Last week, the Members of European Parliament voted on the Commission proposals for a multilateral interchange fee (MIF) regulation and for the revision of the Payment Services Directive (PSD). The votes were cast at the end of the Parliamentary term and consolidate the position of the European Parliament.
Amendments for the MIF-regulation
The initial Commission proposal had capped the interchange fees for international credit-card payments to 0,3% and for debit-card payments to 0,2%. These caps would in time also have applied domestically. The European Parliament has now amended in particular the cap for debit-card payments (including pre-paid cards) to become the lower of 7 eurocents or 0,2% of the payment transaction value.
Under the Commission proposal, commercial cards and three party schemes had been excluded from the scope. The Parliament, however, chose to apply the rules to commercial cards as well. It also decided to bring the three-party-schemes into scope if their volume exceeded a threshold set by the European Commission, and to narrow the limited network exemption.
In the amended proposal, the difference between cross-border and national card payments has been eliminated. According to the Parliament text, the regulation would be equally applicable to cross-border and national card-payments as of one year after its entry into force. However, the rules would still allow Member States to introduce lower caps or further regulation on the national level.
Other amendments clarify rules to improve customer disclosure and protection, to enhance the interoperability between card schemes and to prohibit the use of license rules to limit the free choice of payment processors. In some of these matters, the European Banking Authority (‘EBA’) may further develop guidelines and draft regulatory technical standards.
Amendments for the revised Payment Services Directive
The original EU Commission proposal for the revision of the Payment Services Directive had extended the scope of the rules to payments where either payer or payee are located in the European Union. It had provided for more elaborate and detailed rules on the authentication of transactions and set the stage for the European Banking Authority to issue guidelines in this respect.
The proposal had also allowed for a new type of licensed institution, Third Party PSPs (TPPs). These TPPs would be allowed to initiate payment instructions on behalf of the user at his bank and could also be mandated by the customer to get access to the customer account information.
One of the amendments of Parliament has been to limit the role of the TPPs so that they cannot gain access to the actual balance information of the customer. The bank of the customer should open up its systems to TPPs, but can reply to a payment information request with a yes or no answer that outlines if there is sufficient money in the account for the transaction.
Parliament also specified that TPPs would not require a contract with each individual customers’ bank in order to offer their payment inititiation services to customers. It chose to mandate that the TPPs must authenticate themselves to the customers’ bank based on a standardised guideline and protocol, issued by the EBA. This protocol should be ready in one year after the entry into force of the directive.
The role of the EBA is reinforced by further changes in the Parliament text. The EBA will standardise the authorisation procedure for obtaining a license as a payment institution, and consult with an advisory panel of market representatives on this matter. The EBA will also be mandated to mediate in those instances where information sharing and supervision between local supervisors does not achieve the intended result.
Finally, The Parliament has chosen to be more explicit with respect to the bank accounts that payment institutions need in order to operate their business. Member States need to ensure that access to such bank accounts is granted on an objective, non-discriminatory and proportionate basis and that it is extensive enough to allow payment institutions to provide their services in an unobstructured and efficient manner.
The votes of the European Parliament are the basis for further negotiations with EU Member States and the European Commission on the final text of the MIF-regulation and PSD. These trialogue negotiations will be carried out by the new European Parliament that takes office as of July this year. While the proposals may still change as a result of the trialogue, it is likely that the Parliament will remain focused on customer protection and competition in the payments market.
The exact time that these negotiations will take is hard to predict. If they are concluded by the beginning of 2015, this means that the MIF-regulation will enter into force as of 2016 and the revised PSD would have to be transposed into national law by 2017.