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In your view, which of the following initiatives will have the greatest impact on the European payments market?

European Commission proposal for revised Payment Services Directive (PSD2)
European Commission proposal for new Regulation on interchange fees for card-based payment transactions
Work programme of Euro Retail Payments Board, chaired by European Central Bank
SecuRe Pay Forum recommendations for security of internet payments; for payment account access services; for security of mobile payments
Guidelines and technical standards issued by European Banking Authority pursuant to mandate provided by proposed PSD2 (Articles 86, 87)
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EPC Newsletter
Issue 11 - July 2011

EPC Latest News

EPC Plenary Meeting UpdateMain decisions taken in June 2011

13.07.11 By Gerard Hartsink

INTRODUCTION AND SUMMARY

Gerard Hartsink summarises the main items agreed in the European Payments Council (EPC) Plenary meeting, which took place in June 2011. During the meeting, the EPC Plenary considered next steps with regard to the SEPA e-Payment Framework. The EPC Plenary also addressed inconsistencies between the European Commission's objectives and approach in the areas of market integration and payment innovation on the one hand and competition on the other. The main decisions are highlighted in the information box at the start of this article.

Key Information in this Article

Main items agreed by the European Payments Council (EPC) Plenary in June 2011:

SEPA e-Payment Framework***

*** In June 2012, the EPC and its members decided to abandon the work on a draft SEPA e-Payment Framework

The European Payments Council (EPC) committed to develop the SEPA e-Payment Framework which facilitates online payments. In the first quarter of 2011, the three existing e-payment schemes conducted their proof of concept (PoC) exercise based on the draft SEPA e-Payment Framework Service Description. The EPC received additional comments from an e-payment scheme which did not participate in this PoC. The EPC aims to resolve outstanding issues related to the framework by September 2011 to be able to start a public consultation.

European Commission objectives and approach in the areas of market integration and payment innovation on the one hand and competition on the other

The EPC is committed to developing the harmonised payment schemes and frameworks based on global technical standards, which are required to achieve SEPA as requested by the relevant European authorities throughout the past decade.

Inconsistencies between the European Commission’s objectives and approach in the areas of market integration and payment innovation on the one hand and competition on the other however, have seriously hampered the progress which the EPC would have liked to have made, specifically in the area of cards and e-payments.

The EPC would welcome a shared understanding between the European Commission’s Directorate General (DG) Internal Market and Services, DG Information Society and DG Competition by 2 December 2011 at the latest, when the next meeting of the SEPA Council will take place. The EPC Plenary agreed to address the European Commission with a view to incentivise further discussion on this subject.

Details on this subject are set out in the article titled ‘Arrested Development’ in this issue of the EPC Newsletter.

***
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The SEPA e-Payment Framework: next steps***

*** In June 2012, the EPC and its members decided to abandon the work on a draft SEPA e-Payment Framework

In response to the rapidly increasing volumes of electronic commerce (e-commerce) payment transactions, the European Payments Council (EPC) has committed to develop the SEPA e-Payment Framework which facilitates online payments. It is designed to support interoperability between existing e-payment schemes as well as new e-payment channel schemes, which would like to re-use the SEPA Credit Transfer Scheme and could migrate from a national payment landscape to a SEPA environment.

The framework is not, however, a code of conduct for web merchants on how they should deliver goods and services in time at the appropriate level of quality to consumers. The commercial relations between buyers and sellers of goods and services are not a part of the framework.

In the first quarter of 2011, the three existing e-payment schemes - EPS (Austria), Giropay (Germany) and iDEAL (Netherlands) - carried out their proof of concept (PoC) exercise based on the draft SEPA e-Payment Framework Service Description. The EPC received additional comments from an e-payment scheme which did not participate in this PoC.

Taking into consideration the results of the PoC, the draft SEPA e-Payment Framework documents were amended where needed. It was concluded that further review with regard to legal aspects pertaining to the framework is required. To ensure an integrated approach, the EPC aims to resolve outstanding issues related to the framework by September 2011 before a public consultation will be launched.

European Commission objectives and approach in the areas of market integration and payment innovation on the one hand and competition on the other: next steps

The EPC is committed to promoting SEPA. The EPC develops the scheme rules and frameworks required to achieve SEPA as requested by the Economic and Financial Affairs Council (ECOFIN), the European Parliament, the Directorate General (DG) Internal Market and Services of the European Commission, and the Governing Council of the European Central Bank (ECB). Throughout the past decade, these European authorities have continuously articulated the expectation that industry should develop the harmonised payment schemes and frameworks based on global technical standards, which would allow banks and payment institutions to deliver SEPA payment services to all European citizens and businesses. These authorities stressed that advancing the integration and innovation of the euro payments market would increase the global competitiveness of the European Union (EU).

Recently however, inconsistencies between the European Commission's objectives and approach in the areas of market integration and payment innovation on the one hand and competition on the other have seriously hampered the progress, which the EPC would have liked to have made specifically in the area of cards and e-payments. The EPC found itself subject to several questions and enquiries from DG Competition. While the EPC wholeheartedly subscribes to the view that its work should comply with competition law, the EPC does feel that some recent developments would need discussion between the European Commission services and the EPC in order for the EPC to determine to what extent it can continue to pursue the fulfilment of some of the policy objectives set by the EU.

The EPC Plenary agreed to address the European Commission with a view to incentivise further discussion on this subject. The EPC would welcome a shared understanding between the DG Internal Market and Services, DG Information Society and DG Competition by 2 December 2011 at the latest, when the next meeting of the SEPA Council1 will take place.

Examples highlighting the difficulties the EPC is facing in view of diverging messages from the European Commission in the areas of market integration and payment innovation on the one hand and competition on the other, are included in the article 'Arrested Development' (see link under 'related articles in this issue' below).

Gerard Hartsink is the Chair of the EPC.

Related articles in this issue:

Arrested Development. Inconsistencies between the European Commission's objectives threaten to hamper SEPA progress

A Closer Look at Innovation in Retail Payments. Central Bank research in preparation: a report on first findings of working group established by the Committee on Payment and Settlement Systems

Related article in previous issue:

Innovacompegration (This is Not a Typo). Reflections on the best approach to innovation, integration and competition in payments (EPC Newsletter, Issue 10, April 2011)

  


1The SEPA Council, which brings together representatives of both the demand and supply sides of the payments market, including the EPC, was established by the European Commission and the ECB in June 2010 to promote the realisation of an integrated euro retail payments market by ensuring proper stakeholder involvement at high level and by fostering consensus on the next steps towards the full realisation of SEPA.

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