Forms of payments alternative to cash and other traditional means are changing the lives of millions of people in advanced and developing countries alike. In Europe, card payments have enjoyed an enormous success over the past 20 years. Indeed, this is good news. Open, secure and innovative payments markets are crucial for the digital economy, which is in turn one of the most promising sectors for Europe’s growth. On top of this, payments systems underpin the smooth functioning of the internal market.
Card payments fulfil these requirements. But substantial changes lie ahead of us, and we are eager to tap the potential of the new, digital payment systems. Unfortunately, payments are one of the main barriers that hinder the rise of e-commerce in Europe.
This is why commissioner Michel Barnier and Joaquín Almunia have taken the initiative to launch the Green Paper we are discussing today. The Green Paper reviews the main obstacles that obstruct the completion of the internal market for cards, internet and mobile payments and explores possible solutions. The Green Paper is a perfect example of the Commission's dedication to growth and innovation and is fully in line with the Europe 2020 Strategy – especially with the Digital Agenda.
Let me review the main problems has been identified in the payments sector:
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Cost - card transactions cost EU merchants about €25 billion a year. We don't see any indication that these costs have been reduced since. We should understand the merchants who regard these charges as an excessive tax imposed by banks, since the payment service fee rate can be as high as 2 per cent of the transaction value.
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Payments markets are still fragmented, especially because the industry has not yet agreed on a set of technical standards for the whole of the EU, such as a standard for card terminals similar to the general standards for mobile phones.
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The markets are not as dynamic and innovative as they should be. There are many new technologies (electronic wallets on your smartphone,…), but it is difficult for these technologies to enter the market for payments.
What has been done over the last decade in the payments markets – and what must be improved? A mix of regulation, self-regulation and competition enforcement has been used in the sector so far. At the core lies the Single Euro Payments Area, a project run by the banking sector.
One issue is that the actual take-up of the new SEPA instruments has been too slow. In February this year, SEPA credit transfers accounted for less than 25 per cent of all such transactions in Europe and SEPA direct debits for a meagre 0.4 per cent. Another issue is the growing diversity in the sector. New market players are knocking at the door – such as internet service providers and other non-bank organisations.
Full speech
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