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Erhvervs-, Vækst- og Eksportudvalget 2011-12
KOM (2011) 0941 Bilag 3
Offentligt

European Commission

[email protected]

MINISTER FOR BUSINESS AND

GROWTH

Green Paper – Towards an integrated European market

for card, internet and mobile payments

General comments

MINISTRY OF BUSINESS AND

GROWTH

Slotsholmsgade 10-12

DK-1216 Copenhagen K

Tel.

+45 33 92 33 50

+45 33 12 37 78

The Danish government welcomes the initiative by the European Com-

mission to launch a broad consultation about the European market for card,

internet and mobile payments.

The Single Market is the largest home market in the world. However, the

digital single market still needs to be unleashed. Removing the existing bar-

riers, and modernising the legislative ground rules, can give consumers and

businesses in Europe access to the Single Market from their home computer,

from the office and from their smart phone. The economic potential in com-

pleting the digital single market amounts to up to 4 % of GDP or five hun-

dred billion EURO

The Danish Government attaches great importance to the removal of the

barriers that stand in the way of realising the potential of the Digital Single

Market as this can serve to boost jobs and growth in Europe. E-commerce is

to a large extent based on distance electronic payments and furthering trade

via the internet therefore necessitates efficient and safe payment systems in

Europe.

The Danish government therefore considers it appropriate that the European

Commission undertakes a broad consultation with stakeholders in order to

validate or contribute to the analysis of the market for card, internet and mo-

bile payments. This will contribute to the identification of the right method

to improve market integration.

The Danish government agrees there is a need to increase the market integra-

tion in the area of payment instruments and generally welcomes initiatives

that promote the four factors (competition, transparency, innovation and

payment security) that can create a more efficient market for payments with-

in the European Union.

The Danish government attaches great importance

to ensuring infrastructure that can facilitate cheap and effective payment.

Fax

CVR no. 10 09 24 85

[email protected]

www.evm.dk

Specific comments

Copenhagen Economics: ”The Economic Impact of a European Digital Single Mar-

ket”, marts 2010.

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Separation of card schemes and processing of card payments

(Green Paper section 4.1.4)

Card schemes may have subsidiaries that process or handle the transac-

tions. Other actors (acquirers or processors) may therefore be required to

use these subsidiaries in the processing of transactions. This can consti-

tute an entry barrier. Such vertical integration between a card scheme and

its subsidiary may make it less attractive for other actors to establish

themselves in the market and compete against the subsidiary since these

actors cannot achieve economies of scale in the cost of transaction pro-

cessing as opposed to the subsidiary which is affiliated with or owned by

the card scheme. This can constitute a challenge to an integrated Europe-

an market.

However, there might be economic benefits as a whole of vertically inte-

grated companies in light of economies of scale in a payment system.

Furthermore, the competition can instead be characterized by a system of

competition, meaning that the competition takes place between different

payment systems rather than competition within the same payment sys-

tem where the vertical integration takes place. This can still enable an

appropriate competitive pressure in the payment market.

The Danish government has no knowledge of the extent of the problem of

these types of entry barriers within EU. With regard to Denmark the

payment service provider Nets is in practice the only collector of transac-

tions in Denmark and all other processors (Swedbank, Valitor etc.) are

obliged to use Nets for the processing of the transactions.

The Danish government finds that initiatives such as open standards for

infrastructure and transaction processing may be appropriate in order to

promote competition among payment service providers and thereby give

alternative providers an easier access to the processing of transactions.

Such initiatives may reduce entry barriers caused by card schemes having

a subsidiary that process the transactions.

However taking into account that such measures will have a significant

impact on market operators there should be made a thorough and objec-

tive analysis of the affected areas before any action is considered further.

Access to settlement systems

(Green Paper section 4.1.5.)

The Danish government attaches great importance to the security in des-

ignated settlement systems. It is therefore considered essential that the

consequences of providing direct access to designated settlement systems

are mapped and analyzed very carefully. In connection with any consid-

eration of whether there should be access to designated settlement sys-

tems for other than credit institutions and investment firms in accordance

with Article 2(b) of the settlement finality directive it is considered most

appropriate that if a thorough analysis should prove that these potential

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new participants are most likely to present a risk to the safety of the sys-

tems this should be given greater weight than an expansion of the poten-

tial participants of a settlement system to also include payment services

and electronic money institutions.

Compliance with the SCF (SEPA Cards Framework)

(Green Paper section 4.1.6.)

The European Payments council (EPC) has developed SCF in order to

create common standards for payment cards. The SCF defines obligations

for cards to be SEPA compliant. Card arrangements that do not meet the

SCF common standards are at risk of disappearing.

However, there should be focus on this area in order to avoid that the

obligations of SCF will create an unequal relationship between domestic

payment cards and international payment cards, and prevent that domes-

tic debit cards which are often efficient payment instruments will sudden-

ly disappear.

Information on the availability of funds

(Green Paper section 4.1.7)

As regards the sharing of personal information such as the availability of

funds on consumers bank accounts it is vital that the express consent is

given by the consumer. It should be clear and transparent to the consumer

at all stages, who can access the information and when- ensuring that an

informed choice can be made.

The relationship between consumers and recipients

(Green Paper section 4.2.2.)

An appropriate manner to increase the use of efficient payment instru-

ments is through the fees or discounts set by merchants in relation to the

use of different payment means.

The Danish government finds that measures that can increase the option

and the incentives of the merchants to charge fees or offer discounts to

make consumers use the most effective and inexpensive means of pay-

ment should be encouraged.

It is a general principle that transparency enables competition and builds

consumer confidence. As such it is important to find a reasonable solu-

tion that does not needlessly confuse or obfuscate purchasing decisions

for the consumers.

The Danish government also considers that consumers are encouraged in

a more effective way through fees and discounts than if the merchant

simply informs about the costs of the different payment instruments as

stated in the Green paper section 4.2.1.

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Since the use of payment instruments in the EU countries is still very

different it will be appropriate that the member states have a certain scope

of action to establish rules or actions that can be adapted to national cir-

cumstances. This way the use of efficient payment instruments can be

appropriately encouraged.

The relationship between merchants and payment service providers

(Green Paper section 4.2.3)

Transparency in prices for different payment cards and the true cost of

accepting cards can be increased by preventing the rules set by acquirers

that limit the opportunities of the merchants to set appropriate fees or

rebates to difference payment means.

This especially concerns the

No Discrimination Rule (NDR)

where the

payment service providers (acquirers) may prevent merchants from en-

couraging consumers to choose the cheapest payment cards, and the

blending practices rule

in which acquirers charge one price for all pay-

ment cards irrespective of whether they are actually associated with dif-

ferent costs. For example a “corporate card” is often more expensive to

accept than a “consumer card”, but if the acquirers charge the same price

for both cards the merchants will have no incentive to steer consumers

towards the cheaper consumer cards.

If the merchant had larger possibilities to steer consumers towards cheap

payment instruments and the acquirers were required to offer payment

instruments to accurate merchant service charges this would increase the

possibility of competitive pressures between card types and card compa-

nies.

Again it should be taken into account that the consumer should have

transparency in terms of costs of making payments in order make an in-

formed decision the consumer has to be appropriately informed.