. sepa for cards – business rules the business rules are set out in the sepa cards framework ( scf ) by the european payments council ( epc ), as well as the ecb ’ s “ sepa for cards ” report of november 2006. of course, every agreement is to some extent a compromise which tries to accommodate as many views as possible. that is not to say that there is anything wrong with a compromise per se. without the ability to reach compromises we would, for example never have been able to agree on the design of the euro banknotes since, of course, every country believed its legacy banknotes to be the most beautiful. however, a compromise should not be too general leaving too much room for interpretation. i have already said on several occasions before that for me the scf document is perhaps too general. i think the scf requires further development, increased clarity and more detailed rules. let me also recall that in the sixth sepa progress report we proposed the creation of a card transaction processing framework. 1 this would set out the business rules for card schemes and processors with regard to the processing of sepa card transactions. but european projects and initiatives do not relieve individual stakeholders of the responsibility to contribute to european integration. major efforts by individual card scheme providers are needed too. although work has already started in some areas, it is far from finished. a number of tasks that i have highlighted on other occasions before are still outstanding : the effective separation of scheme management from processing entities in order to overcome barriers to entry and to contribute to fairer and greater competition between card schemes, as well as between processors ; the charges or reporting requirements that some schemes impose on issuers and acquirers for transactions carried out with cards bearing their brand, even if it was not used in the transactions ; the setting of the brand that will be used at terminals, without giving the retailer and / or cardholder any choice ; and the rule that in cross - border transactions, it is always the interchange fee of the country of the merchant that applies. europe is not the only region to recognise the importance of clear business rules for the proper functioning of the cards market. less than a month ago the canadian government released a code of conduct for the credit and debit card industry in canada, which promotes fair business practices and ensures that merchants and consumers understand the costs and benefits associated with credit and debit cards. this follows similar regulatory initiatives in the united states and significant efforts made in australia,

that banks are increasingly challenged by technological shifts. new competitors are emerging rapidly and threaten to conquer banks ’ market shares in some of their core income - generating areas. crowd funding or peer - to - peer lending, for example, has the potential to affect bank lending services. e - trading or robo - advisory, meanwhile, may crowd banks out of typical investment management or advisory functions. other areas of competition involve the provision of payment services. this, of course, does not mean that banks have become redundant or a drag on society. banks play a key social role of pooling savings and engaging in maturity and risk transformation, and they should continue doing so. but it does raise two important questions : first, are we at a tipping point where the future of banks is challenged? and second, should regulators care? that is, should we protect banks from recent technological shifts and the emergence of new competitors? should regulators have a preconceived idea of which financial structure is best for society, bearing in mind the trade - off i mentioned before? so far, the regulatory approach has generally been built on the assumption that opening up market access to new fintech companies will increase social surplus and spur innovation, similar 3 / 6 bis central bankers'speeches to what we have seen in other network industries. at the same time, rules are still in place that protect incumbents. for example, fintech firms lack access to the customer transaction data they would need to provide a broader range of financial services – data that banks can use to cross - sell financial services at a price that might be higher than if information - sharing was less restricted. as an example, the revision of europe ’ s payment services directive ( psd2 ), due to be implemented by eu member states in january 2018, is designed to introduce more competition by requiring banks to share account information. with access to such data, fintech companies could increasingly shake up the banking sector. in this regulatory landscape, i see two broad scenarios for the future. in the first one, incumbents rise to the challenge. they join forces with start - ups, embrace new technologies, cut costs and gain new sources of revenue. some of these partnerships are happening as we speak. the outcome under this scenario is generally benign as, first, new technologies are likely to spread more rapidly through banks ’ existing networks, fostering productivity and growth, and, second, as current prudential regulation is already geared towards banks, thereby preserving financial stability.