Opinion of the European Economic and Social Committee on Implementing the Community Lisbon programme: Proposal for a Directive of the European Parliament and of the Council on payment services in the internal market and amending Directives 97/7/EC, 2000/12/EC and 2002/65/EC COM(2005) 603 final — 2005/0245 (COD)
Date: 2006-09-13
Institutions: European Economic and Social Committee
Subjects: approximation of laws, free movement of capital, free movement of goods, free movement of persons, freedom to provide services, payment, services contract, single market

23.12.2006

EN

Official Journal of the European Union

C 318/51

Opinion of the European Economic and Social Committee on Implementing the Community Lisbon
programme: Proposal for a Directive of the European Parliament and of the Council on payment
services in the internal market and amending Directives 97/7/EC, 2000/12/EC and 2002/65/EC

COM(2005) 603 final — 2005/0245 (COD)

(2006/C 318/09)

On 18 January 2006, the Council decided to consult the European Economic and Social Committee, under
Article 47(2) and Article 95 of the Treaty establishing the European Community, on the abovementioned
proposal.

The Section for the Single Market, Production and Consumption, which was responsible for preparing the
Committee's work on the subject, adopted its opinion on 12 July 2006. The rapporteur was
Mr Frank von Fürstenwerth.

At its 429th plenary session, held on 13 and 14 September 2006 (meeting of 13 September), the European
Economic and Social Committee adopted the following opinion by 191 votes to one, with three abstentions:

1. Summary

what
is necessary to achieve the objective at hand. The
Committee urges that more consideration be given to self-regu-
lation and co-regulation tools.

1.1
The European Economic and Social Committee (EESC)
agrees with the European Commission that, for the establish-
ment of the internal market, it is essential that all internal fron-
tiers in the Community be dismantled so as to enable the free
movement of goods, persons, services and capital. A key
element in this process is a properly functioning single market
in payment services. Such a market, however, is not yet in place.
Following the successful introduction of the euro, the EESC now
also supports the establishment of a Single Euro Payments Area
(SEPA).

1.2
The EESC backs the European Commission's efforts to
establish a proper legal framework for a Single Euro Payments
Area and feels that the proposal for a directive points the way
forward.

1.3
The Committee welcomes the action already taken by the
European Commission and the European banking industry to
establish a Single Euro Payments Area, the (really quite ambi-
tious) aim of which is to make cross-border euro payments
within the European single market simple, convenient, safe and
cheap.

1.4
The Committee notes, however, that, in submitting this
proposal for a directive, the European Commission has selected
a very broad-based approach to the rules in this area that clearly
goes beyond the legal
framework required for cross-border
payment services. The EESC is thus concerned that, not least
given the transposition periods required by the Member States
and payment service providers and users, the target of estab-
lishing the Single Euro Payments Area in 2008 could be missed
because of an overloaded legal framework that goes beyond

All

1.5
that should be needed to achieve the European
Commission's objective of launching the Single Euro Payments
Area in 2008 is to establish the legal basis for cross-border
direct debits and to rework the requisite legal provisions set out
under Title II (Payment service providers) and Title IV (Rights
and obligations in relation to the provision and use of payment
services) of the proposed directive (in relation, among other
things, to the authorisation, revocability and refund of direct
debits as set out in Title IV). This would make it possible to
meet the 2008 launch date for the Single Euro Payments Area.

Not least in the light of the legal provisions already in
1.6
place, the EESC feels that the principle of better regulation is
only served by focusing on those areas that really do require
regulatory action. Hence, in the interests of both providers and
users of payment services, the basic premise of the proposed
directive should be to promote and facilitate payments, not to
hamper them by red tape that ultimately makes the systems
more expensive and thus less acceptable to users.

The EESC would point to other issues arising in connec-
1.7
tion with the establishment of a single market
in payment
services, which it is not possible to resolve here. These include
the security of electronic payments and related factors. The ques-
tion of access to a current account, without which it is now
virtually impossible to take part
is also
becoming an increasingly important issue in the Member States.

in economic life,

The EESC recommends a series of specific changes to the

1.8
proposal for a directive.

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2. Content of the draft directive

2.1
The proposal for a directive is designed to establish a
uniform legal framework for SEPA, the main purpose of which
is to facilitate cross-border payments. The proposal seeks to
harmonise the different legal provisions in place in the Member
States so as to:

— enhance competition between national markets by creating a

level playing field;

— increase market transparency for payment service providers

and users; and

— standardise the rights and obligations of payment services

providers and users.

The main provisions of the proposed directive are as follows:

2.2 Right to provide payment services to the public (Title II)

2.2.1
The harmonisation of market access requirements of
non-credit institution payment service providers is designed to
create a level playing field, instil more competition in national
markets and reflect market developments in recent years, trig-
i.e.
gering market entry of a new generation of providers,
payment institutions.

2.3 Transparency and information requirements (Title III)

2.3.1
Clear and consistent rules on transparency for payment
services are intended to enhance competition by boosting user
choice and protection. The European Commission is proposing
information requirements
to replace
national rules.

for payment

services

2.4 Rights and obligations of users and providers of payment services

(Title IV)

The proposal for a directive sets out the core rights
2.4.1
and obligations of users and providers of payment services. The
provisions are designed to make users more trustful of elec-
tronic payment systems and thus to secure the efficiency and
acceptance of such systems.

3. General comments

3.1
The European Economic and Social Committee supports
the objective of the draft directive to establish a Single Euro
Payments Area, particularly for cross-border payment services.
The establishment of a single market in payment services is long
overdue and should, as planned, be launched in 2008.

3.2
The European Commission has selected a very broad-
based approach to the rules in this area. Indeed, some of the
rules go beyond the legal framework required for a Single Euro

Payments Area. This is particularly true since harmonised legal
provisions are already in place for credit transfers (Directive
97/5/EC on cross-border credit transfers, Directive 2002/65/EC
concerning the distance marketing of consumer
financial
services, and the E-money directive (2000/46/EC)).

3.3 Maintaining established, cost-effective and efficient proce-
dures is no barrier to a Single Euro Payments Area. On the
contrary, such procedures can be built upon as a conduit to
standardisation, thereby safeguarding the level of security and
efficiency that has already been achieved while at the same time
making a high-calibre Single Euro Payments Area a reality
through intelligent interface management. Guided by the prin-
ciple of better regulation,
the EESC advocates keeping the
proposed provisions to the minimum required to improve
payments within the European single market and urges that
more consideration be given to self-regulation and co-regulation
tools.

3.4
The EESC considers the Single Euro Payments Area to be
a key prerequisite for transparent product development across
Europe, with payment service providers free to compete with
each other in a way that also benefits clients. Moreover, the
EESC considers it important that consumers retain the existing
freedom to use the payment instruments of their choice so that
due account can be taken of customer preference.

3.5
One difficulty is access to payment systems by payment
institutions that do not hold a banking licence. In the interests
of fair competition, this requires a uniform level of prudential
supervision. The fear otherwise is that competition will be
distorted and that the operability and safety both of payment
transactions and of payment service providers (e.g. bankruptcy)
will be compromised.

3.6
The Committee recommends confining the proposed
directive to the provisions — set out in Title II (Payment service
providers) and Title IV (Rights and obligations in relation to the
provision and use of payment services) — that are needed for
any future European direct-debit scheme (in relation, among
other things, to the authorisation, revocability and refund of
direct debits). This should still make it possible both to adopt
the directive and to transpose it into national law within the
prescribed time frame so that the 2008 launch date for SEPA
(including uniform conditions for payment service providers
and SEPA Direct Debit) can be met.

3.7
The Committee very much welcomes the provisions of
Article 79 of the proposal, under which, no later than two years
after the directive is adopted, the Commission is to present an
implementation report to the European Parliament, the Council
and the European Economic and Social Committee.

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4. Specific comments

The Committee would make the following specific

4.1
comments about the proposal for a directive:

4.2 Article 2(1) — Third-country transactions should not be included

4.2.1
Article 2(1) includes within the geographical scope of
the directive payments to and from countries outside the Euro-
pean Union and the European Economic Area (third countries).
This goes considerably beyond the objective of establishing a
uniform legal framework within the European single market.
Moreover, this provision may well lie outside the EU's legislative
remit and also raises difficulties in that the European legislator
is in no position to ensure that corresponding provisions are
adopted in third countries. It is therefore wholly inappropriate
to impose (as Article 67 does) strict liability for the execution of
the transaction in a third country on the payment service
provider of
the payer without corresponding rules being in
place in the third country.

mers — and for the acceptance of SEPA. The information must
be clear and easily understandable and must be presented in a
readable form. Too varied and too frequent information may be
counterproductive, however, and may make the situation less
rather than more transparent. Moreover, private SEPA users
need different information from commercial ones. The Commis-
sion also sows confusion — and generates extra costs — when
it imposes different transparency requirements on similar cases.
The Committee would draw particular attention in this regard
to the distance marketing directive.

4.4.2
The selected approach to harmonisation — full harmo-
nisation and mutual recognition — may well pose problems for
consumers and consumer protection. The possibility cannot be
discounted,
for instance, that consumer protection standards
will be lower than those already in place in individual Member
States.

The Committee recommends that

the
4.2.2
directive be confined to payment services within the European
single market.

the scope of

4.3 Articles 5 et seq. — A uniform level of prudential supervision is

an essential element of fair competition

if payment

The prudential requirements that apply to the market
4.3.1
access of payment
institutions that do not hold a banking
licence (Articles 5 et seq.) should diverge from those that apply
to the banking sector only insofar as a payment institute is not
comparable with a fully licensed bank. The fear otherwise is that
competition will be distorted to the detriment of banks and that
the operability of payment systems will be severely compro-
mised. Moreover,
institutes that do not hold a
banking licence do not meet the same conditions as banks in
terms of risk-based equity, managerial competence and relia-
bility, business plans, and the organisation and ongoing supervi-
sion of business operations, including any necessary sanctions,
then the imposition of a rule granting such institutes access to
payment systems could also undermine the integrity and oper-
the European direct-debit scheme currently in the
ability of
pipeline. Above all, however, consumer confidence in SEPA
would be perennially compromised without an appropriate level
of prudential supervision. This also includes the question of
bankruptcy protection and the necessary arrangements for
holding client funds separately.

4.3.2
The EESC therefore feels it is essential that all payment
institutions should be subject to the same prudential supervision
requirements in relation to the risks and dangers of payment
transactions and that appropriate supervisory bodies should be
equipped with the requisite powers.

4.4 Articles 30 et seq. — Information requirements must not be too

formalised

The EESC agrees with the Commission that clear and
4.4.1
consistent transparency rules are of key importance for consu-

conditions

and about

4.4.3
The provisions relating to the method of providing
information under Article 30 should also be simplified. Particu-
larly in cases where users are to be informed about changes in
executed
contractual
(Article 33)
payments (Article 36) and received payments (Article 37),
it
should be possible, where this is the agreed custom, to retain
the current practice — which is inexpensive for users — of
making the information available via account statements or via
online banking. It should also be possible to meet the informa-
tion requirements using price tables or by posting the data on
the internet. It should be stated in more explicit terms (Articles
31 und 37) that the prices of the various service elements
covered by an aggregate fee need only be indicated separately to
the client in cases where individual service elements involve
separate and/or different product constellations.

4.4.4
For incoming and outgoing payments, it is important,
from a user perspective, not only that a clear indication is given
of both payer and payee, but also that the full payment reference
data are included in the transfer details. This is the only way to
secure fully automated referral for outstanding items and sums
due.

4.5 Article 41, second sentence — All kinds of authorisation must be

permitted

4.5.1
The EESC agrees with the Commission's approach
whereby a payment transaction is to be considered as authorised
only if the payer has consented to the payment order addressed
to the payment service provider. Under the second sentence of
Article 41, payers are required to give their consent by means of
‘explicit’ authorisation of ‘a payment transaction or a series of
transactions’. The wording here is unclear. To require an explicit
authorisation for each and every direct debit within a contrac-
tual relationship would impose serious constraints on any effi-
cient and cost-effective direct-debit scheme.

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To ensure the continued use of what consumers too
4.5.2
perceive to be tried-and-trusted, cost-effective procedures such
as direct debits,
the directive should be geared towards
minimum coordination rather than any full harmonisation that
brooks no exceptions.

4.6 Article 48(2) and (3) — The burden of proof in cases of disputed

payment transactions is not properly balance

Under Article 45, payment service users are, rightly,
4.7.2
required to check their account transactions regularly and to
raise any objections against unauthorised payment transactions
without undue delay. It is therefore a consistent and balanced
move to limit the refund claims of payment service users in
respect of unauthorised payments to one year. This would give
both payment service providers and payment service users the
requisite legal certainty that, on expiry of
the
payment is considered final. A one-year period would also tie in
with the record-keeping requirement under Article 44.

that period,

4.6.1
Consumers will not accept SEPA if, in cases of disputed
authorisation, they are faced with insurmountable difficulties
relating to evidence. The EESC backs the Commission's efforts
to facilitate matters for users on this front.

4.8 Articles 49 and 50 — Liability allocation requires further consid-

eration

4.6.2
That said, such an approach must not result in the
payment service provider being blocked from producing any
counterevidence in the case of gross abuse. Yet, Article 48(2)
makes it impossible for, the payment service provider to bring
forward evidence of gross negligence or even intent on the
user's part. If, however, it is no longer possible to bring forward
evidence that a payment service user did in fact act with gross
negligence or even intent, then this too is nothing short of an
invitation to disregard any normal safekeeping requirements and
to abuse the system. A rule of this kind also very much limits
the scope to offer certain electronic payment methods.

4.8.1
The EESC feels that liability must be allocated in an
appropriate way between service provider and user. Only then
will consumers use the payment service concerned and only
then will payment service providers be able to offer the service
at reasonable prices.

The strict liability of the payment service provider for
4.8.2
unauthorised payments proposed under Article 49 makes sense,
in the EESC's view, provided users handle their payment verifica-
tion instrument with the requisite care and in compliance with
the contractual requirements.

4.6.3
The EESC would advocate fair burden-sharing. The
onus is thereby on the payment service provider to furnish
evidence that the holder of the payment verification instrument
did in fact order the payment. If, however, the payment was
made using special security features incorporating recognised
safeguards against improper use, then the prima facie evidence
should stand, i.e. that the payment service user either authorised
the payment himself or herself or has at least acted in a grossly
negligent manner. Moreover, no undue limits should be placed
on national courts' scope to consider the evidence, especially
since Member States' civil procedure laws are not harmonised.

4.8.3
The EESC feels that, as provided for under Article 50, it
is appropriate to limit to EUR 150 the liability of users who,
despite having taken the requisite care, fail to notice the loss of
the payment verification instrument but duly notify the loss the
moment it comes to their attention. However, users who fail to
notify the loss without undue delay, even though they are
obliged to do so under Article 46, thereby also depriving the
payment service provider of the opportunity to avert or limit
any damage, should be given no special treatment, in terms of
the liability they bear, to the detriment of those users who do
exercise the requisite care.

4.7 Article 49 — Legal certainty must be established in the case of
unauthorised payment transactions by introducing uniform cut-off
periods for refunds

4.9 Article 53 — The refund period must be clearly fixed

the European Commission makes the point

In the explanatory memorandum to the proposal for a
4.7.1
directive,
that
payment systems are used in some 231 billion transactions
within the Community each year. This fact alone makes clear
the need, at a certain point, for legal certainty as to whether a
transaction was authorised or not.
In order to establish an
appropriate degree of legal certainty, the refund claim by the
payment service user in the case of unauthorised payment trans-
actions should be time-limited. The time limit should be fair.
The EESC considers a time limit of one year to be appropriate.

The period during which a refund may be claimed is a
4.9.1
key feature of the European direct-debit scheme. It is essential
that all those involved in the payment procedure are able to
determine when, precisely,
the period ends during which a
refund may be claimed on authorised payments. There is no
guarantee of this, however, as the first sentence of Article 53(1)
states
the period begins once information has been
provided to the payer, yet neither the payee nor his or her
payment service provider knows when the payment service
the
provider of
payment transaction on his or her account.

the payer actually informed the payer of

that

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Official Journal of the European Union

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that,

in practice,

the interval

The reason is

for
4.9.2
providing bank account statements varies widely. Sometimes,
statements are provided only every quarter, sometimes every
week, and sometimes even on a daily basis. This is a question of
user preference and cost. Depending on the frequency of the
information provided, therefore, the refund period may, to take
these examples, be three months plus four weeks, one week
plus four weeks, or even one day plus four weeks. It is thus
more or
less impossible to determine when the payment
becomes final. This would pose a virtually insoluble problem for
— and seriously jeopardise — the European direct-debit scheme
currently in the pipeline.

4.9.3
The EESC therefore proposes that, in line with Article
53(1), a four-week period should start when the customer is
informed, but should end at all events eight weeks after the
entry on the payer's account.

4.10 Articles 60, 61 and 67 — A clear distinction must be made
between the obligations of the payment service providers involved
in executing the payment

4.10.1
Articles 60, 61 and 67 indicate that the payment is
deemed to have been executed once the amount is credited to
the payee's account. This represents a break, for no apparent
reason, with existing European law on credit transfers. It lumps
together the contractual obligations of
the payment service
provider of the payer on the one hand, and the payment service
the payee on the other. The payment service
provider of
to a requirement
the payer would thus subject
provider of
which is incumbent only on the payment service provider of the
payee and which cannot be verified by the payment service
provider of the payer.

The EESC therefore proposes retaining the principle
4.10.2
governing payment rules currently enshrined under the Euro-
pean directive on credit transfers and applicable in a uniform
manner across all the EU Member States. Under this principle,
the payment service provider of the payer is responsible for the
transaction until it reaches the payment service provider of the
payee), while the payment service provider of
the payee is
responsible until the amount is credited to the payee's account.

Brussels, 13 September 2006.

4.11 Articles 60, 61 and 67 — The execution periods must be prac-

ticable

4.11.1
The EESC considers it essential that the execution
periods be such that they represent a clear improvement on the
present position, but that the technical implementation does not
involve unreasonably high costs which would then make
payments more expensive.

4.11.2
The execution periods of one banking business day
provided for under Articles 60 and 61 (day on which the
payment order is accepted plus one banking business day)
could, under present circumstances, be too ambitious. Under
the current European directive on cross-border credit transfers,
the standard period is six banking business days (day on which
the order is accepted plus five banking business days, plus one
day for the funds to be credited = five days for the payment
service provider of
the payer to credit the payment service
provider of the payee, plus one day for the payment service
provider of the payee to credit the payee), although some devia-
tion from these rules is possible. A number of regional and
smaller payment service providers are indicating that they will
be unable to meet this requirement. The planned (maximum)
execution period (one day for the payment service provider of
the payer to credit the payee) would be one sixth of the time
frame permitted at the moment. According to payment service
providers, the technical implementation of this rule would also
involve unreasonably high costs,
inevitably making
payments more expensive. The European banking sector has
the Credeuro
entered into a voluntary commitment under
Convention for a maximum execution period of three banking
business days for euro payments, and a standard execution
period of three banking business days for payments in other
European currencies.

thus

In the event

4.11.3
that competitive disadvantages are
suffered by regional and smaller payment service providers, the
EESC recommends that an execution period of three days be set
for an appropriate transitional period. This is not, however, to
affect provision being made for shorter execution periods for
purely national payment transactions (Article 64).

The President

of the European Economic and Social Committee

Anne-Marie SIGMUND