09 January 2013

EPC: The 2013 euro payments outlook

In this EPC Newsletter article, the authors argue that when taking a close look at the broader picture, it becomes clear that the European Commission is determined to drive forward its vision of an integrated, efficient and stable euro payments market through regulatory action.

The reforms currently carried out at EU level will have a major impact on payment service providers. According to the authors, chances are that the measures outlined in this article are only the beginning of an era which will see further regulatory changes affecting the industry. The authors conclude: European payments regulation is a moving target. The principal dossiers currently being progressed by the Commission, which will have a significant impact on the euro payments market, include the following:

• The Green Paper ‘Towards an integrated European market for card, internet and mobile payments' was published in January 2012. It is expected that the Commission will announce next steps in the coming months.
• The Regulation (EU) No 260/2012 establishing technical and business requirements for credit transfers and direct debits in euro and amending Regulation (EC) No 924/2009, that came into force on 30 March 2012 tasks the Commission to review the Single Euro Payments Area (SEPA) governance arrangements. It is expected that the Commission will table a related communication early 2013.
• The Payment Services Directive (PSD) is being reviewed by the Commission. Article 87 of the PSD requires the Commission to present a report on the implementation and impact of the Directive, together with proposals for its revision. It has been suggested that the PSD2 proposals will be published in the spring of 2013, although it should be noted that this has not been officially confirmed.
• The proposal for a Regulation on electronic identification and trusted services for electronic transactions in the internal market was published in June 2012. The legislative process leading to the adoption of this Regulation will probably take between one and two years.

According to the Commission, these initiatives are aimed at promoting market integration, improving efficiency, increasing security and transparency, as well as strengthening financial stability in the EU, while at the same time fostering innovation and increasing the competitiveness of the EU economy. These are noble aspirations which deserve everyone's full support. The question however, remains whether EU regulatory action is the adequate means to all these ends.

As observed on earlier occasions: EU regulatory action in the area of payments should be restricted to and focus on integration, not on ‘innovacompegration'. Experience demonstrates that the most successful innovations materialise if the market is simply allowed to generate forward-looking payment solutions in response to customer demand. It would be welcomed if the Commission would take this market reality into consideration when determining the need for further EU action in the area of payments.

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