bpce response to the european commission’s green … payment cards could yield direct an indirect...

BPCE

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BPCE response to the European Commission’s Green Paper

“Towards an integrated European market for card, internet and mobile payment”

---- April 2012

BPCE response to the European Commission’s Green Paper - April 2012

Introduction BPCE, as a Member of the FBF (Fédération Bancaire Française), has contributed to the FBF global response to the European Commission’s Green Paper “Towards an integrated European market for card, internet and mobile payment” (Green Paper). BPCE shares the common views of FBF members. In addition to the FBF answer, BPCE has decided to submit its own individual response, in order to emphasise some key points and express some additional comments. This is the purpose if this document. First, we would like to fully support the fundamental objectives underlined by the Commission: Transparency and openness in the market, trusted environments and secured payments for everyone, innovation in new payment methods… for the benefit of new generations of consumers and merchants. Equally, BPCE expect that fair and proportionate rules and policies will be applied to all market players, whether they are incumbent or new entrants, with stability and minimum clarity in those rules. As well, BPCE wishes that the Commission recognizes a legitimate remuneration for the services provided and investments’ borne by all market participants to meet constantly the increasing levels of security requirements as well as the development of new innovative products. General observations Before answering questions specifically, BPCE wishes to submit a number of key general observations on this Green Paper. Context and scope The title of the Green Paper is “Towards an integrated European market for card, internet and mobile payment”. Whilst BPCE shares the objective of the Commission to achieve a more harmonised and integrated European payment market, BPCE regrets that the Green Paper is notably not considering and integrating all payment instruments, such as Cash or Cheques. In this respect, card payments are surprisingly completely singled out with regard to MIF, while a wider analysis and its objective comparison with all payment instruments, including Cash, would lead to very different conclusions. Also, BPCE wishes to stress the fact that the European payment market has to be considered as a part of a global market, and the payments instruments, particularly in e and m-commerce, are used worldwide. Any regulation or standardization made in the SEPA area should not be in contradiction with the global context. Facts and figures In the introduction, the Green Paper provides quantitative figures about the market, using existing studies, where some of them are not clearly backed up, such as: (p3 - §2) “For example, studies suggest that full migration to SEPA for credit transfers, direct debits and payment cards could yield direct an indirect benefit of more than EUR 300 billion over the six-year period.” (p5 - §2.4) “Other studies suggest that the value of m-payments worldwide will surpass USD 1 trillion in 2014, totaling USD 350 billion in Europe alone. It is also estimated that one out of five smart phones will be NFC-capable by the same date.” Considering the importance of this consultation and the conclusions that can be reached based on wrong assumptions, we would expect clarification on the source of figures provided and assertions made in the Green Paper.


With regard to MIFs: Interchanges fees are not, as written in the Green Paper, "a basis for issuing banks to incentivize consumers to use a payment card". Interchange fees are the fundamental basis of a “4 party” card scheme. They are paid by a merchant’s acquiring bank to a cardholder’s issuing bank, as part of the costs of the interbank services provided (Interbank payment guarantee, fraud prevention, security mechanisms…). Despite DG Competition contentions, interchange fees are neither hidden nor a tax, and are not paid by consumers. These interbank costs are clearly dependant from the scheme regulation (level of payment guarantee, etc.) and the market conditions in which it takes place. Interchange fees may be differ from one scheme to another, each one having his specific product offer (Visa offer is not Mastercard offer, neither CB, CUP or Diner’s Club, however they are all “4 party” schemes), and even from a product to another. It rather depends on the level of service offered through the product and the rules attached to it (e.g. payment guarantee or not…). Competition must exist between card schemes and interchange fees are part of their differences and key factors of this competitive environment, for the benefit of consumers, merchants and businesses, getting the best products and services for the best prices. With regard to the cost of Cash: All independent studies that have been carried out on the cost of Cash reach the same conclusion: Cash is consistently the most expensive payment method (in average the cost of a cash payment is estimated as 2 to 3 times the cost of a card payment). Surprisingly, it does not seem however to be perceived that way by the Commission. Cash is definitely the less transparent payment mean in terms of costs for merchants. While the main merchant cost categories for managing card payment is very clear (telecommunications, POS terminals maintenance, Merchant fees), merchant costs related to Cash handling are not evaluated, and very often hidden. However, it is the most used payment instrument all over the world, accounting for about 70% of retail transactions in the European Union, even in the most advanced economies, driven by habits and attitudes, but also, to some large extent, by illegal transactions. It is also worth mentioning that use of Cash continues to grow in Europe whilst its use declines in other parts of the world. Considering the high societal cost of Cash, promoting card and the new payment methods is largely beneficial, for both merchants and the economy globally. Reducing Cash would definitely lead substantial economic savings globally, through both diminution of the shadow economy and increase of tax revenues. Transparent cost evaluation of all payment instruments is of crucial importance in leveraging merchant acceptance of cards and electronic payments. The regulator should recognise that, when banks are convicted to transfer the costs of card payments to merchants, we should wonder why the cost of Cash should not be passed on to Cash users. In any approach to determine the “proper” level of interchange fees, the cost of Cash must be taken into account. With regard to “3 party” schemes: Evidence supports that “3 party” schemes are generally more expensive globally for both consumers and merchants than a “4 party” scheme, increasing up to over 3% rate for some specific categories of merchants with some existing and well known schemes. Surprisingly, there is no regulation applied to these market players whilst a strong pressure is put on “4 party” schemes. Any regulation applied to “4 party” schemes should equally apply to “3 party” schemes, for fair competition. Particularly, it is important to remind that “implicit” interchange fees do exist in a “3 party” schemes. This must be taken into account in any further clarification on this topic.


On the other hand, when non banks offer more cost attractive services than banks – or perceived that way - it is important to compare the services provided. A “cheaper” price may be due to the provision of lower level or quality of services, particularly in the areas of security or liability constraints attached to the services provided. With regard to E and m-payment There seems to be some confusion in the title and the content of the Green Paper between the payment instruments (cards, direct debits, credit transfers) and the channels through which payments are made. E-commerce drives card payments but not only; Mobile can be used in proximity payment (NFC) and on internet (remote payment), using card scheme or other electronic money. A clear distinction must be made by the Commission. The Green Paper underlines that “Payments have been identified as one of the main barriers to the future growth of e-commerce”. Such a statement is not based on any objective criteria and is in contradiction with all existing e-commerce studies which identify many other factors which are at least as important as payment: goods delivery, dispute resolution, legal issues, consumer rights...1 Also, the development of e and m-payments is not comparable. Whilst e-commerce is already a steadily growing business, based on a large extent on secured card payment and on a worldwide scope, m-commerce is still at its very early stage. The following statement, “The volume of payments made through mobile phones is currently the fastest growing of all payment methods”, again, is rather questionable since today NFC, P2P, Remote Payment, use of a mobile phone as a POS… have not yet reached significant volumes. In addition, the Green Paper makes the statement that the more interesting initiatives in the payment domain are launched outside Europe (Apple, Google…). This would be due to the fact that major players in the European Union have not yet reached an agreement on a business model. If this is compelling today, this statement seems to be somehow too restrictive and falls short of the inherent ability of the US economy to foster innovation which unfortunately does not seem to be case in Europe. The question is rather whether there is more incitement for innovation outside Europe. More generally, in any proposal with respect to any pan-European regulation, all end user’s interests should be balanced properly. Market players need stability and visibility as a pre-requisite to make the investments required to launch new payment solutions. Customer trust and confidence are also key in payment services. Any regulation or decision that would be decided by the Commission must neither become a risk of stifling innovation and market players’ initiatives, nor compromise payment security, for the mutual benefit of consumers and merchants. BPCE would greatly appreciate these preliminary remarks to be duly considered by the Commission when drawing its conclusions to this public consultation.

1 In this matter, we refer to a market study on “The functioning of e-commerce and internet marketing and selling techniques in the retail of goods”, dated 9 September 2011, and commissioned by the Executive Agency for Health and Consumers of the European Commission.


Answers to Questions 4.1.1. Multilateral Interchange fees (MIFs) Q1) Under the same card scheme, MIFs can differ from one country to another, and for cross-border payments. Can this create problems in an integrated market? Do you think that differing terms and conditions in the card markets in different Member States reflect objective structural differences in these markets? Do you think that the application of different fees for domestic and cross-border payments could be based on objective reasons? Q 2) Is there a need to increase legal clarity on interchange fees? If so, how and through which instrument do you think this could be achieved? Q 3) If you think that action on interchange fees is necessary, which issues should be covered and in which form? For example, lowering MIF levels, providing fee transparency and facilitating market access? Should three-party schemes be covered? Should a distinction be drawn between consumer and commercial cards? A1) In principle, in a “single market” there should be little cause for different MIF for the same card product in different countries. But the European payment market today is obviously not yet an integrated market, due to historical reasons and various situations in each country, including cultural ones. Differences in the MIF that are applicable in each country are justified by objective differences. Amongst them, the following examples of factors that vary from one country to another must be highlighted:

• card penetration, number and volume of transactions, • card usage and maturity – cash withdraw, face to face payment, e-commerce – credit

usage, culture and habits, consumers’ product and service demand, • level of fraud in payment services, • cost of cash handling, cost of funding and credit, • taxes, local legislation in general, • back office personnel salaries and other charges...

MIF may then be different, dependant from the current market situation. We can expect some convergence in MIF once some of these major differences have been reduced. But, it is important to mention that, even in an integrated payment market, all these differences will not disappear, since some of them are linked to the national economies (local legislation, labour costs, taxes, cost of cash...). …………………………………………………………………………………………………………… A2) There is definitely a need to increase clarity on interchange fees for the “4 party” card schemes active in the EU. Market players need some stability as a pre-requisite to make the proper investments in new payment solutions development. Issuers, notably, need greater long term visibility on their card issuing economic model to build consistent and sustainable plans. Therefore, addressing the current lack of legal certainty on the evolution of MIF in Europe is a key issue for all players. This clarification should cover two points:

• MIFs are legal within card schemes, • There is a clear methodology for calculating MIFs, compliant with competition law.

Market players need to be able to rely on a clear methodology. Such a methodology should spells out high level principals but fee levels should be adapted for each European country and each scheme, in order to preserve diversity in the product offers and facilitate fair competition.


Increased clarity in this area should come from the European Commission and national competition authorities’ decision, as well as European Commission and national court’s decision. A regulation should only be considered as the ultima ratio. Indeed, any inappropriate regulation in this matter could lead to unexpected effects to the detriment of European Consumers and Merchants. Such regulation - if any - should in all events duly take into consideration European and national competition decisions in this matter including relevant European and national court decisions. …………………………………………………………………………………………………………… A3) Please, refer to the above answers on Questions 1 and 2 for need of action on MIF levels. In addition to the above considerations, we would like to underline the fact that a reduction of MIF levels could generate negative effects, such as lower level of services or higher prices, with at the end no benefit for consumers and merchants. This is obviously not the objective of the European Commission. Concerning transparency on interchange fees, we are in favour of a total communication on MIFs. In France the interchange rate of the CB scheme is disclosed on CB web site. Moreover, each card scheme is free to present on its website its interchange rates (e.g. www.mastercardmerchand.com). Furthermore, Visa Europe allows their member banks to disclose to merchants both the level of the Visa EU intra-regional MIFs in force, should merchants request such information. If the Commission were to issue any rules/ regulations regarding the “proper” MIFs level:

• the cost of cash should be taken into account; • MIFs levels should be transparent and directly related to costs; • it should apply to “3 party” schemes as well as to “4 party” schemes, for fair competition,

since “3 party” schemes do have “implicit interchange” (which exists, in a less transparent way, between the issuer and the acquirer, even if they are in the same organisation).

We consider that a distinction should be drawn between commercial and consumer cards regarding MIF levels, since MIF levels are directly linked to the costs involved in the service provided by the issuer, which is not the same in both cases. 4.1.2. Cross-border acquiring 4) Are there currently any obstacles to cross-border or central acquiring? If so, what are the reasons? Would substantial benefits arise from facilitating cross-border or central acquiring? 5) How could cross-border acquiring be facilitated? If you think that action is necessary, which form should it take and what aspects should it cover? For instance, is mandatory prior authorisation by the payment card scheme for cross-border acquiring justifiable? Should MIFs be calculated on the basis of the retailer’s country (at point of sale)? Or, should a cross-border MIF be applicable to cross-border acquiring? A4) For a long time, international card schemes have been offering cross border and/or central acquiring solutions in Europe, through specific licenses. These licenses costs come in addition to the domestic license fees paid by the acquirers in their own country. Although, if this market is steadily growing over the years, cross-border or central acquiring is not yet as easy to undertake as it should be in a mature single market for payments. There is a real and significant operational complexity for markets players to set up such cross border services, notably due to the differences in each country. Implementation of standards is definitely different in

http://www.mastercardmerchand.com/


each market, depending on local rules and payment infrastructures. If acquirers want to offer a consistent cross border acquiring service, they have to deal not only with the international schemes, but also with existing local card schemes. This is an area where significant operational issues have to be handled (interoperability issues, local rules and protocols, infrastructures, local payment usage…). …………………………………………………………………………………………………………… A5) Cross border acquiring will be progressively facilitated once standards will be put in place all over the different countries, and once the harmonization of the European payment market will become a reality. Alleviating existing implementation differences will address some of the issues and cross border services will expand more easily. But is it important to mention that this standardization process will certainly take time. MIF calculated on the basis of the retailers’ country is the most fair, since the largest part of the payments for a retailer is made with local cards. And whether the transaction is locally or centrally acquired does not make a difference for the issuer, whose cost is the same. Therefore, there is no justification to change anything in the current practice. Regarding card schemes principles, any geographic restriction to licensing, issuing and acquiring within SEPA, should be removed and basic card payment products and services should be offered throughout the SEPA area on the basis of a single license, as mentioned in Art. 3.2.2. b) of the SEPA Cards Framework (SCF):

“All SEPA banks or payment institutions must be able to offer basic card payment products and services throughout SEPA on the basis of a single license from each card scheme without the requirement to obtain individual licenses for each SEPA country. For the purpose of licensing, “on us” transactions within “banking groups”, including “cross border on us” transactions, must be treated in the same way by any scheme as “on us” national transactions. For the purpose of this Framework, “on us” includes communities of users made up of direct and indirect participants in card schemes, who under the responsibility of a designated participant use the same service(s). At their discretion, banks or payment institutions must be able across SEPA to enter solely into an issuing license. At their discretion, banks or payment institutions must be able across SEPA to enter solely into an acquiring license”. (emphasis added)

4.1.3 Co-badging Q6) What are the potential benefits and/or drawbacks of co-badging? Are there any potential restrictions to co-badging that are particularly problematic? If you can, please quantify the magnitude of the problem. Should restrictions on co-badging by schemes be addressed and, if so, in which form? Q7) When a co-badged payment instrument is used, who should take the decision on prioritization of the instrument to be used first? How could this be implemented in practice ? A6) Co-badging (different scheme brands on the same card or, more generally, the same “chip carrier”, in the case of mobile or other form factor) is beneficial for market players. Co-badging exists for years in a number of European countries. At first, it has taken the form of a mere co-existence of a domestic card scheme with an international card scheme (typically in France CB with Visa or MasterCard) on the same card. It has allowed consumers to use their payment card abroad as easily as in their home country. The schemes offer complementary and non competitive services to cardholders.


The decision of co-badging should be left to the issuer, as stated in Art.1.2.1 of the SEPA SCF (v2.1):

“1.2.1 Implementation options On the basis of the present situation in each country, each bank or payment institution as participant in, and user of, various SCF compliant card scheme has a choice of a number of options, or combination of options, to offer SCF compliant card products (as defined in 1.3.2. hereafter). These options include for example: (…)

- Option 3 : brand its cards with more than one SCF compliant schemes provided that these schemes accept such co-branding; ” (emphasis added)

Co-badging must always be the result of a contractual agreement between an issuer and another scheme (or more), providing, for their mutual benefit, a unique value proposition with multiple applications on a single card. It is clearly beneficial for the cardholder who can have access to a number of services and facilities (payment but also other kind of services, such as loyalty programs) on the same card. Co-badging also allows merchants to provide multiple applications at its point of sale, and becomes a competitive advantage. The cooperation between an issuer and another scheme needs to define precisely all areas that will coexist on the same card, such as security mechanisms and levels, responsibility, technical standards, applications compatibility and complementarity, etc … In a competitive market, such cooperation should be built on a voluntary and case-by-case basis. The EMV chip deployment in Europe is definitely facilitating the creation of such product offers, enabling multiple applications on the same card or “chip carrier”. This means that the issuer is accountable for the provision of exhaustive and clear information to the cardholder on the contract it signs, about the applications available on its card and the conditions of use. …………………………………………………………………………………………………………… A7) The Sepa Card Framework (SCF), published by the European Payments Council on 18 December 2009, already provides an answer to this question in the 3.6.1 chapter (“Cardholder experience”):

“3.6.1 Cardholder experience ……..In accordance with Directive 2007/64EC, where several payment applications are made available by the issuer in the same card, supported by the same terminal, and are accepted by the merchant, cardholders will have through their cardholder agreement with their card issuer the choice of which payment application they will use provided the merchant accepts it and its POS equipment supports it…… The agreement between the cardholder and the issuer will define the choices available to the cardholder. Prevalence at POS or ATM for a particular payment application may not be mandated by a card scheme or ATM operator or merchant”. (Emphasis added)

Market acceptance of these co-badged cards is clearly a matter of business. The contract between the issuer and the cardholder must be very clear in describing how the application’s selection is made at the point of sale. On the other side, the merchant remains free to wish to accept or not such cards, which application and under which conditions. This has to be specified in the contract between the acquirer and the merchant.


The merchant must inform its customer about the applications available at the point of sale. 4.1.4. Separating card schemes and card payment processing Q8) Do you think that bundling scheme and processing entities is problematic, and if so why? What is the magnitude of the problem? Q9) 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’? A8) We support the principle of unbundling scheme management functions from processing activities, since the services provided are of clearly different nature, as opposed to systematic legal separation or “full ownership unbundling”. This principle should apply to both “4 party” and “3 party” schemes. When industrial players bundle services, their main driver is cost reduction, enabling a more attractive customer proposition with lower pricing. From this point of view, if schemes are obliged to unbundle services, this separation can potentially make services more complex and more costly to manage if no additional business is gained by the 2 unbundled entities. Then the consequence could be an increase of their prices. Those schemes may also be put in a difficult position, if each unbundled entity is not able to stay competitive and profitable anymore. In this matter, it is important to underline the fact that a clear separation of scheme and processing functions may not be easy to define in some cases, particularly in the new payments design, such as wallets. Also, consideration must be given to the mobile network operators with regard to mobile payment. This is the reason why we are in favor of the following positions:

• issuers and acquirers should remain free to choose a processing partner independently from the scheme manager, possibly to the same company or to different companies;

• scheme pricing must be the same for all players, whether they are sourcing processing services or not to the scheme partner.

…………………………………………………………………………………………………………… A9) No legal separation is needed with regard to schemes and processing entities. However, both of them must have clearly defined services. Art.3.2.3 of SCF (v2.1) addresses quite well the topic:

“3.2.3 Separation of card scheme governance, processing and other functions: A SCF compliant card scheme is a scheme that allows unbundling of functions whilst applying the same pricing per card product to national euro and SEPA transactions of the same type. Separation of SEPA card schemes’ brand governance and management from the operations that have to be performed by service providers and infrastructures under these SEPA schemes is mandatory. A card scheme may offer additional services (e.g. processing services) but their usage cannot be mandated. Scheme rules may not require as a condition of participation that any particular provider of processing services (e.g. network management, switching, clearing, settlement) be used. Equally SCF compliant schemes may not mandate any certification to be performed only by a proprietary certification body. This, however, is not intended to pre-empt legitimate risk management requirements from card schemes.


Consistent with 3.2.2. d) above, no card scheme will discriminate when pricing services or charging any fee between banks and payment institutions who use additional services offered by the said card scheme and banks and payment institutions who do not, or only partially so”. (Emphasis added)

4.1.5. Access to settlement systems Q10) 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? Q11) Should a common cards-processing framework laying down the rules for SEPA card processing (i.e. authorization, clearing and settlement) be set up? Should it lay out terms and fees for access to card processing infrastructures under transparent and non-discriminatory 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? A10) Non-direct access to clearing and settlement systems by payment institutions and e-money institutions is not an issue. We refer to the Payments Services Directive (PSD) which provides for an appropriate framework for defining the conditions under which participation to designated settlement systems would become possible (Art. 28.1):

“… the rules on access of authorized or registered payments service providers that are legal persons to payment systems [that comprise clearing and settlement systems] shall be objective, non-discriminatory and proportionate and that those rules do not inhibit access more than is necessary to safeguard against specific risks such as settlement risk and business risk and to protect the financial and operational stability of the payment system”.

One of the main principles that must lead the access to clearing and settlement system is that conditions are the same for all players, whether they are banks or non-banks (rules, regulations, financial guarantee and stability, liquidity, security requirements…). Payment institutions and e-money institutions indeed do have access to such systems under the same conditions than other market players, if not directly, through banks. Payment Institutions and e-money institutions might cause financial stability issues to clearing and settlement systems, as well as to card schemes, they want to access, as they do not have to comply with same prudential obligations than banks. Those systems must be capable to protect themselves against such risks through appropriate access rules in order to avoid the emergence of systemic risks. Article 28.1 of the PSD specifically allows them to do so (see above). …………………………………………………………………………………………………………… A11) There is no need to set up common cards-processing framework laying down the rules for processing, since rules for processing SEPA card payments are already defined in Art.3.6.3.1 of the SCF (v2.1):

“3.6.3.1 Necessary interoperability domains In order for the objectives if this framework to be achieved, SEPA-level interoperability must be ensured in the following 4 domains: (…)


- Acquirer to issuer interface, including network protocols (authorization and clearing). Such interoperability will allow the different market options described in this framework to exist. This framework does not have as its purpose the mandating of any single option nor infrastructure.” (emphasis added)

Fundamental principles in the development of these rules - such as transparency and non-discrimination in the access to infrastructures - should be applied by all market players, particularly the new ones. We don’t see any rational for amending Art. 28 of the PSD. With regard to the SFD (Settlement Finality Directive), we consider that it provides also for the appropriate dispositions for the issues to be addressed. 4.1.6. Compliance with the SEPA Cards Framework (SCF) Q12) What is your opinion on the content and market impact (products, prices, terms and conditions) of the SCF? Is the SCF sufficient to drive market integration at EU level? Are there any areas that should be reviewed? Should non-compliant schemes disappear after full SCF implementation, or is there a case for their survival? A12) As said above, after ten years of work, the SEPA Card Framework (SCF) and the “Book of Requirements” are today a solid base for the general specifications of a SEPA card payment scheme, whether it is a new one or the evolution of an existing one. European authorities should now focus their efforts on supporting the transposition in the market of the business specifications defined in the SCF, facilitating its implementation by the market players, and making sure that all of them, particularly the new entrants, respect the main principles. It is a key point to focus the work on technical standardization, interoperability and reachability as well as security issues. In this domain, it is particularly necessary to address the new payment situations - mobile payment or emerging products like e-wallets - that may cause new critical issues. If the target must be clear, we consider that no decision should be taken with regard to a market player which is not SCF compliant once the main principles listed above are respected. The market itself will decide if it will disappear or grow. Card scheme diversity enables a fair competition, for the benefit of the consumers and merchants. 4.1.7. Information on the availability of funds Q13) 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? A13) It is argued in the Green Paper that banks may have “an incentive to refuse to cooperate, despite the willingness of their customers” which could “unduly hinder the emergence of safe and efficient alternative payment solutions, even if they are subject to prudential requirements”.2

2 Green Paper COM (2011) 941 final 4.1.7


This question cannot be treated in isolation. Access by non-banks to information on the availability of funds in a customer’s bank account raises many issues. Such non-banks may be payment service providers (PSP) within the meaning of the PSD, such as payment institutions/e-money institutions and thus regulated and supervised. Such non-banks may also not be PSP, offering what are known as overlay services and thus not regulated and supervised. Some recent negative experience shows that some of them may get access to customer’ personal data and misuse it. For instance, a non-bank may have access to a purchasing customer’s bank account to support instant payment confirmation. This access should be done for the sole purpose of instant payment confirmation, but in fact it allows also gathering additional information from the purchasing customer3. Such information may be then used by the non-bank in a variety of ways: mere post-payment services, constitution of marketing data basis, etc... The purchasing customer might have given some “agreement” for this access for the non bank, by handling its payment account credentials for instance, but it may not be sufficiently documented to ensure full customer knowledge and appreciation of its implications in terms of privacy, data protection, misappropriation and misuse of information. Such situations may also infringe banking secrecy principles. The current legal and regulation framework is clearly not suited for meeting the challenge of access to payment accounts. Thus, we believe that non-banks should not have access to information on availability of funds in bank accounts. If the Commission were nevertheless considering giving non-banks access to information on the availability of funds in bank accounts with respect to payment services, the following points should be properly addressed:

• consistency across the EU in terms of legal regime in the areas of data protection, banking secrecy and protection of personal security credentials,

• adequate regulation and supervision of non-banks (including non PSP) having access to information on the availability of funds in bank accounts,

• information handled to non-banks: - restricted to any given payment transaction and the given payment transaction amount

and used within this restrictive framework only, - not safeguarded, nor accessed or distributed to third parties nor used for another

purposes, • adequate contractual arrangements between the parties concerned (bank/non-bank,

bank/customer and non-bank/customer) specifying notably: - potential risks for customers if they hand out their bank account credentials to a third

party and subsequent potential liability of the bank in the event of fraudulent action by non-banks,

- proper remuneration by the non-bank to the bank with regard to the service provided as this new process would require developments and generate on-going costs within banks.

3 Salary, expenditure pattern etc…


The Commission should also consider giving access to information on the availability of funds held in payment accounts, within the meaning of the PSD, i.e. accounts which may be held by other PSP such as Payment Institution and e-money Institution. European authorities should recognize that those questions are crucial. If they are not properly addressed, wrong conclusions could compromise customers’ trust and confidence in electronic payments (consumers as well as merchants). 4.1.8. Dependence on payment card transactions Q14) 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-à-vis dependent users? A14) There is no such thing as “dependent users”. No merchant in the world is required to accept cards. If it does so, it’s its own decision given the value card acceptance brings to its business. Merchants can even accept some card products and not others, local or international ones. Of course, in e-commerce card acceptance is mostly used, but not only (PayPal accounts, credit transfers, direct debits). This is primarily due to the business structure and market environment. A wide variety of payments instruments can be proposed today by e-merchants. Competition between Payment Service Providers already exists and must not be underestimated by the Commission. For card payments (and actually other non-cash payment instruments), regulators have established a significant legal framework, detailing the rights and obligations of both providers and users. It may not be its role to decide which payment method is mandatory or not. If the regulator would want to single out a specific payment instrument, Cash would rather be a more interesting topic. It is the most used payment instrument, with about 70% of all transactions in volume, and it continues to grow in Europe whilst its use declines in other parts of the world. Facilitating card and other electronic payments in all areas where cash is still used – see answer to question 12 above – through standards deployment, technology and innovation, would enhance payment security, reduce shadow economy and certainly be profitable for the European market globally. 4.2.1. Consumer – merchant relationship: transparency Q15) 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? A15) There is no reason why merchants should inform their customers about the fees they pay for the use of payments instruments (cost for cash handling and cheques management, merchant fees they pay to their acquirer, charge for their POS terminal…). These costs are a part of their global costs, along with shop renting charges, electricity and telephone bills, personnel salaries, taxes, supply costs, advertising costs... Merchants fix the prices for their goods. If they remain free of the information they provide to their customers, they should not be obliged to communicate on their costs (why on the cost of cards, as opposed to other payment instruments?...). Neither does other market industry.


On the other hand, there is no reason why payment service providers should be obliged to disclose to consumers information on merchant service fees they charge as acquirers or MIF’ income they receive as issuers. Transparency is the rule in any contractual relationship. In this instance, a contractual relationship exists between a given acquirer and a given merchant. There is no need to disclose these conditions to the customers. Why should the cost of a specific payment instrument be singled out, and not the others, such cash or cheques?... If such a decision on cost information would be taken, then all payment instruments must be covered, for a total transparency, particularly the cost of cash handling for the merchant. This position of the European Commission assumes the high importance of the cost of the payment instrument within the global price of the product sold by the merchant, which does not seem to be in good proportion with the reality. Beside this consideration, there is no serious market study demonstrating that the cost of the payment instrument is a key factor in the consumer’s decision to purchase a product. 4.2.2. Consumer – merchant relationship: rebates, surcharging and other steering practices Q16) Is there a need to further harmonize rebates, surcharges and other steering practices across the European Union for card, internet and m-payments? If so, in what direction should such harmonization go? Should, for instance: – certain methods (rebates, surcharging, etc.) be encouraged, and if so how? – surcharging be generally authorized, 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? A16) About Surcharging, beside the fact that there is no question about it in France today since it is not permitted by law, we would like to make some comments. While transparency is required by the Commission as a key principle in payment –we fully agree on this point - surcharging practice brings some contradiction. Payment surcharges definitely make price comparisons more difficult for consumers. In case of surcharging, reliable information should be given to the customer about the real cost for the merchant, the surcharge which is applied, as well as the reasons explaining the difference between the cost for the merchant and the surcharge paid by the customer. The reality shows that this is never the case. Surcharging practice is not fair, neither justified. It discriminates cards, which is the most cost effective and the more secure payment instrument today. And consumers don’t have generally any choice, since surcharging is mostly an on-line practice. Moreover, surcharging always generate additional revenues for the merchant. To illustrate this very concretely, in the UK the Office of Fair Trading (OFT) concluded, in its decision in June 2010, that consumers have paid an amount of 300 million Pounds due surcharging specifically in the Airline sector in 20104, while the majority of them are against the idea of “paying for paying”. Concerning rebates, the logic is the same. There is also a risk to have an increase of prices, including the potential rebates. Some recent cases have proven its inefficiency of the rebates ideas: 4 Office of Fair Trading. Payment surcharges.


• The Commission services held a public Hearing in Brussels on 17 November 2010 during which the chairman of the “French Association of Corporate Treasurers” has declared “we cannot accept the request to give rebates to our clients. The companies will do what they want but it must not be a rule”.

• In Australia for example, the question was raised by analogy that if all consumers paid for the cost of a merchant’s free parking, which was only used by some customers, why shouldn’t a merchant charge the same price to all consumers even though they used different forms of payment.

• In France, whilst the government has decided to reduce the VAT for restaurants, no price decrease in this activity has been identified.

The Commission’s proposal aiming to impose merchants to accept one widely used and cost-effective electronic payment instrument without surcharge means to impose payment cards since they fit with all these criteria. This measure would certainly enable to reduce a part of the cost of shadow economy. However, the question is to know if such a decision must be taken through a regulation or must stay in the contractual domain. We consider that any initiative which will reduce Cash usage, such as promotion of new payment solutions, would be beneficial for the European economy (reducing shadow economy, improving security in payment and reducing fraud, providing efficiency and simplicity in the purchase process). If surcharge would become possible, then it would be a good proposal to ask merchants to accept without surcharge at least one non-cash payment means of their choice. 4.2.3. Merchant – payment service provider relationship Q17) Could changes in the card scheme and acquirer rules improve the transparency and facilitate cost-effective pricing of payment services? Would such measures be effective on their own or would they require additional flanking measures? Would such changes require additional checks and balances or new measures in the merchant-consumer relations, so that consumer rights are not affected? Should threeparty schemes be covered? Should a distinction be drawn between consumer and commercial cards? Are there specific requirements and implications for micropayments? A17) First, this question assumes that today payment services provided to a merchant are neither transparent nor cost-effective. The rules referred here are the Honor All Cards Rule (HACR) and the Non Discrimination Rule (NDR). BPCE considers that they are neither the source of any non transparency nor non cost-effective pricing in payment card services. With regard to the Honor All Cards Rule, it is important to remember that it had been created in order not to discriminate issuers. It is a fundamental principle of card payment systems and has certainly facilitated its wide development. It is a guarantee for a cardholder that his card will be accepted everywhere. If this rule would disappear, then the consumer would have to get multiple cards to be sure to be able to pay everywhere. This would finally entail an increase of cost for consumers. HACR should then be maintained since it is crucial for the universality of card payment. However, this rule can be adapted if necessary, considering that a merchant does not have to accept all product cards of a card scheme, as far as he does not make any discrimination on this type of product with all banks that are issuing it. Both Visa and Mastercard have already adapted their rules in order to allow separately the acceptance of debit and credit cards. Regarding transparency on merchant fees, blending is not an issue. Merchant fees are contractually agreed between a merchant and an acquirer. By the way, differentiated pricing depending on card schemes or product is already proposed by acquirers. It is mainly to respond to


merchant’s simplicity requirement that blended pricing is a current practice. Whilst intellectually there is some logic to different fees for acquiring payment cards with different features, overall freedom to contract and competition should prevail, so that a merchant may request an acquirer to provide him with a single transaction fee for any card transaction accepted. Merchants dispose all the information they need to compare the pricing of different acquirers and choose the best offer for them, blended or not. As mentioned earlier, the relationship between a merchant and its acquirer is a contractual relationship, where transparency is inevitably provided. In contradiction with the statement made in the Green Paper, there is already a strong competition between acquirers and no further rules need to be considered except the existing compliance to the EU legislation in this area. In order to allow for a level playing field, “3 party” schemes, where the issuer and the acquirer are a same entity, should be subject to any requirement applicable to the provision of payment services, to the same extent as any other provider. 4.3. Standardization Q18) Do you agree that the use of common standards for card payments would be beneficial? What are the main gaps, if any? Are there other specific aspects of card payments, other than the three mentioned above (A2I, T2A, certification), which would benefit from more standardization? Q19) Are the current governance arrangements sufficient to coordinate, drive and ensure the adoption and implementation of common standards for card payments 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? Q20) Should European standardization bodies, such as the European Committee for Standardization (Comité Européen de Normalisation, CEN) or the European Telecommunications Standards Institute (ETSI), play a more active role in standardizing card payments? In which area do you see the greatest potential for their involvement and what are the potential deliverables? Are there other new or existing bodies that could facilitate standardization for card payments? Q21) On e- and m-payments, do you see specific areas in which more standardization would be crucial to support fundamental principles, such as open innovation, portability of applications and interoperability? If so, which? Q22) Should European standardization bodies, such as CEN or ETSI, play a more active role in standardizing e- or m-payments? In which area do you see the greatest potential for their involvement and what are the potential deliverables? A18) Generally speaking, the use of common standards in the field of payment cards is with no doubt beneficial for all players, facilitating the acceptance and usage in all countries as well as fostering competition. Higher level of standardisation can bring more economies of scale, more interoperability and more stability in the technical solutions developed and used in card payments. Common standards (ISO-level) for card payments are already available. Functional requirements for SEPA card payments have also been defined in the EPC Cards Standardization Volume, so called “Book of Requirements”. A huge amount of work has been done on SEPA card standardization in the EPC working groups during the past 10 years (EPAS, SEPA Fast…). In term of availability of standards, the POS terminal application as well as the terminal-to-acquirer domain have been standardised at detailed level (SEPA-FAST and EPAS-ISO20022 protocol). The first pilot projects are now coming to the field (OSCAR). However, some areas still need to be worked on. For example, new ISO20022 acquirer-to-issuer protocols are still missing (for both clearing and authorisation messages) and the ATICA-ISO20022 messages need to be completed.


At this current stage of SEPA construction, the key issue is the implementation of standards and the way it will be driven. Standards must be adopted and implemented by the industry, each market player being able to built its own operational specifications and create its solutions and services. The regulator must not impose any implementation rules, since standardization does not mean uniformity and must leave space for innovation and competition. …………………………………………………………………………………………………………… A19) Two years ago, the European banking payment industry has established a Card Stakeholders Group (CSG), where bank representatives, retailers, vendors, processors and card schemes sit together, to bring input into the Book of Requirements. A public consultation process also allows for gathering the widest possible input. However, neither the CSG, nor the EPC, may take responsibility with respect to the implementation of standards or these requirements. There is sufficient work being undertaken on standardization on cards in Europe, by the EPC then with the CSG, and no further initiative is needed. It is essential that the implementation process of the defined standards will be led by the industry, and not by the regulator neither a central standards-setting body. Such implementation is the responsibility of each relevant market player. It is also essential that all of them are involved in this process. In this matter, it is important to point out the huge amount of work for implementation of such standards and to assess that such a process is time consuming, around 10-15 years with no doubt (remember EMV roll out: stable specification available in 1998, pan-European deployment completed in 2012). When referring to “reasonable timeframes”, the Commission would be well advised to acknowledge the average timeframes that are common in the field of card payments. This means that there will be a period of transition where existing legacy systems and new standards will coexist. ………………………………………………………………………………………………………….... A20) BPCE does not consider that European bodies such the Comité Européen de Normalisation (CEN) or the European Telecommunications Standard Institute (ETSI) have a role to play in card standardization, since they are not experts in this domain. Existing European standardization bodies must be used in finalizing the last pieces of work, for instance allowing for certification processes to become country and scheme-independent. But, at this stage, we don’t advise to create any additional standardization body standardization of card payments. …………………………………………………………………………………………………………… A21) Instead of e and m-payments, we would like first to assess that the “proper” terms should be “e and m-channels” where various payment instruments can be used. Considering card payment, e-commerce cannot anymore be considered as under development. This is clearly an existing business, a fast growing one, with standards in place, including security mechanisms (3DSecure). In comparison, m-commerce is still at an early stage of its development. A number of critical issues are under discussion. In this area, standardization activities would be necessary in two areas:

• the payment workflow, including user interface, • the channel management, particularly for the Secure Element management.

About the user interface, it would be useful to define the same payment workflow for all environments - computer, mobile phone or smart phone - as it is today on the POS or ATM environments. The standardization process must include the wording for each European language,


to facilitate the local portability. For the Secure Element standardization, it must complement other existing standardization initiatives such as Global Platform, GSMA, EMVCo, ISO... Open innovation, portability of applications and interoperability all require that a stable legal and regulatory environment exists. In the field of security requirements, the recommendations that are under development by the Eurosystem’s SecuRePay Forum are expected by the market. Security should not become a field of competition between market players. …………………………………………………………………………………………………………… A22) The dimension of payment is not local or European, but worldwide. This is particularly true in the area of e and m-payment. Standards have to be global and any initiative should immediately be positioned at a global level. Therefore, European standardization bodies working on these domains are already liaising with global organisations, such as:

• Global Platform, the leading worldwide association defining interoperable and open infrastructure for smart card deployment;

• The International Organisation for Standards (ISO), through the ISO Mobile Banking / Payments Working Group;

• The GSM Association (GSMA), representing the worldwide mobile communications industry;

• EMVco, PCI DSS and the card schemes.

Regarding mobile payment, devices and components, such as Secure Element, are manufactured at global level and need global standards. The Comité Européen de Normalisation (CEN) could standardize the payment workflow, and could define local European variation (e.g. translation of wording in local languages). 4.4. Interoperability between service providers Q23) Is there currently any segment in the payment chain (payer, payee, payee’s PSP, processor, scheme, payer’s PSP) where interoperability gaps are particularly prominent? How should they be addressed? What level of interoperability would be needed to avoid fragmentation of the market? Can minimum requirements for interoperability, in particular of e-payments, be identified? Q24) 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? A23) For card payment, the CSG has identified and analysed standardization and interoperability questions within the SCF and the “Book of Requirements”. As far as their implementation, it has to be addressed by market players. Whilst interoperability is a valuable objective to be pursued, the level to be achieved is function of the relative maturity of the payment instrument or infrastructure concerned. New “innovative” solutions should not necessarily be expected to be interoperable as soon as mature solutions. In this matter, minimum requirements of standards have to be defined before any large deployment. This is crucial for new payment services, such as mobile payment or electronic wallets. …………………………………………………………………………………………………………… A24) With regard to Mobile payments, it is important to underline again that it is in an emerging state. Please refer to responses given in question 21 and 22. On the other hand, it is incorrect to state that e-commerce is making slow progress.


The growth rate of e-commerce does not seem to suffer from the relative lack of interoperability in e-payments domain. This market is developing with double digit growth rates continuously. In this matter, card payments are widely used and proposed by a large majority of European merchants on line, together with a significant usage of other payment instruments such as credit transfers, PayPal accounts, or other e-money solution. The main obstacles in promoting e-commerce as perceived by consumers are not the payment itself but other concerns about buying products, as underlined by different market studies (goods delivery times, return of products, products not delivered or damaged, personal data potentially misused…). In this matter, once again, we can refer to a market study on “The functioning of e-commerce and internet marketing and selling techniques in the retail of goods”, dated 9 September 2011, and commissioned by the Executive Agency for Health and Consumers of the European Commission. Beside the current case opened by the DG Competition, numerous restraints can explain the low speed of the work conducted by the EPC in order to create interoperability between e-payment solutions:

• The definition of the need is not precise in front of a market which does not seem to be in expectation of such a solution,

• The recommendations made by the national regulation authorities in Europe are quite heterogeneous,

• There is no business model, • The current governance mechanisms do not allow handling this subject serenely. A global

questioning of the governance of its works must be undertaken. Refer to answer to the question 29, providing some propositions in this matter.

4.5. Payments security Q25) Do you think that physical transactions, including those with EMV-compliant cards and proximity m-payments, are sufficiently secure? If not, what are the security gaps and how could they be addressed? Q26) 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? Q27) Should payment security be underpinned by a regulatory framework, potentially in connection with other digital authentication initiatives? Which categories of market actors should be subject to such a framework? Q28) What are the most appropriate mechanisms to ensure the protection of personal data and compliance with the legal and technical requirements laid down by EU law? A25) Generally speaking, security domain is critical in the success and good functioning of a payment instrument. It requires constantly investments and maintenance. Security and fraud prevention measures are in constant evolution. With respect to physical transactions, in particular when performed with EMV-compliant cards and the use of PIN, may be considered as sufficiently secure today, as evidenced by the sharp drop in fraud rates everywhere EMV has been implemented. It is however not completely true to assess that proximity payments are fully secured, since fraud is a dynamic area, where “innovation” is growing fast. The number and the level of sophistication of fraud attacks are always rising. It is very important to closely monitor what the fraudsters are doing in order to react, and as far as possible anticipate, to their behaviours with countermeasures. Some of these measures are already known:


• promote the global adoption of EMV infrastructure (a major part of fraud come from non EMV country),

• envisage the possible end of magstripe at medium term (e.g. Belgium resolution to eradicate fraud),

• do not extend card validity period longer than 3 years, • set up a variety of authentication methods (protection against compromise of one of them), • improve crypto keys algorithms...

The market must continuously invest in developing practices and technologies to protect, detect, and respond to attacks, accidents, and failures inside network or payment systems, along with the risk and fraud threats. New challenges for face to face transactions are presumably in the domain of contactless payments performed by contactless cards or even more by mobiles equipped with NFC technology. M-proximity payments are particularly concerned. Regarding mobile payment, the weakest part of the chain is the mobile device and its operating system, which were not designed originally for supporting transaction security as e.g. a classical POS terminal would. Advances in technology, implementations and rules will address existing shortcomings. New solutions to secure the use of wallets (merchant wallets where consumer can record their card account details or bank/”3 party” schemes wallets) need also to be investigated before proceeding to a larger deployment (e.g. responsibility must be clearly established between the wallet providers and the issuers of the card recorded into the wallet). Generally speaking, we consider that all market players should have to respect the same level of requirements, especially in the security domain, whether they are Credit Institutions, Payment Institutions or E-Money Institutions. This should be applied to security mechanisms, data management and protection, responsibility and regulatory issues, so that they offer the same level of quality of service for the consumer. In this respect, European authorities should watch carefully current practices of some e-merchants regarding data storage, data redistribution (without consumer’s consent) and data protection. …………………………………………………………………………………………………………… A26) The rapid development of e-commerce has attracted a number of fraudulent operators and practices. Mitigating payment fraud requires effective cardholder and merchant identification and authentication. Fraud mitigation must however at all times remain context-dependent: it is the responsibility of the issuer of the payment instrument to decide on a risk-based approach the measures to be implemented. In order to support the further development of an integrated market, policy makers and supervisors should define minimum security requirements which must be clear, forward looking and technology neutral, in order to overcome the discrepancies existing in this respect between national regulators. The Eurosystem’s SecuRePay Forum is currently working on minimum security requirements. This work is beneficial, since it will provide market players a basis for implementation guidelines, in order to allow interoperability between solutions. …………………………………………………………………………………………………………… A27) Fraud being a very fast moving topic, it seems that rather than a regulatory framework, a coordinated approach between the Commission, the Central Banks and the private sector will be much more efficient. The work expected from the Eurosystem’s SecuRePay Forum will define the necessary harmonized, minimum security requirements. Meeting the objectives expressed therein then is a task for the industry, including payment service providers, vendors, processors – being


stressed once again that combating fraud effectively is an active responsibility of all, including payment service users. None of the current shortcomings requires any legislative or regulatory intervention. Payment service users including consumers are more than appropriately protected by existing legislation, including the PSD. …………………………………………………………………………………………………………… A28) Legislations related to personal data protection have mostly been defined at national level. In France, regulatory authority, CNIL, defines rules and supervise notably the implementation of any private data file and the mechanisms for safeguarding it. Harmonization of data protection regulations would definitely need to be improved at the EU level. BPCE supports the current revision of the Data Protection Directive. In the area of cards, banks have set up solutions to protect data integrity. Among those solutions 3DSecure encryption, EMV infrastructure, DDA/CDA chip cards, as well as standards such as PCI DSS (Payment Card Industry Data Security Standards). The development and continuous evolution of solutions to comply with security and data protection requirements must be left to market players. Our demand is that these solutions would be implemented by all participants in the value chain, including merchants and third party service providers, to achieve the same level of security and implement trustable solutions for consumers. 5.1. Governance of SEPA Q29) How do you assess the current SEPA governance arrangements at EU level? Can you identify any weaknesses, and if so, do you have any suggestions for improving SEPA governance? What overall balance would you consider appropriate between a regulatory and a self-regulatory approach? Do you agree that European regulators and supervisors should play a more active role in driving the SEPA project forward? A29) SEPA is a political project, part of the Lisbon Agenda in 2000. The European Commission and the European Central Bank see SEPA as an integrated market for payment services which is subject to effective competition and which will allow customers to make euro payments throughout Europe as easily securely and efficiently as they do within their own countries. This calls for the removal of all technical, legal and commercial barriers between the current national payment markets. The SEPA project has focused on three core and basic payment instruments for the European citizens: credit transfers, direct debits and cards. During a Phase ONE (past 10 years), the EPC has developed new payment schemes for credit transfers (SCT) and direct debits (SDD), within the timescale required by the European authorities. For card payments, taking into account the existing environment, the EPC has decided to establish a global framework which the industry needs to adapt to in order to comply with SEPA (SCF). Today, with the migration towards the SCT and the SDD and the delivery of the SEPA Card Framework and the current work on the volume, we have to consider that the Phase ONE is over, and must enter a phase TWO, taking into account the current context:

• If the ambition is still there and shared by all, SEPA governance arrangements are still a matter of debate 10 years after the EPC creation, with a main question pending: Who has the responsibility of this project?

• The current relationships between the EPC and some representatives of stakeholders (e.g. BEUC) and the European Authorities (DG Competition) are quite confused;


• The EPC has no roadmap for the following years and works at the mercy of the European authorities’ requests (SEPA Progress Report, Commissioner speeches…).

The increasing critics on the SEPA governance lead towards the end of self regulation which is confirmed by the “end date” regulation - and the banishment of the SDD MIF - and the current inquiries. The governance of the SEPA project must be reviewed. This is the reason why the Fédération Bancaire Française (FBF), and BPCE as a member, are fully supporting the emergence of a new governance of the SEPA project, where the European authorities would have a role and clear responsibilities. This governance would be based on a “top-down” approach, where SEPA Council would design strategic orientations and development priorities for the European market. The orientations fixed by the SEPA Council would be analysed within technical Committees or working groups, dedicated to specific topics, such as e-payment, mobile, standardization… Such an organisation requires that all market sectors concerned are represented (not necessarily the same in all the dedicated groups). Each sector represented will notify its endorsement on some proposals established by the EPC. Members are expected to commit and engage the sectors they represent, and ensure that an appropriate follow-up is given to their deliberations. The role of this new governance will be to develop formal positions on standardisations proposals. On the basis of these standards and recommendations, market players will necessarily keep their ability to differentiate their products for fair competition. A viable and sustainable business model, validated by the DG Competition, will be of a crucial importance for the development of innovative, robust and secure payment solutions. 5.2. Governance in the field of cards, m-payments and e-payments Q30) How should current governance aspects of standardisation and interoperability be addressed? Is there a need to increase involvement of stakeholders other than banks and if so, how (e.g. public consultation, memorandum of understanding by stakeholders, giving the SEPA Council a role to issue guidance on certain technical standards, etc.)? Should it be left to market participants to drive market integration EU-wide and, in particular, decide whether and under which conditions payment schemes in non-euro currencies should align themselves with existing payment schemes in euro? If not, how could this be addressed? Q31) Should there be a role for public authorities, and if so what? For instance, could a memorandum of understanding between the European public authorities and the EPC identifying a time-schedule/work plan with specific deliverables (‘milestones’) and specific target dates be considered? A30) Please refer to the answer of question 29. A31) Please refer to the answer of question 29.


6. General remarks Q32) 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? A32) BPCE has no further remark in addition to the introduction and responses given in this document.

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