OPINION OF THE EUROPEAN CENTRAL BANK
of 12 July 2000
at the request of the Luxembourg Ministry of Fina nce on ‘Chapter VII – El ectronic Payments’ of a
Luxembourg legislative proposal concerning electronic commerce
(CON/00/11)
1. On 3 May 2000, the European Central Bank (ECB) received a request from the Luxembourg
Ministry of Finance for an ECB opinion on ‘Chapt er VII – Electronic Payments’ of a Luxembourg
legislative proposal concerning electronic commerce (hereinafter referred to as the ‘Draft Law’).
2. The ECB’s competence to deliver an opinion is based on Article 105 (4), second indent, of the
Treaty establishing the European Community and on the second indent of Article 2 (1) of CouncilDecision 98/415/EC of 29 June 1998 on the consultation of the ECB by national authorities
regarding draft legislative provisions, as the legislative proposal contains provisions concerning
means of payment. In accordance with the first sentence of Article 17.5 of the Rules of Procedureof the European Central Bank, this ECB opinion has been adopted by the Governing Council of theECB. This ECB opinion is based on an unofficial English translation of the official proposalwritten in French.
3. The ECB welcomes the Luxembourg initiative to strengthen customer confidence when making
payments over the internet whereby Commi ssion recommendation 97/489/EC of 30 July 1997
concerning transactions by electronic payment instruments and in particular the relationship
between issuer and holder (the ‘recommendation’) is given due consideration. The ECB is,
however, of the view that some parts of th e recommendation, for example in the Section on
‘transparency of conditions for transactions ’ (Section II of the recommendation) and certain
aspects of the Section on ‘ obligations and liabilities of the parties to a contract ’ (Section III of the
recommendation), have not been entirely transposed. The ECB understands at the same time that anumber of provisions of the recommendation, which have not been transposed in the Draft Law,are covered by provisions of the Luxembourg Civil Code.
Page 2 of 44. The ECB understands that the Draft Law has taken account of the proposal for: 1) a directive of the
European Parliament and of the Council on the taking up, the pursuit and the prudential supervisionof the business of electronic money institutions; and for 2) a directive of the European Parliamentand of the Council amending Directive 77/780/EEC  on the co-ordination of laws, regulations and
administrative provisions relating to the taking up and pursuit of the business of credit institutions;
which proposal, once adopted, would be implem ented in Luxembourg in a separate law.
5. With regard to the definition, in Article 75(1) of the Draft Law, of ‘ electronic funds transfer
instrument’  (as ‘ any system which permits the following transactions to be effected either fully or
partly electronically: a) the transfer of funds; b) cash withdrawals and deposits; c) remote access
to an account; and d) loading and unloading  of a reloadable payment instrument’ ), the ECB finds
it somewhat ambiguous that such instrument is defined by reference to the term ‘ system’.  The use
of the term ‘ system ’, combined with a reference to the transfer of funds, could be read to mean that
in principle any interbank transfer system can be defined as ‘ electronic funds transfer instrument ’
which should not be the case. Therefore, the ECB would like to propose to replace the word
‘system’  with ‘ instrument’ . Also, to add clarity, the definition could be reformulated as ‘ any
instrument which permits one or more of the following transactions to be effected either fully or
partly electronically: a) the transfer of funds; b) cash withdrawals; c) deposits; d) remote access toan account; e) loading and unloading of an electronic money instrument.’
6. In Article 75 (2) of the Draft Law, ‘ reloadable instrument ’ is defined as ‘ any electronic funds
transfer instrument on which value units are stored electronically’.  The ECB would, however, like
to propose that the concept of ‘ electronic money’ be used instead throughout the Draft Law.
‘Electronic money’ is defined in Article 1(3) (b), of the proposal for a directive of the European
Parliament and of the Council on the taking-up, pursuit of and prudential supervision of thebusiness of electronic money institutions as ‘ monetary value as represented by a claim on the
issuer which is (i) stored on an electronic device; (ii) issued on receipt of funds of an amount notless in value than the monetary value issued; (iii) accepted as means of payment by undertakingsother than the issuer’ . In accordance with this concept, also non-reloadable electronic money usage
devices (basically disposable electronic money cards) would fall within the purview of thedefinition. The ECB is of the view that disposable cards should also fall within the scope of thisDraft Law.
As according to the recommendation, the term ‘ electronic money instrument’ only comprises
reloadable but not non-reloadable instruments, the ECB would welcome that if this term wouldsubsequently be introduced in the Draft Law, it would then be defined more broadly. 
Page 3 of 47. Regarding the definition of an ‘ issuer’ (as ‘ any person who, in the course of his/her business,
makes available to another person an electronic funds transfer instrument pursuant to a contractconcluded with him/her’ ) in Article 75(3) of the Draft Law, it would seem reasonable to replace the
reference to ‘ any person ’ with ‘ any legal person ’ (and, correspondingly, replace the reference to
‘his/her’ with ‘ its’ and ‘it’ respectively). Secondly, it is not clear whether the definition refers to
the issuer of the electronic funds transfer instrument or the issuer of the card/software on which the
electronic money is stored. Therefore, one possibility to achieve further clarity would be to includeafter the term ‘issuer’ the words ‘of an electronic funds transfer instrument’.
8. With respect to the definition of a ‘ holder ’ (as ‘ any person who, pursuant to a contract concluded
between themself and an issuer, holds an electronic funds transfer instument’ ) in Article 75(4) of
the Draft Law, the paragraph could be redrafted as such that also persons possessing an electronic
money instrument are included.
9. The scope of the Draft Law has been defined in Article 76 in the negative. In principle, this means
that the Draft Law would apply to everything except to those two issues referred to in Article 76. In
the recommendation, the scope has been defined in both a positive and a negative way, by statingto which transactions the recommendation applies and to which it does not apply. To add clarity, itwould be beneficial to use the same approach also in the Draft Law. 
10. The definition of single purpose electronic money contained in Article 76 (b) is not in line with the
proposal for a directive of the European Parliament and of the Council on the taking up, the pursuitand the prudential supervision of the business of electronic money institutions. Therefore, the
sentence in question could be reformulated e.g. as follows: ‘ The provisions of this law shall not
apply to (b) electronic funds transfers carried out by electronic money instruments which can onlybe used to pay for products bought from and/or services provided by the issuer of electronic money
in question .’ Article 79  of the Draft Law does not refer to transactions undertaken by means of
reloadable instruments, even if this transaction is of loading/unloading nature. The ECB proposes
to include such transactions into the scope of this Article.
With respect to the second sentence of Article 79(1) of the Draft Law in which it is stated that the
issuer shall make available to the holder the appropriate means to make the notification, the ECB is
of the view that a sentence should be added referring to the obligation of the issuer to provide the
holder with evidence that such notification was made. In detail, such an additional sentence shouldstipulate that the issuer provide the holder with the means of proof that the holder has made anotification in case the notification was made by telephone. 
Page 4 of 4Furthermore, it is not clear what the second bullet point of Article 79(2) refers to. This could be
clarified by changing the order of the sentences in this paragraph. 
11. Further to the issuer’s obligations and liabilities,  the ECB is of the view that the obligations and
liabilities of the issuer as laid down in Section III of the recommendation have only partly been
considered in the Draft Law. With respect to the issuer’s liabilities, it seems that neither the DraftLaw nor the Luxembourg Civil Code contains prov isions that correspond to Article 8 of the
recommendation. The ECB would, therefore, like to propose to insert rules in the Draft Law aimedat transposing Article 8(1), (3) and (4) of the recommendation.  Regarding the issuer’s obligations,the ECB notes that the Draft Law leaves out the secrecy of the holder’s personal identificationcodes (Article 7(2)(a) and (b) of the recommendation). Also with respect to this issue, the ECBwould welcome that additional corresponding provisions be inserted in the Draft Law.
12. The ECB proposes that provisions about notification (Article 9 of the recommendation) are
included in the Draft Law. In particular, these provisions could stipulate that the issuer is obliged toprovide means for notification at any time of the day and that the issuer is obliged to take actions inorder to stop further use of electronic payment instruments upon receipt of notification. 
13. The ECB confirms that it has no objection to this ECB opinion being made public by the competent
national authorities at their discretion.
Done at Frankfurt am Main on 12 July 2000.
The President of the ECB
[signed]
Willem F. Duisenberg