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02 December 2003

Commission Consultation paper on Cross-border payments

The European Commission has published a consultation paper on cross-border payments which includes preliminary suggestions for future EU legislation to constitute a 'new legal framework' for payments in the Internal Market. The consultation should lead to the Commission presenting appropriate proposals for a New Legal Framework for Payments.

Among others, the consultation paper sets out options for ensuring that payment providers licensed in one Member State can operate in the others. As a result of different national regulations, this is not currently always the case. It also looks at ways of removing legal barriers to cross-border direct debits.

The consultation also calls for clarification and improvement for users of payment systems and states possible further action at EU level. This includes:

  • defining the information that payment providers must make available to customers
  • shortening the maximum execution time for payment orders from the current six days to three days
  • regulating the use of 'value dates', which by delaying the crediting of accounts can act as hidden charges
  • establishing the liability of payment service providers towards merchants or their customers when transactions fail for technical reasons, are incorrectly executed or are unauthorised
  • clarifying the conditions under which customers can revoke payment orders
  • establishing adequate procedures for dispute resolution.

    21 Annexes on various specific legal and technical issues concerning the efficient functioning of the Single Payment Area are attached to the document. Annex 11 – on the role of the payment service provider in the case of customer/merchant dispute in distance commerce – states that the Commission aims to increase consumer confidence and protection for distance commerce.

    According to the Commission, in the case of problems with the product, it is generally easier for a consumer to use his right of withdrawal, where this exists, or to seek redress in the case of face-to-face purchases. However, if problems arise in distance selling, consumers may be less easily able to get into contact with the merchant.

    As possible ways forward, the Commission asks if consumer's trust in e-commerce could be improved if the Payment Service Provider's responsibility in case of merchant / customer – disputes is strengthened.

    So far, mainly two ideas have been discussed during the preliminary consultation period on the forthcoming Legal Framework for payments:

    (1) the establishment of some sort of joint liability between the Payment Service Provider and the merchant in case of non-delivery of a product (or even further in case of non-conformity of a delivered product);

    (2) specific revocability rules for payments made in e-commerce, e.g. by providing that remote payments in the case of distance selling contracts are revocable until the merchant provides evidence to the Payment Service Provider that he has delivered.

    Responses to the consultation paper are to be made until 31 January 2004.

    Commission press release
    Consultation note

    © European Commission

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