Opinion of the European Central Bank of 12 July 2000 at the request of the Luxembourg Ministry of Finance on ‘Chapter VII – Electronic Payments’ of a Luxembourg legislative proposal concerning electronic commerce (CON/00/11)
Date: 2000-07-12
Institutions: European Central Bank
Subjects: Luxembourg, electronic banking, financial supervision, money, national law, payment system

OPINION OF THE EUROPEAN CENTRAL BANK

of 12 July 2000

at the request of the Luxembourg Ministry of Finance on ‘Chapter VII – Electronic 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 ‘Chapter 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 Council

Decision  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 Procedure

of the European Central Bank, this ECB opinion has been adopted by the Governing Council of the

ECB.  This  ECB  opinion  is  based  on  an  unofficial  English  translation  of  the  official  proposal

written in French.

3. 

The  ECB  welcomes  the  Luxembourg  initiative  to  strengthen  customer  confidence  when  making

payments  over  the  internet  whereby  Commission  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  the  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 a

number of provisions of the recommendation, which have not been  transposed  in  the  Draft  Law,

are covered by provisions of the Luxembourg Civil Code.

4. 

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 supervision

of the business of electronic money institutions; and for 2) a directive of the European Parliament

and 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 implemented 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 to

an 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  the

business  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 not

less in value than the monetary value issued; (iii) accepted as means of payment by undertakings

other 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  the

definition. The ECB is of the view that disposable cards should also fall within the scope of this

Draft 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  would

subsequently be introduced in the Draft Law, it would then be defined more broadly. 

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7. 

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 contract

concluded 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 include

after 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 stating

to which transactions the recommendation applies and to which it does not apply. To add clarity, it

would 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 pursuit

and  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 only

be 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 should

stipulate  that  the  issuer  provide  the  holder  with  the  means  of  proof  that  the  holder  has  made  a

notification in case the notification was made by telephone. 

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Furthermore, 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 Draft

Law  nor  the  Luxembourg  Civil  Code  contains  provisions  that  correspond  to  Article  8  of  the

recommendation. The ECB would, therefore, like to propose to insert rules in the Draft Law aimed

at 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  identification

codes  (Article  7(2)(a)  and  (b)  of  the  recommendation).  Also  with  respect  to  this  issue,  the  ECB

would 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 to

provide means for notification at any time of the day and that the issuer is obliged to take actions in

order 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

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