On 22 March 2021, the Council of the EU published an outcome of proceedings (7225/21), setting out its conclusions on the Commission's communication for the further development of the retail payments market in the EU. As reported in our previous finbrief, the communication was published on 24 September 2020 and outlined the vision and four key pillars of a new Retail Payments Strategy for the European Union.
New initiatives and PSD2 review
The Council fully supports the overall aims of the strategy and approves the Commission's plans. The Council's endorsement is an important milestone in the development and execution of the new Retail Payments Strategy. It will allow the Commission to push forward initiatives across the retail payments field and to present legislative proposals. In particular, the Commission now has the Council's support for a comprehensive review of the payments services directive (PSD2), including an EU view on open banking.
Challenges
The conclusions identify the following general challenges to further developing and regulating the retail payments market: financial inclusion; security and consumer protection; competition; data protection; anti‑money laundering aspects; and anti-terrorism.
Four key pillars
Several conclusions specific to the four key pillars in the Commission’s communication are also set out in the outcome of proceedings:
Pillar 1: Increasingly digital and instant payment solutions
The Council:
- agrees that legislation may be needed to promote uptake of the SEPA Instant Credit Transfer (SCT Inst.) scheme and its additional functionalities (e.g. requests to pay QR codes and proxy lookup services). Suggests that other ways to foster its adoption could also be explored.
- agrees that National Competent Authorities should swiftly investigate and remedy breaches of the SEPA Regulation.
- agrees that a study should be conducted as to the level of acceptance of digital payments before any possible legislative proposal is developed to increase them.
Our recent Finbrief on instant payment proposals is here.
Pillar 2: Innovation and competitiveness issues (PSD2 review)
The Council:
Welcomes a comprehensive review of the implementation of the Payment Services Directive 2 (PSD2) which takes account of the developments in the market and the challenges encountered in its implementation, and in particular:
- how appropriate the PSD2’s scope is, and the need for further clarification of existing concepts and rules;
- PSD2’s interplay with the E-money Directive, the Anti-money laundering Directive and the GDPR;
- the evolution to ‘open banking’, and associated privacy risks;
- PSD2’s impact on competition;
- how effective PSD2 is at limiting fraud and enhancing consumer protection.
Pillar 3: Access and interoperability aspects
The Council:
- supports an extension of the scope of the Settlement Finality Directive (SFD) to include e-money and payment institutions, providing that the potential risks are carefully assessed and adequately mitigated;
- agrees that legislative action should be taken to secure a right of access, under fair, reasonable and non-discriminatory conditions, to technical infrastructures that are considered necessary to support the provision of payment services such as near field communications (NFC).
Pillar 4: The international dimension
The Council:
- supports efforts to facilitate linkages to third-country jurisdictions, assuming that they meet requirements for consumer protection, fraud prevention, AML/CFT and GDPR compliance;
- encourages the adoption of the ISO 2022 global standard in order to facilitate the inclusion of richer data in payment messages;
- supports public and private initiatives in various Member States leading to faster, cheaper and more convenient remittances;
- asks the Commission to promote access to payment accounts and globally interoperable payment solutions in low and middle income countries (within the framework of EU development policy).
DLA Piper Payments Team
The DLA Piper payments team is a market leading cross-jurisdictional group of specialist payments lawyers. The team has a broad range of clients, from dynamic FinTech offerings to established banks and merchant acquirers. The team advises clients on the full range of payments matters including payment scheme participation, sourcing tech solutions, the regulatory framework, commercial contracts, mobile and online payments, digital currencies and disputes. For more information, please contact the authors.
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