The European Commission has announced1 that it is looking into the standardisation process for payments made over the internet that is being led by the European Payments Council ("EPC"). The investigation is another example of the Commission's interest in standardisation and interoperability. The Commission recognises that standard setting can be efficiency enhancing and promote interoperability and competition; however, how standards are set, used or accessed also has the potential to restrict competition, including by restricting the opportunities for non-participants.
What is the background to this?
The EPC is the co-ordination and decision making body for the European banking payments industry2. Its membership comprises some of the EU's largest banks. The EPC has been working since 20083 to develop a Europe-wide standard for online payments, through its self-regulatory project the Single Euro Payments Area ("SEPA") for cards4.
As things stand currently, the majority of e-payments systems only work within national borders. SEPA will establish a standard framework for e-payments, to enable internet users to buy online regardless of where they are located in Europe, and pay the merchant using their own internet banking services and their current bank account. The aim is to eliminate differences between national and cross-border payments, which could achieve significant cost savings and efficiencies, and to bring benefits such as equal time limits, fraud risk levels, and processes. It is also hoped that SEPA will increase competition between banks and enable them to consolidate their payments processing onto common platforms across Europe. To facilitate this, SEPA would see the development of common financial instruments, standards, procedures and infrastructure.
In June, the EPC published its latest draft document, version 5.5 of the Standardisation Volume, for public consultation5 . This defined the functional and security standards requirements as well as an evaluation methodology designed to achieve interoperability based on open and free standards within SEPA.
What is the Commisson concerned about?
The investigation has been prompted by a complaint – the identity of the complainant has not been revealed but it is known that this follows a complaint made by the German online payment provider, Payment Network AG, earlier this year.
The Commission has made clear that it supports the work of the EPC to develop standards in this area...