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EU Monitoring Report The EU Monitoring Report is compiled by Dorsey & Whitney MNP in London exclusively for ATMIA Europe and covers legislative efforts in or by the European Union and Member State institutions, and other issues of relevance to ATMIA’s members. This EU Monitoring Report covers the period from March 2007 to the end of August 2007. As Dorsey & Whitney constantly strives to improve the EU Monitoring Report we welcome all comments you may have, especially as regards content or issues treated by the EU Monitoring Report. You may contact us either through ATMIA Europe or directly, using the address below. ______________________________________________________________ EUROPEAN PARLIAMENT ADOPTS PAYMENT SERVICE DIRECTIVE The European Parliament adopted the proposal for the Payment Services Directive (PSD) on 24 April 2007. This follows the ECOFIN Council (Council of European Finance Ministers) of 27 March 2007 where the proposal was approved. The aim of the PSD is to establish a common legal framework for the payments market which will be applicable to all payments made within the European Union (EU) in order to enhance competition by opening markets, provide harmonised market-access requirements for non-bank payment service providers and introduce a set of information requirements. Main elements of the PSD There are three main elements to the PSD: Right to provide payment services to the public (Title II) These rules will create a new licence arrangement applicable throughout the EU. Once a payment institution is licenced by the appropriate regulatory body in its home member state, it will be able to provide cross-border payment services to consumers throughout the EU, or to establish a branch in another member state, without having to apply to the regulatory body in that member state for an additional licence. Title II will establish a licence arrangement which is similar to, but less restrictive, that which already applies to banks. The new arrangement will apply to money transmitters, ATM operators and other providers of payment services. Transparency and information requirements (Title III) The PSD introduces a number of information requirements for payment services, including pre-contract procedures the payment service provider has to observe, and post-contract information which must be provided to both the payer and the payee. The parties involved in a transaction will have the ability to opt out of Title II provided the payment service user is not a consumer. Rights and obligations of users and providers of payment services (Title IV) The PSD sets out the rights and obligations of both the payment service providers and users, including the rights and liabilities of each party in the case of unauthorised transactions. If a transaction is initiated by the payment service provider without the payer's consent, the service provider will be required to refund the amount of the unauthorised transaction plus any legally determined compensation. In the event of loss or theft of user identification information, the PSD obliges the user to notify the payment service provider without delay and to bear any loss from any unauthorised transactions which took place before notification (up to a maximum amount of € 150). Next steps The PSD will now be forwarded to the EU Council for final adoption during the third quarter of 2007. It is expected to be approved and to enter into force by 1 November 2009. The PSD will provide the legal framework for the Single European Payments Area (SEPA) which is expected to be launched in January 2008 and to replace the national payments systems from January 2010. (Source: European Parliament adopts Payment Services Directive; www.finextra.com; Press release 4 May 2006 from the European Central Bank, www.ecb.int/press; Payment Services Directive pushed through by Parliament, www.euractive.com/en/financial-services; Payment Services Directive; Proposals for the Payment Services Directive, text of proposed directive, www.europa.eu ) _____________________________________________________________ NEW EUROPEAN DEBIT CARD SCHEME CALLED FOR In a recent report the European Central Bank (ECB) called for an additional European debit card scheme to be used mainly in the Euro area. The ECB states that such a scheme could be a completely new scheme, or that it could be an alliance between existing national schemes. Global coverage would be welcomed but it would not be considered a necessity. Any such scheme should, according to the ECB, operate under EU law and should process personal data in line with EU data protection laws. The ECB considers most of the current national debit card schemes as efficient with low fee levels. This should not be lost with the creation of SEPA and one way to capture this would be with the creation of a new European wide scheme. The ECB also claims that such a pan European scheme would stimulate competition and would ensure the close involvement of European banks in the governance of the scheme. The ECB recognizes that it will take some time to set up a European debit card scheme and that it probably would not be ready by either of the SEPA milestone dates of 2008 or 2010. (Source: Single Euro Payments Area (SEPA) from Concept to Reality. Published July 2007 on www.europa.eu). _____________________________________________________________ INTERCHANGE FEES The ECB has called for the EU Commission to reach a decision on outstanding interchange fee cases as soon as possible. The EU Commission is currently investigating fees charged by MasterCard in relation to cross-border card transfers. Additionally, EU Competition Commissioner Neelie Kroes has previously said that she will investigate interchange fees charged by Visa when an "antitrust exemption" agreement for the card company expires at the end of December 2007. In a recent report the ECB notes that although it does not anticipate the abolition of interchange fees nor does it wish to enter into the defence of these arrangements involving existing credit and debit cards, a decision would greatly assist future planning. The ECB believes that in the long term geographical differentiation of interchange fees would not be compatible with the SEPA concept. The ECB would accept that differentiation might take place during a transition period in order to facilitate change in national markets, but is concerned that interchange fees do not cause merchants and cardholders to move away from using the most efficient payments system. (Source: Single Euro Payments Area (SEPA) from Concept to Reality. Published July 2007 on www.europa.eu). ______________________________________________________________ DATA PROTECTION A report issued by the UK Information Commissioner Richard Thomas states that a "horrifying" number of companies, government departments and other public bodies have breached the UK's data protection rules in the past year, and that management of firms controlling personal data must take the personal data of both staff and customers seriously. The Commissioner was publicly critical of three companies, Orange, Barclays and NatWest. The UK Information Commissioner received nearly 24,000 enquiries and complaints about issues relating to personal information in 2006-07. He noted that a breach was likely to have happened in 35% of cases. A total of twelve high street banks were guilty of disclosing customers' personal details, including bank statements and partially destroyed credit cards. The Commissioner called for greater powers to check of the behaviour of companies, and in particular the right to carry out an inspection without that company's permission. The current penalties for the misuse of personal data in the UK are already severe and include a possible prison sentence for those who deliberately misuse personal information. (Source: BBC News item "Firms breaching data protection" dated 22 August 2007. www.bbc.co.uk/news) The issue of the credit transfer scheme was addressed in a recent report from the ECB. The report noted that in order to make the SEPA scheme more attractive to national consumers it would require the development of a priority credit transfer system which would provide same day settlement. The ECB welcomed the work undertaken by some market participants to develop an interbank payment service which had a maximum settlement time of four hours. For the credit scheme to prosper, the ECB noted that institutions receiving and sending domestic credit transfers should also be able to receive and send SEPA credit transfers. The ECB believes that banks whose payment volumes represent the critical mass of payments should have the ability of receiving and sending SEPA credit transfers from January 2008. Smaller banks are only expected to be able to receive SEPA credits as from January 2008 and are expected to gain the ability to send credit transfers during the course of 2008. (Source: Single Euro Payments Area (SEPA) from Concept to Reality. Published July 2007 on www.europa.eu). _____________________________________________________________ IMPLEMENTATION AND MIGRATION TOWARDS SEPA Recent reports from the ECB have called for all affected EU countries to produce detailed plans for the implementation of SEPA. While most countries had not completed their plans by the end of 2006, a report published by the ECB in July 2007 noted that most EU countries have now published comprehensive plans. The ECB called for plans to be "concrete and precise, and to provide guidance to all stakeholders". All plans will be translated into English and published on the SEPA directory (www.sepa.eu) in order to aid transparency. The report noted that the movement to SEPA will be a gradual process over time, but thought that a critical mass of transactions will have migrated by the end of 2010. The report added that national migration authorities should clearly phase out national solutions and determine the end date of the migration phase from the national system to the SEPA equivalent. The report noted that a long continued process of running both the SEPA and national systems together would not allow the gains and efficiency for stakeholders that SEPA can bring. More communication on these migration plans was called for. The report stated that the majority of this communication effort should be undertaken by banks, national migration entities and public authorities. (Source: Single Euro Payments Area (SEPA) from Concept to Reality. Published July 2007 on www.europa.eu). _____________________________________________________________ 40 YEARS OF ATM’S IN THE UK June 2007 was the 40th anniversary of the first ATM installed in the UK. The first machine was installed at a branch of Barclays Bank in Enfield, north London. Plastic cards were yet to be invented, so the ATM used a cheque impregnated with carbon 14 (a substance which is radioactive). The machine paid out a maximum of £10. Many ATMs still use IBM's OS2 operating system, but the end of support for this platform is forcing operators to migrate to different platforms, including Microsoft Windows. Although most ATMs currently provide similar services, newer technology allows operators to differentiate their machines by offering new services such as up-to-date sports scores. Customers may also be able to customise the screen so that only the services they require most often are shown on the screen to speed up the process. New platforms should also provide cost savings to operators. Rather than changing and testing each ATM individually newer technology platforms allow these functions to be performed remotely. (Source: BBC News report dated 25 June 2007 The man who invented the cash machine; www.bbc.co.uk/news and Cashing in on the ATM revolution dated 2 May 2007; www.silicon.com/financialservices) _____________________________________________________________ DISCLAIMER This EU Monitoring Report has been prepared for general information purposes only. The contents should not be construed as legal advice or opinion. If you have any questions, please contact a lawyer concerning your specific legal situation. Dorsey & Whitney |
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