GREEN PAPER. Towards an integrated European market for card, internet and mobile payments

Transcription

1 GREEN PAPER Towards an integrated European market for card, internet and mobile payments COM/2011/0941 final Contribution to the Public Consultation, submitted by: Hellas Pay Payment Services SA Leoforos Kapodistriou 2, Amaroussio, Athens, Greece Transparency Registry - Interest Representative Register ID: Tel: , larios@hellaspay.gr 1

2 Separating card schemes and card payment processing 9) Should any action be taken on this? Are you in favour of legal separation (i.e. operational separation, although ownership would remain with the same holding company) or full ownership unbundling? The unbundling of the entities related to card scheme management and card payment processing will allow further reduction of costs and improved access to the relevant market. Additionally, the unbundling/ separation of card scheme and processing entities will permit a more effective infusion of new innovative processes and technologies further down the value-chain of card processing, which in turn will spur competition and further optimise costs. The EU experience is positive in all markets that unbundling has been instigated. However, in order to facilitate a smooth transition, a two-phase process might be required. At the first phase, a legal separation might be required to be completed in a certain period (e.g. 1 or 2 years) while at the second phase the full ownership unbundling should become a prerequisite for operations in Europe Access to settlement systems 10) Is non-direct access to clearing and settlement systems problematic for payment institutions and e-money institutions and if so what is the magnitude of the problem? The non-direct access to clearing and settlement systems creates insurmountable obstacles to Payment Institutions and e-money Institutions, and hinders the provision of services in fully transparent, cost-effective and fair-market terms. More specifically, the existing gateways to clearing and settlement systems (such as banking and financing institutions) are benefiting from lower clearing and settlement charges compared to Payment Institutions, which are effectively providing similar payment services, and are thus distorting competition. Additionally, and even more significantly, Banks and other Financing Institutions which are currently acting as gateways, have the power to permit or disallow access to clearing and settlement systems according to their own policies and long timeframes of decisions, thus effectively acting as regulators of other market players that they 2

3 are competing with. The clearing and settlement systems should be accessible unequivocally by any relevant market player, on the basis of equal and transparent access terms, if the m- payments and e-payments market is expected to operate at fair-competition rules and develop on solid market-driven ground. 11) Should a common cards-processing framework laying down the rules for SEPA card processing (i.e. authorisation, clearing and settlement) be set up? Should it lay out terms and fees for access to card processing infrastructures under transparent and nondiscriminatory criteria? Should it tackle the participation of Payment Institutions and E- money Institutions in designated settlement systems? Should the SFD and/or the PSD be amended accordingly? Any framework addressing SEPA card processing, should lay out rules that secure the fair and equal access to settlement systems by all market actors, including Payment Institutions and e-money Institutions. Any additional regulation in the direction of setting access fees should be implemented cautiously, so as not to create over-regulation and cumbersome processes and slow innovation. However, it is even more important to push forward and monitor the application of any SEPA card processing framework to each Member-State s legal framework. Different speeds of framework adoption at the Member-States legal frameworks, essentially creates additional market distortion Information on the availability of funds 13) Is there a need to give non-banks access to information on the availability of funds in bank accounts, with the agreement of the customer, and if so what limits would need to be placed on such information? Should action by public authorities be considered, and if so, what aspects should it cover and what form should it take? Information on the availability of funds and/ or personal data should be provided to Institutions which are designated to implement payments (such as Payment Institutes, e- money Institutes etc) in order to facilitate electronic payments transactions and provide a comprehensive level of security for both citizens and merchants. Unfortunately, current banking practices essentially prohibit the implementation of real-time e-payment processes through accounts and are stalling the development of the e-payments market. However, such information should not be provided on a full-disclosure basis but rather as 3

4 confirmations on data-validating queries sent electronically by the Institutions to the banks. For example, instead of providing full data on bank accounts balances etc. nonbanking Institutes should submit electronically queries (e.g. does this specific bank account bound to be charged, have a balance of XXX euros needed for the e-transaction? ) and banks should either confirm or decline the queries as true or false. The same process should be followed for cross-referencing and confirming sets of personal data. Any involvement of public authorities would add inefficiencies and unnecessary regulation with the minor exception of allowing the use of citizens electronic signatures issued by the state, also by Payment Institutes, e-money Institutes and Banks Dependence on payment card transactions 14) Given the increasing use of payment cards, do you think that there are companies whose activities depend on their ability to accept payments by card? Please give concrete examples of companies and/or sectors. If so, is there a need to set objective rules addressing the behaviour of payment service providers and payment card schemes vis-àvis dependent users? Indeed there exist companies and sectors which are heavily depended operationally on the acceptance/ use of cards (credit or payment cards) such as online travel agencies, entertainment online booking services, dedicated e-shops etc. However, addressing the very critical needs of such companies and sectors should not be the result of regulation but rather a result of market-driven competition. More specifically, increased competition in the m-payments and e-payments market will allow the more efficient among the Payment Institutes and e-money Institutes to capture such clientele, by providing more sophisticated mission-critical services which other competitors may not provide. By eliminating obstacles in the access to settlement systems etc. (please refer to 4.1.5) such critical-services will be catered for by a well-functioning market Consumer merchant relationship: transparency 15) Should merchants inform consumers about the fees they pay for the use of various payment instruments? Should payment service providers be obliged to inform consumers of the Merchant Service Charge (MSC) charged / the MIF income received from customer transactions? Is this information relevant for consumers and does it influence their payment choices? 4

5 Merchants should be required to provide clear and transparent information to the consumers, on the fees they are charged through the use of various payment instruments. However, MSCs/ MIF income etc. are part of a commercial agreement between Payment Service Providers (PSPs) and the Merchants and thus has very limited or negligible effect on consumer decisions. Typically, such commercial agreements between PSPs and Merchants are not easily described through a simple percentage or a fixed amount, but in many cases may be depended on sales volumes, other commercial transactions etc. Such information definitely cannot be described through simple and quickly evaluated terms and is thus deemed irrelevant to the consumer. Additionally, such information might create additional privacy issues to the Merchants, since they will be asked to disclose business decisions and agreements publicly, even to the competition. Thus, such information is deemed irrelevant to influence payment choices of the consumer Consumer merchant relationship: rebates, surcharging and other steering practices 16) Is there a need to further harmonise rebates, surcharges and other steering practices across the European Union for card, internet and m-payments? If so, in what direction should such harmonisation go? Should, for instance: certain methods (rebates, surcharging, etc.) be encouraged, and if so how? surcharging be generally authorised, provided that it is limited to the real cost of the payment instrument borne by the merchant? merchants be asked to accept one, widely used, cost-effective electronic payment instrument without surcharge? specific rules apply to micro-payments and, if applicable, to alternative digital currencies? Harmonisation is deemed necessary in the field of micro-payments fees. Micro-payments do not provide a substantial financial incentive for some PSPs and may be avoided. Thus the micro-payments market is growing at substantially lower rates than its true potential. It is proposed that a pan-european fixed fee is introduced (e.g. 0,25 per transaction) for every transaction under a specific amount (e.g. 10) so as to create a market-incentive for PSPs to support micropayments more aggressively. 5

6 4.3 Standardisation E- and m-payments 21) On e- and m-payments, do you see specific areas in which more standardisation would be crucial to support fundamental principles, such as open innovation, portability of applications and interoperability? If so, which? Standardisation and the introduction of a specific Interoperability Framework are deemed as critical for accessing either clearing and settlement systems or central databases that retain financial-reputation data (e.g. Tiresias database in Greece, which includes data on the financial reputation of merchants). Specific Interoperability Standards should be adopted and enforced on all such systems and databases, so as to facilitate access of Payment Institutes and Banks and help combat fraud more efficiently across Europe Interoperability and Competition 24) How could the current stalemate on interoperability for m-payments and the slow progress on e-payments be resolved? Are the current governance arrangements sufficient to coordinate, drive and ensure interoperability within a reasonable timeframe? Are all stakeholder groups properly represented? Are there specific ways by which conflict resolution could be improved and consensus finding accelerated? Judging from previous European successes and how they were achieved, there should be additional effort by promoting joint R&D projects on the development of pan-european interoperability platforms and standards in the field of e- and m-payments. To this objective, European CIP funds or other funding could be specifically routed to research on advanced standardisation projects for m-payments and e-payments, initiated by the collaboration of key-market players of Europe. 4.5 Payments Security 26) Are additional security requirements (e.g. two-factor authentication or the use of secure payment protocols) required for remote payments (with cards, e-payments or m- payments)? If so, what specific approaches/technologies are most effective? 6

7 Any such initiative, should balance between increased security and increased efficiency/ speed of transactions at real-time. As such, it is proposed that as a major step it is necessary to introduce electronic authentication of Merchants, at their initial registration at any PSP, through accessing any European database that contains financial credit-scoring information. To this effect, any such European database should be accessible to designated PSPs, through a standardised Interoperability Framework. Additional security requirements, further to the existing ones, that are implemented on a transaction-by-transaction basis will introduce significant delays in the electronic processing of payments and thus create a non-favourable experience for consumers. 6. General Remarks 32) This paper addresses specific aspects related to the functioning of the payments market for card, e- and m-payments. Do you think any important issues have been omitted or under-represented? For the market of cards, e- and m-payments to function efficiently and without unfair distortion across Europe, it is important to make sure that all users of Payments Services, such as Merchants, get initially authenticated by utilizing the same pan-european means and tools of authentication, irrespectively of the country where this authentication is taking place. It is noted that in some cases, at the one end of the spectrum at some countries, the rules and paperwork associated with authenticating Merchants is extremely detailed and overburdening and thus inefficient, while at other EU countries, the initial authentication process of the Merchant is minimal. To be more precise, we are offering an example: a European Merchant may opt to select one among two different PSPs, so as to accept m-payments. If the candidate PSP #1 originates from country X, the process for authenticating the Merchant might be concluded fully electronically. If the candidate PSP #2 originates from European country Y, the process for authenticating the same Merchant needs considerably more paperwork, original documentation in paper format etc. Thus for this same-single Merchant requesting the same services, the most preferable PSP will be the one providing the simplest authentication process. These two authentication processes of the example are not the same, due to the regulations introduced by the local Regulatory and Supervisory Authorities of each country. The result of this discrepancy, is strong distortion and artificially-infused inefficiencies in creating a truly competitive, pan-european e-payments market. 7

8 It is thus important to make sure that an integrated European market for card, Internet and mobile Payments makes use of the same and exact rules of authentication for Merchants, physically, electronically or otherwise and that local Regulatory and Supervisory Authorities should adhere to these same rules. 8