EN Official Journal of the European Union CE 84/9

(2004/C 84 E/0009)

WRITTEN QUESTION P-1595/03

by Helena Torres Marques (PSE) to the Commission

(6 May 2003)

Subject: Cross-border payments in euro

With reference to written question P-0327/03 (1) of 31 January 2003, the Commission's answer to which was unclear, the questioner once again seeks clarification as to whether an electronic card which serves as both a credit card and a debit card in Portugal can only be used as a credit card in the other euro countries.

More precisely, can a card which is used to withdraw cash from ATMs free of charge in Portugal be used for the same purpose in the other countries in the euro zone or might the withdrawal, without prior warning, be considered as a cash advance with the charges that entails?

Similarly, can the Commission say what it means by ‘deferred debit cards’ mentioned in point 23 of Commission Decision 2002/914/EC (2) of 24 July 2002 and what the advantages are for consumers?

Supplementary answer given by Mr Bolkestein on behalf of the Commission

(18 July 2003)

According to Regulation (EC) No 2560/2001 of the Parliament and of the Council of 19 December 2001 on cross-border payment in euro (3), since 1 July 2002 the cost for cardholders withdrawing euro cash at automated teller machines (ATMs) should be the same, regardless of whether the ATM is located in the country where the card is issued or in another Member State.

In Article 3 of the Regulation, the principle of equality of charges applies to ‘corresponding payments’.

For payment cards combining both a debit and a credit function (so-called ‘multi-functional cards’) (4), this means the following:

— when the debit function is used for euro cash withdrawals outside the country of issuance of the card in the Union, any charges applied should be the same as when the same function is used in euro cash withdrawals within the country of issuance of the card (5);

— similarly, when the credit function (6) is used, the charges should be the same as for the same function in the country of issuance.

The case referred to by the Honourable Member relates to a multi-functional card issued in Portugal.

On the basis of information provided by several entities, the Commission has the following understanding of the facts:

— Holders of such multi-functional cards have a choice between withdrawing money at ATMs using the debit function (immediate debit on the account, no charge) or the credit function (cash advance, meaning deferred debit on the account and charges of 4 % in average) as long as the cards are used in Portugal.

— When those multi-functional cards issued in Portugal are used in other Member States, the debit function is not available and only the credit function can be used to withdraw money at ATMs. The charges in that case are the same as compared to the use of the credit function in Portugal.

The Commission draws the following conclusions:

— As regards cash withdrawals using the credit function, the charges are the same for cross-border and national transactions, in conformity with the notion of ‘corresponding payments’.

— Cash withdrawals are possible on a cross-border basis. However, the debit function cannot be used outside Portugal. Multi-functional cards issued in Portugal are therefore not fully usable in other Member States at the same conditions as in Portugal. In particular, it can be concluded that the service of cash withdrawals in euros is not available at the same conditions inside and outside Portugal. This difference in available options does not seem, prima facie, to respect the spirit of Regulation (EC) No 2560/2001.

According to information provided by Portuguese banks, in addition to payment cards combining both the debit and the credit function, as described above, there are also ‘pure’ debit cards (only carrying the immediate debit function), which allow cardholders to withdraw euro cash in Portugal and in other Member States free of charge. The Commission will endeavour to obtain data from the Portuguese authorities on the relative use in the market of multi-functional cards as compared to pure debit cards to evaluate the importance of the problem.

It should also be noted that, according to Article 4 of Regulation (EC) No 2560/2001, cardholders shall be supplied with prior information on the charges levied for cross-border payments as well as for national payments. In addition, Commission Recommendation 97/489/EC of 30 July 1997 concerning transactions by electronic payment instruments and in particular the relationship between issuer and holder (7) establishes in Article 3, §3, that the terms of the contract between a cardholder and his bank shall at least include ‘a description of the electronic payment instrument (…), and the way in which it can be used, including the financial limits applied, if any’. Cardholders using multi-functional cards outside Portugal should therefore be informed about the services provided and their price.

The Commission will pursue the contacts undertaken with Portuguese authorities in order to determine whether Regulation (CE) No 2560/2001 is being properly implemented by Portuguese banks, including with respect to prior information requirements.

(1) OJ C 78 E, 27.3.2004, p. 354.

(2) OJ L 318, 22.11.2002, p. 17.

(3) OJ L 344, 28.12.2001.

(4) In Europe, the credit function is rather a deferred debit, meaning that the holder may charge his account up to an authorised limit. A deferred debit card enables the cardholder to make purchases but does not offer extended credit, the full amount of the debt incurred having to be settled at the end of a specified period. When such cards are used to withdraw cash (so-called ‘cash advance’), the funds are debited from the cardholder's account at the end of the specified period.

(5) When the debit function of a card is used in cash withdrawals, the funds are immediately debited from the cardholder's account.

(6) When the credit function of a card is used in cash withdrawals, the funds are debited from the cardholder's account at the end of a specified period.

(7) OJ L 208, 2.8.1997.