As part of its digital finance package (see other news), the European Commission presented, on Thursday 24 September, its Retail Payments Strategy which aims to make them more “modern and profitable”.
Its objective: “to make pan-European instant payment solutions the new standard”, at a time when the Covid-19 crisis has drastically increased the frequency of digital payments, European Commission Executive Vice-President Valdis Dombrovskis said at a press conference.
The European retail payments market is still too fragmented along national borders and Europe is still too dependent on the major global players in payment cards or internet platforms, Dombrovskis stressed.
The Commission therefore wants to create an environment that encourages and facilitates the emergence of innovative pan-European solutions, such as the ‘European Payments Initiative’ (EPI), launched by 16 European banks last July (see EUROPE 12520/3).
In concrete terms, the Commission proposes, by the end of 2023, to study the possibility of creating a “label” with a visible logo for eligible pan-European payment solutions. It is also committed to exploring ways to facilitate the deployment of European specifications for contactless card payments, for example through funding programmes such as InvestEU. It will also support the modernisation and simplification of payment acceptance schemes for EU merchants, for example by allowing cash registers to issue electronic receipts.
The Commission also wants to fully exploit the potential of the Single Euro Payments Area (SEPA) and, in particular, the ‘SEPA Instant Credit Transfer’ scheme launched in 2017.
As of August 2020, only 62.4% of all EU payment service providers offering SEPA credit transfers had joined the scheme, regrets the Commission, which intends to assess the reasons for the lack of adherence in November 2020. Depending on the results of its assessment, the Commission may present legislation in 2021 making it compulsory for certain payment service providers to join the system.
Improving the acceptance of digital payments
Another obstacle that the Commission wants to tackle is the acceptance of digital payments, which varies considerably across the EU. Some entities, such as small merchants, public administrations, hospitals and public transport still do not accept digital payments.
It promises to carry out a study in 2022 on the level of acceptance of digital payments in the EU, including by SMEs and public administrations, which will, inter alia, investigate possible reasons for the low level of acceptance and may propose legislative action.
Nevertheless, at this stage, it does not envisage raising the maximum amounts for contactless payments that are exempt from strong customer authentication, despite the importance that these types of payments gained momentum during the Covid-19 crisis (see EUROPE 12454/10). “This could lead to an increase in fraud”, it explains. However, the Commission will examine the technical conditions that could allow consumers to set their own individual contactless payment limit, within the legal maximum limit of €50.
While encouraging the development of digital payments, the Commission states that it will nevertheless continue to preserve access to and acceptance of euro notes and coins as well as their legal tender status.
Review of the ‘PSD2’ Directive at the end of 2021
If instant payments are to become “the new standard”, the Commission considers that it would be appropriate for the charges for traditional and instant credit transfers to be the same. This is one of the aspects it will assess in its comprehensive review of the application and impact of the Payment Services Directive (PSD2), scheduled for the end of 2021.
In addition, the Commission intends to use this review to take stock of the impact of strong customer authentication on the level of payment fraud in the EU and will consider whether additional measures should be considered to combat new types of fraud, in particular as regards instant payments.
As announced in its strategy on digital finance (see EUROPE 12562/10), the Commission also plans to present a legislative proposal for a framework for open finance in mid-2022, modelled on the concept of “open banking” initiated by the PSD2 Directive.
See the strategy: https://bit.ly/3hZFMlV (Original version in French by Marion Fontana)