Payment Systems Committee
Chairman: Graham Austin
Advisers: Cécile Grégoire, Ruth Milligan
Assistant: Elen Guedes
2009 began with slow progress on payments but saw some developments later in the year, particularly on cards. Following its landmark decision on MasterCard (2007), the Commission agreed a settlement capping interchange fees and improving fee transparency and launched strong competition action against Visa.
However, SEPA is still to realise its promised benefits; it remains in its infancy and, although governance has improved, payment systems users are yet to attain an equal voice in the process. The threat that cheap, efficient national debit card schemes will be replaced by Visa (V Pay) and MasterCard (Maestro) is still present.
2010 is likely to be a crucial year with further action on interchange fees on cards and direct debit and growing pressure to deliver results from SEPA. New technologies such as mobile and contactless payments will further change the European payments landscape.
1. Payment cards complaints
Although progress has been made, the payment card market is still highly anti-competitive and brings huge costs for retailers, especially SMEs, and to all European consumers. Fees remain locked-in to anti-competitive processes and cover services from which retailers do not benefit. This distorts competition and promotes less efficient means of payment. EuroCommerce argues for an abolition of the elements of the MSC from which retailers do not benefit.
The Commission followed up its 2007 decision against MasterCard with a settlement in April 2009, which capped average MIFs at 0.3% for credit and 0.2% for debit cards. It also provides for greater transparency, the unbundling of fees and the abolition of the increased scheme fees introduced in 2008. EuroCommerce argues that this does not go far enough. Also in April 2009, the Commission issued a statement of objections against Visa and EuroCommerce became party to the case after lodging a (new) complaint. At the hearing in December, EuroCommerce, with the help of several members and expert economists, presented a valuable reinforcement of the Commission's case.
On 1 December, EuroCommerce organised a high-level conference on payment systems. Over 70 senior finance executives from member companies and retail associations worldwide expressed their views to the European Commission and to the European Central Bank.
In 2010, EuroCommerce will continue its vociferous opposition to unfair card fees and anti-competitive practices.
2. Single Euro Payments Area (SEPA)
SEPA, the project to create euro zone-wide payment infrastructures, is now a reality – at least on paper. Credit transfers and cards went live in January 2008 and direct debit followed in November 2009. However, in practice, there is still a great deal of work to do. Take-up remains minimal; the various SEPA payment schemes are still 'under construction' (with major points of difference between providers and users to be resolved) and there is therefore no fixed completion date in sight. EuroCommerce insists that no 'end-date' can be set until the outstanding issues have been resolved.
SEPA remains predominantly a banking initiative run by the European Payments Council (EPC). Throughout 2009, we worked hard with other stakeholders to increase user involvement and press the message that SEPA will not meet its objectives of better competition, enhanced transparency and lower prices if the banking industry is allowed to maintain its anti-competitive practices.
SEPA governance saw gradual improvement in 2009, with pressure from EuroCommerce, other stakeholders and EU institutions (Commission and ECB), leading to fuller user involvement in the design of SEPA payment concepts. Without this, the project as a whole could fail. In concrete terms this has meant the establishment of the End-users Committee (EUC) and the Customer Stakeholder Group (CSG).
The creation of these two fora has led to a significant increase in EuroCommerce participation in the work of the EPC, which we see as continuing and expanding in the next years. EuroCommerce also fully supports the Commission proposal for an overarching EU SEPA Council to decide policy issues. We call for equal representation of stakeholders within this body. In addition, the EuroCommerce competition complaint on SEPA governance, lodged in 2008, is still pending.
In 2010, EuroCommerce will continue to push for increased competition, transparency, cost-based pricing and flexibility of payment method choices within SEPA.
3. The Payment Services Directive (PSD)
The Directive on Payment Services in the Internal Market will remove legal barriers for entry into the market and allow new players to provide payment services. By introducing rules for transparency and security, the text will be the core of an internal market for payments and should greatly benefit the retail sector.
The Directive had to be transposed into national legislation by 1 November 2009. One major issue of concern is the decision by several member states not to accept the option to allow surcharging contained in the Directive.
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