper seems to overlook major market achievements to date to progress SEPA. The detailed response of the EPC to the 32 questions tabled by the Commission with the Green Paper is set out at the end of this article.

Key Information in this Article

In April 2012, the European Payments Council (EPC) published its response to the European Commission consultation on its Green Paper ‘Towards an integrated European market for card, internet and mobile payments’. With this response, the EPC shares the following key policy considerations which it believes are important when looking at potential European Union (EU) initiatives impacting the euro payments market:

1. The societal cost of cash and the societal benefit of migration to electronic payments are largely ignored by the Green Paper, whereas the active promotion of non-cash means of payment would significantly contribute to the achievement of the objectives pursued by the Green Paper.

2. Regulatory intervention should not undermine the innovative capacity of the European payment sector and its competitiveness in the global marketplace.

3. Regulation risks stifling innovation and market participants-led standardisation initiatives.

4. Regulation is not suited to keeping pace with the fast evolution of technology, fraud and market developments. As a matter of principle, any regulatory action should be technology-neutral.

5. Ensuring a level playing field for all players active in the European marketplace from a competitive, regulatory and supervisory perspective must be a public policy priority.

6. Payments should be run as a business in a market economy (subject to competition, profitability and compliance with all applicable legislation).

7. Legal clarity and certainty at EU level is a critical prerequisite for creating a stable and predictable SEPA wide environment for investments in new payment initiatives and innovation – e.g. interchange fees.

8. Integrity and customer trust are key in payments and should not be compromised.

9. End user interests should be properly balanced with a particular focus on ensuring tangible benefits for consumers.

10. Any regulatory initiative should be supported by a thorough impact assessment and subject to a comprehensive public consultation and appropriate implementation schedules.

A study carried out on behalf of the Executive Agency for Health and Consumers (EAHC) finds that none of the top five concerns stated by consumers about buying products online in another EU country relate to payments. The EAHC performs the tasks and activities entrusted to it by the Commission, and it works closely with the Commission’s Health and Consumers Directorate General. Additional market research reveals that ‘fragmentation of payment systems’ does not rank within the top 15 issues having an impact on EU cross-border online trading.

The detailed response of the EPC to the 32 questions tabled by the Commission with the Green Paper is set out at the end of this article.

A thorough factual analysis of the European Union payment landscape is a prerequisite for any conclusion that further regulatory action to promote market integration may be required

In January 2012, the European Commission (the Commission) published its Green Paper ‘Towards an integrated European market for card, internet and mobile payments’ for a three month consultation.

The aim of the Green Paper, according to the Commission, is to identify the obstacles that potentially prevent integration in this area. The Commission stated that the contributions to the consultation will determine the need for European Union (EU) action on the various issues raised in the Green Paper and the form this action should take. On the basis of the feedback received, the Commission will announce the next steps by the second quarter of 2012.

The Commission further indicated that proposals, if applicable, will be adopted by the fourth quarter of 2012 or the first quarter of 2013. (See the Commission’s ‘Frequently Asked Questions’ under ‘related links’ below).

The European Payments Council (EPC) published its response to the Green Paper in April 2012. The detailed response of the EPC to the 32 questions tabled by the Commission with the Green Paper is set out at the end of this article (see ‘related links’ below).

The EPC regrets that the Green Paper seems to overlook major market achievements to date to progress the Single Euro Payments Area (SEPA), e.g. development and launch of SEPA Credit Transfer (SCT) and SEPA Direct Debit (SDD) Schemes, publication of the SEPA Cards Framework (SCF) and the SEPA Cards Standardisation Volume – Book of Requirements. Migration to EMV chip and personal identification number (PIN) for face-to-face card transactions is nearly completed. More generally, the market is witnessing a spectacular growth in card transactions and contributions to the development of an integrated mobile payment (m-payment) ecosystem.

The EPC does not support a number of assumptions and suggestions put forth in the Green Paper concerning ‘gaps’ perceived by the Commission with regard to competition, choice, innovation and other ‘market integration drivers’. Consequently, the EPC believes that many of those suggestions will not help achieve the objectives defined in the Green Paper and may even undermine their realisation. A thorough factual analysis of the EU payment landscape is however, a prerequisite for any conclusion that further regulatory action may be required. This analysis should recognise the following market realities: