Brussels, 02/12/2003 (Agence Europe) - The European Commission has launched a consultation document on the setting up of a single payment area". This procedure will be completed in January 2004 and focuses on facilitating and making more secure cross border credit card payments, payment card, electronic bank transfer, and direct debit.
The most controversial point in the communication focuses on the establishing of liability for payment service providers towards merchants or their customers when cross border transactions fail. Commissioner Bolkestein's services are planning to propose several options: 1) the adoption of provisions making repayment compulsory when goods have been paid by credit card but which have not been delivered (the obligation currently exists in the United Kingdom, Finland and in Sweden); 2) the setting up of a system to credit a payment only when the delivery has been made, 3) the defining of information that payment providers must make available to customers so that users are aware of the possibilities for appeal as well as the number of the trader's account number. It appears that pressure from the banking sector (who thought that liability for payment service providers was excessive), the communication submitted to consultation is keen to point our that the three solutions should be subject to analysis before any Community action is taken.
The Commission communication plans to outline in a legislative text what information should be provided to consumers and traders: the conditions, modifications, amounts for commissions, interest rates applied etc. It explains that harmonisation of the rules on revocation of payments would be welcome given the many divergences between the different national legislation on the matter. It is proposing four solutions that will allow payments to be revoked: 1) up to the time that the account of the persons paying have their accounts debited, 2) until the transfer has begun, 3) until the payment order has been executed, 4) until the amount to transfer has been paid to the account of the beneficiary. The communication is also expected to explain that the payment service provider are liable and are responsible for providing proof when a payment has not been executed or carried out insufficiently. An article of the future legislation will bring the deadline for executing a transfer from the current five days to three days. The Commission points out in its communication that according to a recent study the average execution deadline is 2.97 days.
The future Community framework outlines the obligations and responsibilities of the contractual parties when non-authorised payments take place, in order to prevent fraud or when a bank card or private code has been stolen. The Commission also points out that Member States should apply the "optional " provisions of the directive on data protection of a personal nature in a similar way when detection or prevention of fraud is involved. In this connection it is proposing to include an Article making these provisions obligatory in the future Community framework on payments.
Harmonisation on "automatic withdrawals" may be suitable for getting rid of the current disparities. Nevertheless, "whatever legislative proposal, it should not impinge on the current national systems in place when they are working well", noted the Commission.
The Commission may also propose a transposition of the Financial Action Task Force on Money Laundering (FATF) recommendations for fighting against funding for terrorism. Transfer of funds are expected to be accompanied by information on the name of the person making the money order, the account number and address. This information could be limited from five years of being kept on file to a "minimum period".
Without proposing a legislative solution in the immediate future, the Commission is asking the different parties about the ideas, in order to allow consumers to change their banks more easily, banning closing charges and setting a reasonable ceiling on these costs. On the other hand, it will not for the time being make any intervention with regard to portable bank numbers, which it considers to be too expensive technically.
The Commission also wants to limit its action to a minimum on "value dates" that act as a reference for calculating interest rates for creditors and debitors. It also excludes the possibility of intervening in legislative questions regarding bank accounts for non-residents.
The Commission is not unanimous with regard to taking action on improving security of payments instruments and their components, "according to the payment services sector, the adoption of legislative measures could increase the cost of payments and endanger innovations and future developments". It would appear that it was more in favour of leaving it up to market players to define the level of what can be deemed normal security. The questions of payment network security could be dealt with by a future European agency dealing with network security and information, which has just been proposed by the Commission.