Opinion of the European Central Bank of 14 February 2018 on conferring new tasks relating to interchange fees for card-based payment transactions to the Central Bank of Cyprus (CON/2018/10)
Date: 2018-02-14
Institutions: European Central Bank
Subjects: Cyprus, bank charges, electronic banking, electronic money, national law, payment system

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 14 February 2018  

on conferring new tasks relating to interchange fees for card-based payment transactions  

to the Central Bank of Cyprus 

(CON/2018/10) 

Introduction and legal basis 

On 15 January 2018 the European Central Bank (ECB) received a request from the Ministry of Finance of 

the  Republic  of  Cyprus  for  an  opinion  on  a  draft  law  on  interchange  fees  for  card-based  payment 

transactions (hereinafter the ‘draft law’). 

The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the third indent of Article 2(1) of Council Decision 98/415/EC1, as 

the  draft  law  relates  to  the  Central  Bank  of  Cyprus  (CBC).  In  accordance  with  the  first  sentence  of 

Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted 

this opinion. 

1. 

Purpose of the draft law 

1.1  The purpose of the draft law is to effectively implement Articles 3(2), 13, 14 and 15 of Regulation 
(EU)  2015/7512  into  the  Cypriot  legal  order  by  designating  the  CBC  and  the  Commission  for  the 

Protection of Competition of the Republic of Cyprus (hereinafter the ‘Competition Commission’) as 

the competent authorities for the purposes of Regulation (EU) 2015/751. According to the draft law, 

the  two  authorities  will  be  jointly  responsible  to  ensure  the  enforcement  of  the  provisions  of 

Regulation (EU) 2015/751  and  of the draft law, except where responsibility  is expressly assigned 

otherwise.  

1.2 

In relation to the enforcement of Articles 3, 4, 5 and 7 of Regulation (EU) 2015/751, which govern 

the interchange fee caps that should be imposed by payment service providers in consumer credit 

and  debit  card  transactions,  and  the  requirement  to  keep  payment  card  schemes  separate  from 

processing  entities,  the  CBC  is  required  to  set  up  and  manage  a  procedure  for  the  regular 

collection of information and records from all payment services providers and, where appropriate, 

from  all  card  payment  schemes.  In  addition,  where  the  CBC  considers,  in  the  light  of  the 

information  and  records  that  it  may  receive  from  any  payment  service  provider  or  card  payment 

1  

2  

Council  Decision  98/415/EC  of  29 June  1998  on  the  consultation  of  the  European  Central  Bank  by  national 
authorities regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42). 
Regulation (EU) 2015/751 of the European Parliament and of the Council of 29 April 2015 on interchange fees for 
card-based payment transactions (OJ L 123, 19.5.2015, p. 1). 

 
 
 
 
                                                 
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scheme,  that  competition  issues  arise,  it  is  required  to  transmit  the  relevant  information  to  the 

Competition Commission  which may further  investigate the matter and  proceed  with  enforcement 

and administrative sanctions and/or measures.  

1.3  The  Competition  Commission  is  designated  as  the  exclusive  competent  authority  for  the 

enforcement of Articles 6, 8, 9, 10, 11 and 12 of the Regulation (EU) 2015/751 and the Financial 

Ombudsman of the Republic of Cyprus is entrusted with responsibility for out-of-court resolution of 

disputes that may arise under Regulation (EU) 2015/751. 

1.4  Furthermore, for the purposes of enforcing Regulation (EU) 2015/751, and in  particular Article 13 

which  requires  competent  authorities 

to  effectively  monitor  compliance  with  Regulation 

(EU) 2015/751, both authorities are vested with a number of powers, including the power to collect 

information, documents and records from any supervised entity, to carry out on-site investigations 

and to cooperate with the competent authorities of other Member States. In line with Article 14 of 

Regulation (EU) 2015/751, the competent authorities are also empowered to impose administrative 

sanctions  in  cases  of  infringement  of  the  provisions  of  the  draft  law  and/or  Regulation 

(EU) 2015/751,  and  to  take  any  necessary  measures  in  order  to  ensure  the  enforcement  of  the 

draft  law  and  Regulation  (EU)  2015/751.  Any  decision  to  impose  an  administrative  sanction  or  to 

take  other  measures  in  the  case  of  an  infringement  should  be  published  by  each  competent 

authority  on  its  website.  The  draft  law  further  enables  the  competent  authorities  to  determine  the 

fees for the performance of their duties and to issue any relevant directives and guidelines.  

1.5  As far as cooperation between the two authorities is concerned, notwithstanding the more detailed 

provisions  as  regards  enforcement  of  Articles  3,  4,  5  and  7  of  Regulation  (EU)  2015/751  as 

described  in paragraph 1.2 above, the draft law  provides that the competent authorities  will  enter 

into  a  memorandum  of cooperation  and  will  take  all  necessary  measures  to  regulate  cooperation 

between  them.  The  draft  law  also  grants  the  competent  authorities  the  right  to  exchange 

information with each other for the purposes of the draft law.  

1.6  Finally, the draft law limits the liability of the competent authorities and their employees, including, 

in addition to the CBC, the Governor of the CBC, the board of directors of the CBC and any person 

who  is  an  advisor  or  officer  of  the  CBC,  in  relation  to  an  action,  application  or  other  legal 

proceedings  for  damages  for  any  act  or  omission  that  took  place  during  the  performance  of  their 

duties and the exercise of their powers pursuant to the draft law and/or Regulation (EU) 2015/751, 

except  where  the  act  or  omission  was  not  committed  in  good  faith  or  was  the  result  of  gross 

negligence.  

2. 

General observations 

2.1 

In this opinion, the ECB will only assess those provisions of the draft law that may impact on the 

role and tasks of the CBC as a national central bank (NCB), national supervisory authority, member 

of the Eurosystem and the European System of Central Banks (ESCB). Consequently, this opinion 

will not address the question of whether the draft law, if adopted as proposed, would represent an 

effective means of implementing Regulation (EU) 2015/751 in Cyprus. 

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2.2  The ECB understands that the draft law does not intend to confer competition-related tasks on the 

CBC  as  these  tasks  are  intended  to  be  conferred  on  the  Competition  Commission.  The  ECB 

welcomes this, and invites the Ministry of Finance, for the avoidance of doubt, to make it explicitly 

clear that the CBC has not been conferred competition-related tasks under the draft law. 

3. 

New tasks of the CBC 

3.1  The draft law expands the current supervisory functions of the CBC, by granting it the responsibility 

of  supervising  interchange  fees  in  respect  of  payment  service  providers  and  payment  card 

schemes  and  other  technical  and  business  requirements  relating  to  card-based  payment 

transactions.  It  should  be  noted  that  the  CBC  is  already  the  competent  authority  for  supervising 
payment  service  providers  pursuant  to  Law  128(I)/2009  on  payment  services 3.  It  should  also  be 

noted that the CBC has been granted responsibility for tasks related to consumer protection, as it 

has been designated as the competent authority responsible for the application and enforcement of 
the  rules  implementing  Directive  2014/92/EU 4,  and  as  one  of  the  competent  authorities,  together 

with  the  Consumer  Protection  Service  of  the  Republic  of  Cyprus,  responsible  for  the  application 
and enforcement of the rules implementing Directive 2014/17/EU 5. However, the tasks attributed to 

the CBC under the draft law appear to go beyond the scope of its current tasks. Thus, the conferral 

upon  the  CBC  under  the  draft  law  of  the  power  to  monitor  and  ensure  compliance  of  payment 

service  providers,  payment  card  schemes  and  payees  with  their  obligations  under  Regulation 

(EU) 2015/751, and to impose administrative sanctions in cases of infringement, are considered to 

be new tasks of the CBC. 

3.2  The ECB underlines that a proposed conferral of tasks on an NCB in the ESCB must be assessed 

against the prohibition on monetary financing under Article 123 of the Treaty. For the purposes of 
that  prohibition,  Article  1(1)(b)(ii)  of  Council  Regulation  (EC)  No  3603/936  defines  ‘other  type  of 

credit facility’, inter alia, as ‘any financing of the public sector’s obligations vis-à-vis third parties’.  

Ensuring that Member States implement a sound budgetary policy is one of the key objectives of 
the  monetary  financing  prohibition,  which  may  not  be  circumvented 7.  Therefore,  the  task  of 

financing  measures,  which  are  normally  the  responsibility  of  the  Member  States,  and  which  are 

financed from their budgetary sources rather than by the NCBs, must not be entrusted to NCBs. To 

decide what constitutes financing of the public sector’s obligations vis-à-vis third parties, which can 

be translated as the provision of central bank financing outside the scope of central bank tasks, it is 

necessary  to  carry  out,  on  a  case-by-case  basis,  an  assessment  of  whether  the  task  to  be 

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4  

5  

6  

7  

Ο περί Υπηρεσιών Πληρωμών Νόμος του 2009 (Ν. 128(I)/2009). 

Directive  2014/92/EU  of  the  European  Parliament  and  of  the  Council  of  23 July  2014  on  the  comparability  of  fees 
related to payment accounts, payment account switching and  access to payment accounts with basic features (OJ 
L 257, 28.8.2014, p. 214). 
Directive 2014/17/EU  of the European  Parliament  and of the Council of 4 February  2014  on credit agreements for 
consumers  relating  to  residential  immovable  property  and  amending  Directives  2008/48/EC  and  2013/36/EU  and 
Regulation (EU) No 1093/2010 (OJ L 60, 28.2.2014, p. 34). 

Council  Regulation  (EC)  No  3603/93  of  13  December  1993  specifying  definitions  for  the  application  of  the 
prohibitions referred to in Articles 104 and 104b(1) of the Treaty (OJ L 332, 31.12.1993, p. 1). 
Article  123  of  the  Treaty  also  serves  the  objective  of  maintaining  price  stability  and  reinforces  central  bank 
independence. 

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undertaken  by  an  NCB  is  a  central  bank  task  or  a  government  task,  i.e.  a  task  within  the 

responsibility  of  the  Member  States.  In  other  words,  adequate  safeguards  must  be  in  place  to 

ensure that circumventions of the objective of the monetary financing  prohibition of maintaining a 

sound budgetary policy of Member States do not take place. 

3.3  As part of its discretion in the exercise of its duty, on the basis of Article 271(d) of the Treaty and 

Article 35.6 of the Statute of the European System of Central Banks and of the European Central 

Bank (hereinafter the ‘Statute of the ESCB’), to ensure that NCBs honour the obligations laid down 

by the Treaty, the Governing Council has endorsed safeguards of that kind in the form of criteria for 

determining what may be seen as falling within the scope of a public sector’s obligation within the 

meaning of Article 1(1)(b)(ii) of Regulation (EC) No 3603/93 or, in other words, what constitutes a 

government task as follows:  

First, central bank tasks are in particular those tasks that are related to  the tasks that have been 

conferred upon the ECB and the NCBs by the Treaty and the Statute of the ESCB. These tasks are 

mainly defined in Article 127(2), (5) and (6) and Article 128(1) of the Treaty, as well as Article 22 

and Article 25.1 of the Statute of the ESCB.  

Second, as Article 14.4 of the Statute of the ESCB allows NCBs to perform ‘other functions’, new 

tasks, i.e. tasks that are not related to tasks that have been conferred upon the ECB and the NCBs, 

are  not  precluded  per  se.  However,  new  tasks  that  are  undertaken  by  an  NCB  and  which  are 

atypical of NCB tasks or which are clearly discharged on behalf of and in the exclusive interest of 

the government or of other public sector entities should be considered government tasks.  

Third, an important criterion for qualifying a new task as atypical of an NCB task or as being clearly 

discharged  on  behalf  of  and  in  the  exclusive  interest  of  the  government  or  other  public  sector 

entities  is  the  impact  of  the  task  on  the  institutional,  financial  and  personal  independence  of  that 

NCB.  

In particular, the following aspects should be taken into account:  

(a)  whether  the  performance  of  the  new  task  creates  conflicts  of  interest  with  existing  central 

bank tasks which are not adequately addressed and does not necessarily complement those 

existing  central  bank  tasks.  If  a  conflict  of  interest  arises  between  existing  and  new  tasks, 

sufficient  safeguards  to  mitigate  that  conflict  should  be  in  place.  The  complementarity 

between a new task and the existing central bank tasks should not be interpreted broadly, so 

as  to  lead  to  the  creation  of  an  indefinite  chain  of  ancillary  tasks.  Such  complementarity 

should be examined also in relation to the financing of those tasks; 

(b)  whether without new financial resources the performance of the new task is disproportionate 

to  the  NCB’s  financial  or  organisational  capacity  and  may  have  a  negative  impact  on  the 

capacity to perform properly the existing central bank tasks; 

(c)  whether  the  performance  of  the  new  task  fits  into  the  institutional  set-up  of  the  NCB  in  the 

light of central bank independence and accountability considerations; 

(d)  whether the performance of the new task harbours substantial financial risks; 

(e)  whether the performance of the new task exposes the members of the NCB decision-making 

bodies  to  political  risks  which  are  disproportionate  and  may  also  have  an  impact  on  their 

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personal  independence  and,  in  particular,  on  the  guarantee  of  term  of  office  set  out  in 

Article 14.2 of the Statute of the ESCB. 

3.4  On the basis of the criteria set out above, the following paragraphs assess whether the new tasks 

of the CBC are in line with the monetary financing prohibition. 

3.4.1  Tasks related to the tasks conferred upon the ECB and the NCBs by the Treaty and the Statute of 

the ESCB 

The  tasks  conferred  on  the  CBC  in  relation  to  ensuring  enforcement  of  interchange  fee  caps 

between  the  issuing  and  the  acquiring  banks  of  card-based  payment  instruments  as  well  as 

compliance with the requirements of Regulation (EU) 2015/751 by payment service providers, card 

payment schemes and payees, are not among the central banking tasks listed in Article 127(2) and 

(5) of the Treaty, or otherwise conferred upon the NCBs by the Statute of the ESCB. Furthermore, 

these tasks appear to go beyond the scope of the CBC’s existing tasks as supervisory authority of 

payment service providers.  

At the same time, the new tasks, notwithstanding their consumer protection  dimension, are similar 

to CBC’s existing tasks and appear to complement them given that the CBC is already responsible 

for  authorising,  supervising  and  withdrawing  the  authorisation  of  payment  institutions  providing 
payment services 8, with the ultimate objective of safeguarding the smooth and efficient functioning 

of  the  payment  systems.  In  this  sense,  CBC’s  new  tasks  can  be  regarded  as  related  to  the  task 

conferred upon the ESCB in the fourth indent of Article 127(2) of the Treaty, as well as in the fourth 

indent of Article 3.1 of the Statute, based on the understanding that these tasks are ancillary to the 
promotion  of  the  smooth  operation  of  payment  systems9.  In  addition,  the  consumer  protection 

objectives of Regulation (EU) 2015/751 are closely  interrelated  with the objective of safeguarding 

the smooth functioning of payment systems. Taking this into account, the tasks to be conferred on 

the CBC can be seen as ultimately reinforcing the smooth operation of payment systems.  

3.4.2  Tasks which are atypical of NCB tasks 

Regulation  (EU)  2015/751  grants  Member  States  a  wide  discretionary  power  in  determining  the 

competent authorities which are responsible for monitoring compliance with its provisions, provided 

that  the  designated  authorities  have  adequate  resources  for  the  performance  of  the  duties 
assigned to them. A number of Member States 10 have already designated their NCBs as the sole 

competent authorities to ensure compliance with the provisions of Regulation (EU) 2015/751, while 

8    

9  
10   

Pursuant  to  Law  128(I)/2009  on  payment  services.  See  also  paragraph  1.1  of  Opinion  CON/2009/36.  Under  Law 
128(I)/2009  on  payment  services,  the  CBC  is  also  responsible  for  supervising  the  compliance  of  credit  institutions 
and  other  payment  service  providers  with  the  conduct  of  business  rules  under  Directive  (EU)  2015/2366  of  the 
European Parliament and of the Council of 25 November 2015 on payment services in the internal market, amending 
Directives  2002/65/EC,  2009/110/EC  and  2013/36/EU  and  Regulation  (EU)  No  1093/2010,  and  repealing  Directive 
2007/64/EC (OJ L 337, 23.12.2015, p. 35), such as the requirement to provide information to payment service users, 
the time limits for the execution of payment orders, etc. 
See paragraph 3.1.3 of Opinion CON/2016/19 and paragraph 2.4.1 of Opinion CON/2017/2. 

This is the case in Bulgaria (Article 122(2) and Articles 124 and 139 of the Law on Payment Services and Payment 
Systems),  Hungary  (Article  41(19)  of  the  Act  CXXXIX  of  2013  on  the  Magyar  Nemzeti  Bank  and  Act  LXXXV  of 
2009), Lithuania (Article 62 of Law No XII-2561 of 30 June 2016 on Payments), Malta (Regulation 2 of Legal Notice 
326  of  2015),  Spain  (Law  18/2014  of  15  October  2014),  and  Slovenia  (based  on  the  list  of  competent  authorities 
available 
website 
Commission’s 
http://ec.europa.eu/competition/sectors/financial_services/national_competent_authorities.pdf).   

European 

the 

on 

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many  other  Member  States11  have  allocated  these  tasks  between  their  NCBs  and  other  public 

authorities  with  competences  in  the  fields  of  competition  and/or  consumer  protection.  There  are 

also Member States that have not assigned any of these tasks to their NCBs. As the majority of the 

Member States have allocated at least some of the tasks relating to the application of Regulation 

(EU) 2015/751 to their NCBs, the new tasks conferred upon the CBC would thus not be regarded 

as atypical of NCB tasks.  

In  addition,  the  ECB  has  consistently  expressed  the  view  that  consumer  protection  tasks 

discharged by an NCB (and, in particular, by the CBC) may be regarded as central banking tasks 

provided that such  tasks do not interfere  with the  performance of the NCB’s ESCB-related tasks, 

and to the extent that those tasks complement existing supervisory powers and thus contribute to 
the  soundness  of  the  financial  market  and  the  preservation  of  confidence  in  the marketplace 12.  It 

therefore follows that the new tasks which are conferred upon the CBC by the draft law cannot be 

regarded  as  atypical  of  an  NCB,  nor  as  being  discharged  in  the  exclusive  interest  of  the 

government.  

3.4.3  Extent to which performance of the new task creates conflicts of interest with existing central bank 

tasks 

The new task conferred upon the CBC by the draft law does not appear to create any conflicts of 

interest  with  other  central  bank  tasks  performed  by  the  CBC.  As  with  other  consumer  protection 

tasks, sufficient mitigation measures must be put in place to ensure that in the event of a conflict of 
interest supervisory considerations prevail13. 

3.4.4  Extent  to  which  performance  of  the  new  task  is  disproportionate  to  the  financial  or  organisational 

capacity of the CBC 

The  principle  of  financial  independence  requires  that  Member  States  do  not  put  their  NCBs  in  a 

position where they have insufficient financial resources to carry out their national and their ESCB-

related  tasks,  both  from  an  operational  and  financial  perspective.  Furthermore,  each  NCB 

concerned should have additional financial and human resources at its disposal to ensure that the 

new  tasks  can  be  carried  without  impacting  on  the  NCBs’  operational  or  financial  capacity  to 
perform  its  ESCB-related  tasks14.  It  is  noted  that  the  draft  law  provides  that  each  competent 

authority  may  set  reasonable  cost-oriented  fees  for  the  performance  of  its  duties  pursuant  to  the 

draft  law  and/or  the  Regulation  (EU)  2015/751  and  demand  payment  of  such  fees  by  the 

11  

This is the case in Belgium (Article XV.18/4 of the Code of Economic Law), Croatia (Article 4 paragraphs 1, 2, 5 and 
6, and Article 6 of the Law NN 50/2016 on Implementation of EU Regulations Governing Payment Systems), Ireland 
(Regulation 6 of Statutory Instrument No 550 of 2015 and of Statutory Instrument No 292 of 2016), Italy (Article 3 of 
legislative Decree No 218 of 15 December 2017 and Article 34-quater of the Law on payment services), Netherlands 
(Article  2(r)  and  Article  5  and  Annex  2  of  the  Administrative  Order of  17  March  2017  amending  the  Administrative 
Order implementing EU Regulations on Financial Markets), Poland (Article 14 of the Law on Payment Services of 19 
August 2011 (Dz.U. 2017, item 2003)), Slovakia (Article 2(3) of Law 492/2009 Coll., Law 747/2004 Coll., Article 2b of 
Law No 291/2002 Coll., Article 36(1) of Law No 80/1997 Coll., Law No 514/2003 Coll., Article 90 of Law No 492/2009 
Coll.), and the Czech Republic (based on the list of competent authorities available on the European Commission’s 
website http://ec.europa.eu/competition/sectors/financial_services/national_competent_authorities.pdf).  

12     See paragraphs 3.2 and 4.4 of Opinion CON/2016/34 and paragraph 2.3.2 of Opinion CON/2017/3. 
13  
14  

See paragraph 3.1 of Opinion CON/2015/21. 
See paragraphs 2.1 and 2.2 of Opinion CON/2011/30. 

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supervised  entities 15.  Each  competent  authority  is  also  entitled  to  issue  directives  on  the 
determination and payment of these fees16. The ECB notes that the CBC must be in a position to 

avail itself of the necessary resources, including personnel, in view of the need to ensure that it has 

the  capacity  to  perform  its  ESCB-related  tasks  and  that  existing  supervisory  functions  are  not 
affected by these new tasks17.  

3.4.5  Extent to which performance of the new task fits into the institutional set-up of the CBC, in the light 

of central bank independence and accountability considerations 

Given the complementarity of the new tasks with the CBC’s existing functions, in particular in the 

field of supervision of payment institutions and other payment service providers, the performance of 

the new tasks does not appear to be problematic as regards the institutional set-up of the CBC or 

raise accountability or personal and institutional independence concerns.  

3.4.6  Extent to which the performance of tasks harbours substantial financial risks 

The draft law provides that the CBC, the Governor of the CBC, the board of directors of the CBC 

and any person who is an advisor or officer of the CBC, will not be liable in the event of an action, 

application or other legal proceedings for damages in relation to any act or omission that took place 

during  the  performance  of  their  duties  and  the  exercise  of  their  powers  and  responsibilities 

pursuant to the draft law and/or Regulation (EU) 2015/751, except where the act or omission was 
not committed in  good faith or  was the result of gross negligence 18. The performance of the  new 

tasks would not, therefore, appear to harbour undue financial risks for the CBC.  

3.4.7  Extent to which performance of the new task exposes members of the decision-making bodies of 

the CBC to disproportionate political risks and impacts on their personal independence 

The  performance  of  the  new  tasks  conferred  under  the  draft  law  does  not  appear  to  expose  the 

decision-making bodies of the CBC to any disproportionate political risk or to impact their personal 

independence. 

3.4.8  Conclusion 

The  new  tasks  conferred  upon  the  CBC  can  be  regarded  as  central  banking  tasks  based  on  the 

understanding that they are complementary to the CBC’s existing tasks in the area of supervision 

of  payment  service  providers  and,  ultimately,  ancillary  to  the  task  of  promoting  the  smooth 

operation  of  payment  systems.  This  understanding  is  supported  by  the  fact  that  the  consumer 

protection  objectives  of  Regulation  (EU)  2015/751  are  closely  interrelated  with  the  objective  of 

promoting  the  smooth  operation  of  payment  systems.  It  is,  however,  important  that  the  CBC  can 

avail itself of the necessary resources for the performance of its new tasks, so that the CBC’s  

15  
16  
17  
18  

See Article 22(1) of the draft law. 
See Article 22(2) of the draft law. 
See paragraphs 2.1 and 2.2 of Opinion CON/2011/30. 
See Article 23 of the draft law. 

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capacity to perform its ESCB-related tasks and existing supervisory functions is not affected. 

ECB-PUBLIC 

This opinion will be published on the ECB’s website. 

Done at Frankfurt am Main, 14 February 2018. 

[signed] 

The President of the ECB 

Mario DRAGHI 

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