The European Commission has issued new requirements that ensure independence of payment card schemes and processing entities, to enhance competition in the card payment market. Retailers will be able to choose the most suitable processor for their card transactions, to the benefit of consumers.
Commissioner Margrethe Vestager, in charge of competition policy, said: "Many consumers use payment cards every day in shops or online. The Interchange Fee Regulation has capped fees charged by the banks for these card payments, which are ultimately paid by consumers. The new rules will bring more competition to the processing of card payments, which should further reduce costs to the benefit of consumers and retailers."
When a consumer pays with a card in a shop or online, the transaction needs to be processed for the payment to be transferred to the shop's bank account. This service is carried out by processing companies, which manage the necessary communication and IT processes for the payment to be finalised. Payment card schemes often provide their own services for the processing of payment transactions and therefore compete with many other independent companies that also provide the same processing services.
Under the 2015 Interchange Fee Regulation card schemes must ensure the independence of their own processing activities from the rest of their operations. This prevents card schemes from favouring their own processing entities over competing processing entities, and from bundling processing services with other services that the card schemes offer.
To ensure the independence of processing activities within card schemes, the new rules introduce detailed requirements concerning the separation of certain functions, which enter into effect on 7 February 2018. This includes limits on information exchange, as well as separate profit and loss accounts, separate corporate organisation (workspaces, management and staff) and separate decision-making.
As a result of this separation, retailers will be able to choose the best processor for their card transactions, while consumers benefit from reduced processing costs in their daily payments in shops, restaurants, on-line or via a growing range of card-based mobile payment applications.
The 2015 Interchange Fee Regulation (see full text and factsheet) addressed the problem of widely varying and excessive hidden inter-bank fees for card and card-based transactions which were an obstacle to the Single Market and a barrier to innovation in payments. It introduced caps on the fees of consumer debit and credit card payments, which are effective throughout EU and thus establish the same benefits for all consumers, regardless of where they live in the EU. It also ensures that consumers and retailers can choose which card payment options to use (e.g. debit card, credit card, loyalty cards of a store, premium cards), rather than this being imposed by card schemes and card issuing banks, and encourages the development of payments via mobile phones and other devices.
The Regulation also enables independent processors to compete effectively through separation of payment card schemes from their processing entities, applicable since June 2016. To establish the requirements ensuring this separation, the Regulation empowers the Commission to adopt Regulatory Technical Standards on the basis of a draft proposed by the European Banking Authority.
On 4 October 2017, the Commission adopted these Regulatory Technical Standards. Following completion of the scrutiny by the European Parliament and the Council, they have now become final and will enter into effect on 7 February 2018, which is the twentieth day following their publication in the Official Journal of the European Union.