Text proposed by the European Commission Amendments proposed by the ECB (1)

Amendment 1

Recitals 15 to 17

‘(15) This Regulation follows a gradual approach. As a first step, it is necessary to take measures to facilitate cross-border issuing and acquiring of payment card transactions. Allowing merchants to choose an acquirer outside their own Member State (“cross border acquiring”) and imposing a maximum level of cross border interchange fees for cross border acquired transactions should provide the necessary legal clarity. In addition, licences for issuing or acquiring of payment instruments should be valid without geographic restrictions within the Union. These measures would facilitate the smooth functioning of an internal market for card, internet and mobile payments, to the benefit of consumers and retailers. (16) As a consequence of unilateral undertakings and commitments accepted in the framework of competition proceedings, many cross-border card payment transactions in the Union are already carried out respecting the maximum interchanges fees applicable to the first phase of this Regulation. Therefore, the provisions relating to those transactions should enter into force quickly, creating opportunities for retailers to seek cheaper acquiring services cross-border, and incentivising domestic banking communities or schemes to lower their acquiring fees. (17) For domestic transactions, a transition period is necessary to provide payment services providers and schemes with time to adapt to the new requirements. Therefore, after a two year period following the entry into force of this Regulation and in order to provide for a completion of an internal market for card-based payments, the caps on interchange fees for consumer card transactions should be extended to cover all, cross-border and domestic payments.’ ‘(15) This Regulation follows a gradual approach. As a first step, it is necessary to take measures to facilitate cross-border issuing and acquiring of payment card transactions. Allowing merchants to choose an acquirer outside their own Member State (“cross border acquiring”) and imposing a maximum level of cross border interchange fees for cross border acquired transactions should provide the necessary legal clarity. In addition, and ensuring that licences for issuing or acquiring of payment instruments should be valid without geographic restrictions within the Union. These measures would facilitate the smooth functioning of an internal market for card, internet and mobile payments, to the benefit of consumers and retailers. (16) As a consequence of unilateral undertakings and commitments accepted in the framework of competition proceedings, many cross-border card payment transactions in the Union, as well as some national transactions in certain Member States, are already carried out respecting the maximum interchanges fees applicable to the first phase of in this Regulation. Therefore, the provisions relating to those transactions should enter into force quickly, creating opportunities for retailers to seek cheaper acquiring services crossborder, and incentivising domestic banking communities or schemes to lower their acquiring fees. (17) For domestic transactions, a transition period is necessary to provide payment services providers and schemes with time to adapt to the new requirements. Therefore, after a two year transitional period following the entry into force of this Regulation appears to be sufficient and in order to provide for a completion of an internal market for card-based payments, the caps on interchange fees for consumer card transactions should be extended to cover all, cross-border and domestic payments.’

Explanation The proposed 22 months between the introduction of the caps on cross-border interchange fees and on national interchange fees, could put small national card acquirers at a disadvantage since they would not be able to compete with foreign acquirers benefiting from the lower cross-border interchange fees. Therefore, a common date for the introduction of the caps on interchange fees would be preferred; however the ECB remains neutral on the proposed timeline.

Amendment 2

Recital 24

‘(24) Consumers tend to be unaware of the fees paid by merchants for the payment instrument they use. At the same time, a series of incentivising practices applied by issuing payment service providers (such as travel vouchers, bonuses, rebates, charge backs, free insurances, etc.) may steer consumers towards the use of payment instruments generating high fees for issuing payment service providers. To counter this, the measures imposing restrictions on interchange fees should only apply to payment cards that have become mass products and merchants generally have difficulty refusing due to their widespread issuance and use (i.e. consumer debit and credit cards). In order to enhance effective market functioning in the non-regulated parts of the sector and to limit the transfer of business from the regulated to the non-regulated parts of the sector, it is necessary to adopt a series of measures, including separation of scheme and infrastructure, steering of the payer by the payee and enable selective acceptance of payment instruments by the payee.’ ‘(24) Consumers tend to be unaware of the fees paid by merchants for the payment instrument they use. At the same time, a series of incentivising practices applied by issuing payment service providers (such as travel vouchers, bonuses, rebates, charge backs, free insurances, etc.) may steer consumers towards the use of payment instruments generating high fees for issuing payment service providers. To counter this, the measures imposing restrictions on interchange fees should only apply to payment cards that have become mass products and merchants generally have difficulty refusing due to their widespread issuance and use (i.e. consumer debit and credit cards). In order to enhance effective market functioning in the non-regulated parts of the sector and to limit the transfer of business from the regulated to the non-regulated parts of the sector, it is necessary to adopt a series of measures, including separation of the scheme and the processing infrastructure, steering of the payer by the payee and enable selective acceptance of payment instruments by the payee.’

Explanation It is suggested to add this wording to clarify the context.

Amendment 3

Recital 29

‘(29) […] However, to protect the consumer and his ability to use the payment cards as often as possible, merchants should be obliged to accept all cards that are subject to the same regulated interchange fee. Such a limitation would also result in a more competitive environment for cards with interchange fees not regulated under this Regulation, as merchants would gain more negotiating power as regards the conditions under which they accept such cards.’ ‘(29) […] However, to protect the consumer and his ability to use the payment cards as often as possible, merchants should be obliged to accept all cards that are subject to the same regulated interchange fee. Such a limitation would also result in a more competitive environment for cards with interchange fees not regulated under this Regulation, as merchants would gain more negotiating power as regards the conditions under which they accept such cards.’

Explanation Merchants should be able to take commercial decisions themselves on which cards, schemes, brands or products to accept. Introducing mandatory acceptance of cards that are subject to the same regulated interchange fee seems to be unnecessarily broad.

Amendment 4

Article 2(1)

‘(1) “acquirer” means a payment service provider contracting directly or indirectly with a payee to process the payee’s payment transactions;’ ‘(1) “acquirer” means a payment service provider contracting directly or indirectly with a payee to accept and process the payee’s payment transactions initiated by a payer’s payment instrument;’

Explanation This article requires amendment to capture some additional features of acquiring. The drafting suggestion is in line with the Eurosystem’s proposed definition of ‘acquiring of payment transactions’ in its opinion on the proposed PSD2.

Amendment 5

Article 2(2)

‘(2) “issuer” means a payment service provider contracting directly or indirectly with a payer to initiate, process and settle the payer’s payment transactions;’ ‘(2) “issuer” means a payment service provider contracting directly or indirectly with a payer providing the payer with a payment instrument to initiate, process and settle the payer’s payment transactions;’

Explanation Amended to capture some additional features of issuing. The drafting suggestion is in line with the Eurosystem’s proposed definition of ‘issuing of payment instruments’ in its opinion on the proposed PSD2.

Amendment 6

Article 2(4)

‘(4) “debit card transaction” means an card payment transaction included with prepaid cards linked to a current or deposit access account to which a transaction is debited in less than or 48 hours after the transaction has been authorised/initiated.’ ‘(4) “debit card transaction” means a ancard payment transaction initiated with a debit card included with prepaid cards linked to a current or deposit access account to which a transaction is debited in less than or 48 hours after the transaction has been authorised/initiated. (4a) “debit card” means a card that enables its holders to make purchases and/or withdraw cash, which are to be directly and immediately charged to their payment accounts, regardless of whether these are held with the card issuer.’

Explanation It cannot be taken for granted that a debit card will be debited within 48 hours. The separation between debit and credit cards should therefore relate to the immediate debiting of the account (debit card) and debiting on pre-agreed dates (credit card). Moreover, the definition of debit card should also deviate from the definition of credit card (see below) as regards the aspect of benefits for the payee, so as to provide a non-arbitrary reasoning for the proposed difference of the respective interchange fee caps.

Amendment 7

Article 2(5)

‘(5) “credit card transaction” means an card payment transaction where the transaction is settled more than 48 hours after the transaction has been authorised/initiated;’ ‘(5) “credit card transaction” means an card payment transaction initiated with a credit card where the transaction is settled more than 48 hours after the transaction has been authorised/initiated; (5a) “credit card” means a card that enables cardholders to make purchases and/or withdraw cash up to a prearranged credit limit. The credit granted may be either settled in full by the end of a specified period, or settled in part, with the balance taken as extended credit, on which interest is usually charged. The scheme rules and the processing of the transaction, as well as the merchant’s card acceptance procedures, can be broader as compared to transactions with a debit card.’

Explanation See explanation of Amendment 6.

Amendment 8

Article 2(7)

‘(7) “card based payment transaction” means a service used to complete a payment transaction by means of any card, telecommunication, digital or IT device or software if this results in a payment card transaction. Card based payment transactions exclude transactions based on other kinds of payment services.’ ‘(7) “card based payment transaction” means a service used to complete a payment transaction initiated by means of any card, telecommunication, digital or IT device or software a card based payment instrument under the rules, practices, standards and/or implementation guidelines of a card scheme if this results in a payment card transaction. Card based payment transactions exclude transactions based on other kinds of payment services that does not result in a credit transfer or a direct debit as defined by Article 2 of Regulation (EU) No 260/2012.’

Explanation The Commission’s proposed definition of a ‘card based payment transaction’ is slightly wider than the definition of a ‘payment card transaction’ covering also transactions made without a physical card. Considering the rapid development in the area of cards and the increasing variety of payment solutions using the cards infrastructure, the ECB suggests merging the two definitions.

Amendment 9

Article 2(8)

‘(8) “cross-border payment transaction” means a card payment or card-based payment transaction initiated by a payer or by a payee where the payer’s payment service provider and the payee’s payment service provider are established in different Member States or where the payment card is issued by an issuing payment service provider established in a different Member State than that of the point of sale;’ ‘(8) “cross-border card payment transaction” means a card payment or card-based payment transaction initiated by a payer or by a payee where the payer’s payment service provider and the payee’s payment service provider issuer and acquirer of that transaction are established in different Member States or where the payment card acquirer is issued by an issuing payment service provider established in a different Member State than that of the point of sale;’

Explanation It is suggested that the wording of this definition can be simplified as indicated in the amendment above.

Amendment 10

Article 2(9)

‘(9) “interchange fee” means a fee paid for each transaction directly or indirectly (i.e. through a third party) between the payment service providers of the payer and of the payee involved in a payment card or a payment card-based transaction;’ ‘(9) “interchange fee” means a fee paid for each per card-based payment transaction directly or indirectly (i.e. through a third party) between the payment service providers of the payer and of the payee involved in a payment card or a payment card-based issuer and the acquirer of that transaction;’

Explanation It is suggested that the wording of this definition can be simplified by referring to the concepts of issuer and acquirer.

Amendment 11

Article 2(10)

‘(10) “merchant service charge” means a fee paid by the payee to the acquirer for each transaction comprising the interchange fee, the payment scheme and processing fee and the acquirer margin;’ ‘(10) “merchant service charge” means a fee paid by the payee to the acquirer for each card-based payment transaction comprising the interchange fee, the payment scheme and processing fee and the acquirer margin services provided by the acquirer;’

Explanation It is suggested not to limit the definition of the merchant service charge to the items listed.

Amendment 12

Article 2(13)

‘(13) “payment card scheme” means a single set of rules, practices, standards and/or implementation guidelines for the execution of payment transactions across the Union and within Member States, and which is separated from any infrastructure or payment system that supports its operation;’ ‘(13) “payment card scheme” means a single single set of rules, practices, standards and/or implementation guidelines for the execution of payment transactions initated by a card-based payment instrument across the Union and within Member States, and which is separated from any infrastructure or payment system thatsupports its operation;’

Explanation Amended to incorporate the element of initiation; references to the Union and the Member States should be deleted as they are not necessary.

Amendment 13

Article 2(14)

‘(14) “four party payment card scheme” means a payment card scheme in which payments are made from the payment account of a cardholder to the payment account of a payee through the intermediation of the scheme, a payment card issuing payment services provider (on the card holder’s side) and an acquiring payment services provider (on the payee’s side), and card based transactions based on the same structure;’ ‘(14) “four-party payment card scheme” means a payment card scheme where issuing and acquiring services are provided by entities other than the entity governing the card scheme in which payments are made from the payment account of a cardholder to the payment account of a payee through the intermediation of the scheme, a payment card issuing payment services provider (on the card holder's side) and an acquiring payment services provider (on the payee's side), and card based transactions based on the same structure;’

Explanation It is suggested not to distinguish between three-party and four-party card schemes on the basis of the provision of issuing and acquiring services.

Amendment 14

Article 2(15)

‘(15) “three party payment card scheme” means a payment card scheme in which payments are made from a payment account held by the scheme on behalf of the cardholder to a payment account held by the scheme on behalf of the payee, and card based transactions based on the same structure. When a three party payment card scheme licenses other payment service providers for the issuance and/or the acquiring of payment cards, it is considered as a four party payment card scheme;’ ‘(15) “three-party payment card scheme” means a payment card scheme where both the issuing and the acquiring of payment transactions under the scheme’s brand are performed by the entity governing the card scheme in which payments are made from a payment account held by the scheme on behalf of the cardholder to a payment account held by the scheme on behalf of the payee, and card based transactions based on the same structure.When If a three party payment card scheme licenses other payment service providers for the issuance of its card based payment instruments and/or the acquiring of payment cards its card based payment transactions, it is considered as a four party payment card scheme;’

Explanation See explanation of Amendment 13.

Amendment 15

Article 2(16)

‘(16) “payment instrument” means any personalised device(s) and/or set of procedures agreed between the payment service user and the payment service provider and used by the payment service user, or in its behalf, in order to initiate a payment order;’ ‘(16) “payment instrument” means any personalised device(s) and/or set of procedures agreed between the payment service user and the payment service provider and used by the payment service user, or in its behalf, in order to initiate a payment order;’

Explanation This definition should be aligned with the proposed PSD 2.

Amendment 16

Article 2(17)

‘(17) “card-based payment instrument” means any payment instrument, including a card, mobile phone, computer or any other technological device containing the appropriate application, used by the payer to initiate a payment order which in not a credit transfer or a direct debit as defined by Article 2 of Regulation (EU) No 260/2012.;’ ‘(17) “card-based payment instrument” means any payment instrument, including a card, or any other payment instrument providing similar features to a payment card, mobile phone, computer or any other technological device containing the appropriate application, accepted by the payee to receive a payment and used by the payer to initiate a payment order which in does not result in a credit transfer or a direct debit as defined by Article 2 of Regulation (EU) No 260/2012;’

Explanation This definition should be aligned with the drafting suggestion for ‘card based payment transaction’ in Amendment 8.

Amendment 17

Article 2(18)

‘(18) “payment application” means a computer software or equivalent loaded on a device enabling card-based payment transactions to be initiated and allowing the payer to issue payment orders;’ ‘(18) “card-based payment application” means a computer software or equivalent loaded on a device or accessed remotely enabling card-based payment transactions to be initiated and allowing by the payer to issue payment orders;’

Explanation It is suggested to incorporate the element of remote access within this defined term.

Amendment 18

Article 2(19)

‘(19) “payment order” means any instruction by a payer to his payment service provider requesting the execution of a payment transaction;’ ‘(19) “payment order” means any instruction by a payer or payee to his payment service provider requesting the execution of a payment transaction;’

Explanation Payment orders for card payments could also be initiated by the payee. Additionally, the amendment aligns the definition with the proposed PSD 2.

Amendment 19

Article 2(20)

‘(20) “payment card transaction” means a payment transaction made with a payment card or using the infrastructure of a payment card transaction and based on the business rules of a payment card transaction;’ ‘(20) “payment card transaction” means a payment transaction made with a payment card or using the infrastructure of a payment card transaction and based on the business rules of a payment card transaction;’

Explanation The definition is very similar to the definition of ‘card based payment transaction’. The two definitions could usefully be merged.

Amendment 20

Article 2(21)

‘(21) “payment service provider” means natural or legal persons authorized to provide the payment services provider listed in the annex of Directive 2007/64/EC. A payment service provider can be an issuer or an acquirer or both;’ ‘(21) “payment service provider” means natural or legal persons authorized to provide the payment services provider listed in the annex of Directive 2007/64/EC. A payment service provider can be an issuer or an acquirer or both any of the bodies referred to in Article 1(1) of the proposed PSD2 (2) COM(2013)547/3 and legal and natural persons benefiting from the waiver under Article 27 of the proposed PSD2;’

Explanation To be aligned with the proposed PSD2.

Amendment 21

Article 2(23)

‘(23) “payment transaction” means an action, initiated by the payer or on his behalf or by the payee of transferring funds, irrespective of any underlying obligations between the payer and the payee;’ ‘(23) “payment transaction” means an action, initiated by the payer or on his behalf or by the payee of placing, transferring or withdrawing funds, irrespective of any underlying obligations between the payer and the payee;’

Explanation To be aligned with the proposed PSD2.

Amendment 22

Article 2(24)

‘(24) “processing” means the performance of payment transaction processing services in terms of the actions required for the handling of a payment instruction between the acquirer and the issuer;’ ‘(24) “processing” means the performance of payment transaction processing services in terms of the actions required for the handling of a payment instruction between the acquirer and the issuer any automatic data processing effected for the issuer or acquirer in the context of a card-based payment transaction;’

Explanation Amended to further clarify what payment transaction processing services provided by payment service providers entail.

Amendment 23

Article 2(25)

‘(25) “processing entity” means any natural or legal person providing payment transaction processing services;’ ‘(25) “processing entity” means any technical service provider of natural or legal person providing payment transaction processing services;’

Explanation Amended to emphasise the technical nature, i.e. involving IT processing of the payment services being provided.

Amendment 24

Articles 3 and 4

‘Article 3 Interchange fees for cross-border consumer debit or credit card transactions 1. With effect from two months after the entry into force of this Regulation, payment services providers shall not offer or request for cross-border debit card transactions a per transaction interchange fee or other agreed remuneration with an equivalent object or effect of more than 0,2 % of the value of the transaction. 2. With effect from two months after the entry into force of this Regulation, payment services providers shall not offer or request for cross-border credit card transactions a per transaction interchange fee or other agreed remuneration with an equivalent object or effect of more than 0,3 % of the value of the transaction. Article 4 Interchange fees for all consumer debit or credit card transactions 1. With effect from two years after the entry into force of this Regulation, payment service providers shall not offer or request a per transaction interchange fee or other agreed remuneration with an equivalent object or effect of more than 0,2 % of the value of the transaction for any debit card based transactions. 2. With effect from two years after the entry into force of this Regulation, payment service providers shall not offer or request a per transaction interchange fee or other agreed remuneration with an equivalent object or effect of more than 0,3 % of the value of the transaction for any credit card based transactions.’ ‘Article 3 Interchange fees for cross-border consumer debit or credit card transactions 1. With effect from two years after the entry into force of this Regulation, payment service providers shall not offer or request a per transaction interchange fee or other agreed remuneration with an equivalent object or effect of more than 0,2 % of the value of the transaction for any debit card based transactions. 2. With effect from two years after the entry into force of this Regulation, payment service providers shall not offer or request a per transaction interchange fee or other agreed remuneration with an equivalent object or effect of more than 0,3 % of the value of the transaction for any credit card based transactions.’ Article 4 Interchange fees for all consumer debit or credit card transactions 1. With effect from two years after the entry into force of this Regulation, payment service providers shall not offer or request a per transaction interchange fee or other agreed remuneration with an equivalent object or effect of more than 0,2 % of the value of the transaction for any debit card based transactions. 2. With effect from two years after the entry into force of this Regulation, payment service providers shall not offer or request a per transaction interchange fee or other agreed remuneration with an equivalent object or effect of more than 0,3 % of the value of the transaction for any credit card based transactions.’

Explanation See explanation of Amendment 1.

Amendment 25

Article 7(3) and Article 7(5) and (6) (new) (3)

‘3. Any territorial discrimination in processing rules operated by payment card schemes shall be prohibited. […]’ ‘3. Any territorial discrimination relating to the choice of processing entity in the processing rules operated by payment card schemes shall be prohibited. […] 5. Payment card schemes should have a fair and transparent procedure to ensure that other processing entities are not unduly discriminated against and that technical interoperability with independent processing entities is not restricted. 6. This Article shall apply with effect from two years after the entry into force of this Regulation.’

An amendment to paragraph 3 is suggested to increase the clarity of the current wording, which, as it currently stands, could be interpreted in a way that would not leave room for country risk management at different stages of the processing, i.e. at authorisation. A new paragraph 5 is suggested to avoid the possibility of payment card schemes discriminating against processing entities by implementing business rules that unduly restrict interoperability between processing entities. Finally, a new paragraph 6 is suggested. The payment industry might need some additional time to implement the separation of the scheme and the processing infrastructure. It is therefore suggested that this article should not apply until two years after the Regulation has entered into force.

Amendment 26

Article 8(3) and (5)

‘3. Payment card schemes shall not impose reporting requirements, obligations to pay fees or other obligations with the same object or effect on card issuing and acquiring payment services providers for transactions carried out with any device on which their brand is present in relation to transactions for which their scheme is not used. […] 5. Where a payment device offers the choice between different brands of payment instruments, the brand applied to the payment transaction at issue shall be determined by the payer at the point of sale.’ ‘3. Payment card schemes shall not impose reporting requirements, obligations to pay fees or other obligations with the same object or effect on card issuing and acquiring payment services providers for transactions carried out with any device on which their brand is present in relation to transactions for which their scheme is not used, apart from reporting requirements imposed by regulators, supervisory authorities or central banks. […] 5. Where a payment device offers the choice between different brands of payment instruments, the brand to be applied to the payment transaction at issue shall be agreed determined by the payer and the payee at the point of sale.’

For oversight purposes, central banks require card schemes to report card fraud statistics. It would be a substantial burden if reporting requirements were modified to cover a larger number of providers. Therefore, as a solution to this, it is proposed to impose reporting requirements that will provide information that is actually needed by regulators, supervisory authorities or central banks. The choice of a specific brand should be jointly agreed upon by the cardholder (i.e. the payer) and the merchant (payee). If the choice lies solely with the payer, there is a risk that the payer will choose an expensive brand, which, while providing him with additional benefits, would lead to higher costs for the merchant which, ultimately, could lead to higher prices for all the merchant’s customers.

Amendment 27

Article 10(1)

‘1. Payment schemes and payment service providers shall not apply any rule that may oblige payees accepting cards and other payment instruments issued by one issuing payment service provider within the framework of a payment instruments scheme to also accept other payment instruments of the same brand and/or category issued by other issuing payment service providers within the framework of the same scheme, except if they are subject to the same regulated interchange fee.’ ‘1. Payment schemes and payment service providers shall not apply any rule that may oblige payees accepting cards and other payment instruments issued by one issuing payment service provider within the framework of a card payment instruments scheme to also accept other brands, payment instruments or products of the same brand and/or categoryissued by other issuing payment service providers within the framework of the same scheme, except if they are subject to the same regulated interchange fee.’

Explanation The decision on whether to accept cards, as well as which schemes, brands or products to accept, or which cards under a certain scheme to accept, should be a commercial decision taken by the merchant. Allowing schemes and providers to apply rules forcing upon payees the mandatory acceptance of cards which are subject to the same regulated interchange fee, seems to be unnecessarily broad. The additional amendments aim to simplify the requirements set out in this paragraph. According to recital 29, the goal of this paragraph is to remove the ‘Honour All Products’ element of the ‘Honour All Cards’ rule. The conditions on issuers are not necessary in order to reach this objective.

Amendment 28

Article 10(5) new

No text ‘5. Merchants may decide not to accept all cards or other payment instruments if they provide a low level of security and if the acquirer does not guarantee the full payment of authorised transactions.’