If Europe is to enjoy a truly single market it must first tackle the fragmentation in its payments markets.
The
single market is considered one of the primary achievements of the
European Union, yet half a century after it was conceived it still
features significant gaps that are causing fragmentation and creating
obstacles to cross-border activity. Nowhere are these barriers more
crucial, but less visible to citizens, than in the EU's dynamic and
shifting payments market. The dream is for cross-border payments to
eventually become as simple as domestic payments within a member state.
Looking at this issue are two key reports currently moving through
parliament; one looking at card-based transaction fees and another
looking at the EU-wide market for electronic payments.
For
Portuguese MEP Diogo Feio, who is rapporteur on electronic payments, it
is vital to understand the "differences between the various states of
the EU" when looking at the market for transactions. "Some are developed
and more modern than others," he explained, adding that "For a
Portuguese citizen it is usual to do a payment at an ATM or in internet
banking. In other countries this is not the same." In addition to the
various methods employed in different member states, there are also
"different levels of payments and we need to understand these", said
Feio. To properly deal with these diverging methods, he urged
policymakers to "think of consumers", adding that "first of all we need a
more simple and understandable law". He underlined the need for
regulations on ePayments to have "clear and easy rules" and for Europe
to move in the "direction of a single payments market". "This is a very
important step in line with the internal market," he added.
Fellow
EPP deputy Pablo Zalba Bidegain, whose report looks at card-based
payments, highlighted the need for a "level playing field for all
transactions based on payment cards". For him, this could achieved by
setting the same multilateral interchange fees (MIFs) across the entire
EU. MIFs, which are collectively agreed inter-bank fees, form part of
the fees that payment service providers charge to merchants, who in turn
pass the costs onto the consumer.
"One of the problems we face"
said the Spanish MEP, "is that market entry for pan-European players
remains difficult as interchange fees in EU member states vary a lot
between one country and another. New entrants have to offer interchange
fees at least comparable to those prevailing in each within the whole
European Union will create a level playing field."
The European
commission's proposal suggests capping MIFs at 0.2 per cent for debit
transactions and 0.3 per cent for credit card transactions. This would
represent a significant drop in member states such as Poland, where the
fees are around 1.6 per cent, but would be over the 0.1 per cent charged
in Denmark. Zalba Bidegain said that parliament wants to be sure that
these figures are charged at the correct amount and that they "do not
negatively affect consumers". However, when looking at the possibility
of an outright ban for MIFs, he said, "I firmly believe in the case of
credit cards that banks have the right to charge for that payment
because there is a risk linked to that. In the case of debit card
operations, although it is not so clear, I think it would make sense to
charge something." The capped figures of 0.2 per cent and 0.3 per cent
have reportedly been accepted by key players in the payments market,
Visa, MasterCard and the French domestic scheme Groupement Cartes
Bancaires.
A key issue facing both pieces of legislation is the
dynamic and changing nature of the payments market. For Zalba Bidegain
it was crucial to ensure that the regulation of these fees was made
"futureproof ". "We have to make sure that there are no gaps in the
regulation that PSPs can take advantage of," he added. Feio also
underlined the importance of recognising "new ways of payment" and the
need for any new regulations to be able to "understand and regulate"
these novel methods. However, he also made it clear that he felt all
different methods of payment "should have the same treatment as much as
possible". For the Portuguese rapporteur, new problems such as the
protection of data have also arisen through the use of these new
methods. "Safety and security of data will be a priority," he said,
adding that the protection of systems of payment against fraud" will be a
key aspect of his report.
Zalba Bidegain was keen to stress that
innovation was a crucial issue for him. "We want companies to go on
having incentives in investing in innovation," he said, adding that MIFs
have a negative effect on this. This understanding of the negative
effect of transaction fees was in part inspired by the May 2012 general
court decision against MasterCard, which found that MIFs restrict
competition by inflating card acceptance costs, while providing no
consumer benefits.
Both rapporteurs wanted to ensure that
consideration for consumers was made a central pillar of their reports
and ensuring an easy and transparent way of making payments across the
EU is key to this aim. For Zalba Bidegain, both reports are inextricably
linked in helping make the single market a reality. "We are working
very closely on this report with Mr Feio. Same line, same direction,
same timing," he said. For Feio the aim was simple "We are building what
we need to have a single payments market."
