Cross-border payments in the Community - The business of electronic money institutions (debate) 
President
The next item is the joint debate on:
the report by Mrs Starkevičiūtė, on behalf of the Committee on Economic and Monetary Affairs, on the proposal for a regulation of the European Parliament and of the Council on cross-border payments in the Community - C6-0352/2008 -, and
- the report by Mr Purvis, on behalf of the Committee on Economic and Monetary Affairs, on the proposal for a directive of the European Parliament and of the Council on the taking up, pursuit and prudential supervision of the business of electronic money institutions, amending Directives 2005/60/EC and 2006/48/EC and repealing Directive 2000/46/EC - C6-0350/2008 -.
Margarita Starkevičiūtė
rapporteur. - (LT) Today, as the European Union's economy experiences a period of recession, it is very important to stimulate economic growth. One of the sources of the European Union's economic growth is the expansion of the common market, which is still very fragmented, especially in the area of financial services. The proposal before us should help solve this problem and establish a common European payment area. In English this is called the Single Euro Payments Area.
This document already has some history. As soon as the euro was introduced and the currency exchange rates were abolished in euro zone countries, it became clear that prices for cross-border payments still differed from prices for local payments. For this reason Regulation (EC) No 2560 of the European Parliament and of the Council on cross-border payments in euro was adopted and entered into force at the end of 2001. It set equal charges for corresponding local, national payments and cross-border payments and strengthened this principle. The aim of this was to reduce prices for consumers and ensure greater competition in the payment services market.
Implementing this regulation reduced payment fees; for example, a cross-border transfer of EUR 100 used to cost an average of EUR 24 in the European Union, now it costs EUR 2.50. On the other hand, the document revealed certain deficiencies. For this reason it was decided that it should be revised.
The document before us is an improved version of Regulation No 2560. What is new in the document? Firstly, the principle of equality of charges for cross-border and corresponding domestic payments has been extended to include direct debit. This was not previously available. Once the SEPA had been created and the Payment Services Directive had been adopted, the payment environment in Europe changed; therefore, it is important that from November 2009 it will be possible to use the popular electronic payment method, direct debit, on a cross-border basis. In order to help create that common direct debit model, the regulation states that in the absence of a bilateral agreement between the payment service providers of the payer and the payee, the level of the default interim Multilateral Interchange Fee for a direct debit will be set at EUR 0.08 for a transitional period until 2012.
The document also outlines how to improve the defence of consumer rights and remove obstacles to business. It is proposed that Member States appoint competent authorities to supervise the implementation of this regulation, and those authorities should also actively cooperate across nations, so that there are fewer obstacles to business; they could also lay down guidelines on how to assess procedures for determining compliance with the principle.
Another novelty the revision of this document offers is the proposal to gradually abolish obligations imposed on banks in certain states to provide balance-of-payments statistics and the laying down of other procedures for providing balance-of-payments statistics.
I am very sorry that an agreement with the Council could not be reached on this point and for the time being the balance-of-payments revision procedures and implementation procedures have still to be defined. Parliament and the Commission have declared that a strict deadline would be set.
John Purvis
rapporteur. - Madam President, this directive responds to the growing importance of electronic commerce and of electronic money and the need for a clear legislative framework. Its aim is to facilitate the use of electronic money for on-line payments accounts, pre-paid mobile phone accounts, top-up travel cards and gift vouchers.
E-money is no different from other forms of money in that it stores monetary value and provides a convenient means of exchange. But, unlike account-based payment instruments, such as credit and debit cards, it works as a pre-paid bearer instrument. It is used to cover payments - usually of relatively small amounts - to undertakings other than the user, thus differentiating it from single purpose pre-paid cards like telephone cards. There is no need of a bank account in order to use e-money, so it is particularly relevant to those in society who do not, or cannot, have bank accounts.
It was all of eight years ago that a Benjamin Cohen, in his article, 'Electronic Money: New Day or False Dawn?', stated that the era of electronic money will soon be upon us. Sadly, this prediction was both over-optimistic and premature - for Europe, at least. Electronic money is still far from delivering, in Europe, the full benefits which were expected when the first e-money directive was adopted in 2001.
Probably this was because of the high initial capital requirement and other over-cautious restrictions. The number of e-money institutions differs remarkably from one Member State to another. For example, the Czech Republic has over 40 EMIs, or Electronic Money Institutes, while France and Germany between them have a grand total of 12. In fact, two German EMIs were even constrained to move to the UK jurisdiction because of major differences in regulation, even under this directive. In August 2007 - two years ago - outstanding electronic money was only EUR 1 billion, and that compares with EUR 600 billion of cash in circulation.
So, clearly, e-money has a long way to go to become a serious alternative to cash. However, it is growing significantly, despite the restrictions, and this new directive should enable new, innovative and secure electronic money services to operate, to provide market access possibilities for new players and to foster real and effective competition between market participants. New and smaller operators will have an opportunity to enter the market, as the amount of initial capital needed will be reduced from EUR 1 million to EUR 350 000. The Committee on Economic and Monetary Affairs would certainly have preferred less.
Providers can extend the outlets where e-payments can be made, for example the customer paying for his metro ticket with e-money could also purchase a coffee, a newspaper or a bunch of flowers at the station kiosk, as is already - and very successfully - the case in Hong Kong, for example.
We have been rushed through the legislative process for a first-reading agreement in order to get this measure enacted before the European elections. I thank most warmly Ivo and Melanie from the Economic Committee staff, the Socialist and Liberal shadows, Mr Pittella and Mrs Raeva, the Commission services and the Czech Presidency, notably Tomáš Trnka and his team, for their very positive cooperation. None of us achieved all we would have wished, but I believe we will have made a significant step forward, and I would very much welcome Parliament's support for this project.
Antonio Tajani
Vice-President of the Commission. - (IT) Madam President, ladies and gentlemen, first of all I would like to express the Commission's appreciation of the speed with which Parliament has dealt with these two issues, which are so important, and on this point I would like to thank both the rapporteurs and Mrs Berès, chairman of the Committee on Economic and Monetary Affairs, for making a crucial contribution to the speed of the work.
We are now only a couple of months away from the final deadline for transposition by the Member States of the directive on payment services. These two measures, alongside the noteworthy efforts of the payments industry to develop SEPA products, constitute a crucial and timely step towards the completion of the single market for payments. These measures, together with the directive, will complete the legal basis which is indispensable in providing clarity, certainty and stability to the market. The negotiations that have been conducted in recent weeks have made it possible to obtain a very rapid agreement concerning these two issues.
With regard to the revised regulation on cross-border payments, I am pleased to announce that the Commission endorses the proposed amendment, which has come about as a result of a compromise. The Commission is particularly pleased by the inclusion in its original proposal of articles governing the matter of the multilateral interbank fee for direct debit transactions. The market was looking for these provisions and we consider them to be vital for a timely launch by European banks of the SEPA direct debit.
These rules will give the payments industry three years to put forward a long-term commercial model for automated debits that abides by competition rules. In a spirit of compromise, the Commission is willing to replace the unconditional removal of these obligations with a review clause, as proposed by Parliament and the Council.
With regard to the revised directive on electronic money, this is a particularly ambitious piece of legislation that will offer a well-received second chance for the establishment of a market in electronic money that will be genuinely useful. The directive aims to provide the market with a clear and balanced legal and prudential framework, removing unnecessary, disproportionate or excessive barriers to market entry and making the business of issuing electronic money more attractive.
The new directive should promote genuine and effective competition between all market participants, and at the same time ensure equal conditions for all payment services providers and a high level of consumer protection. The compromise reached establishes an excellent balance, fully protecting our initial objectives and at the same time providing an appropriate response to the legitimate concerns expressed during the adoption process. We therefore fully support this proposal.
Aloyzas Sakalas
draftsman of the opinion of the Committee on Legal Affairs. - Madam President, the Legal Affairs Committee supports the proposal for a regulation of the European Parliament and of the Council on cross-border payments in the Community.
The aims of the Commission initiative are as follows: firstly, to replace the existing regulation in order to adapt it to market developments; secondly, to advance the protection of consumer rights and to provide an adequate legal framework for the development of a modern and efficient payment system within the EU; and thirdly, to achieve an internal market for payment services in euro.
The Legal Affairs Committee was appointed to submit an opinion to the lead Committee on Economic and Monetary Affairs. In the opinion it was proposed that Member States may appoint existing institutions to act as competent authorities and to utilise or extend existing procedures concerning cross-border payment services. It is important to apply and improve already existing measures and redress bodies to deal effectively with complaints and disputes regarding this proposal.
It is important to point out that the principles of proportionality, subsidiarity and especially the extended principle of equality of charges for cross-border payments should comply with the EC Treaty, Article 95(1). Cross-border payments in euro require a Community-wide approach because the applicable rules and principles have to be the same in all Member States in order to achieve legal certainty and a level playing field for all European payments market stakeholders.
José Manuel García-Margallo y Marfil
on behalf of the PPE-DE Group. - (ES) Madam President, I am going to comment only on the regulation on cross-border payments and the report drawn up by Mrs Starkevičiūtė.
The regulation, as she has explained very well, responds to the needs that have been perceived as a result of the introduction of the euro, and lays down a relatively clear principle: charges must be the same for domestic payments as for cross-border payments. This is a common-sense rule in an internal market, but one that was far from being adhered to prior to this regulation.
The regulation has thus become a launch-pad for the Single Euro Payments Area, to which the rapporteur also referred, and I therefore have some additional observations.
With time, this regulation has become outdated and it has been necessary to revise it in order to adapt it to the changes on the financial markets and also to the directive on payment services.
The Commission set itself three goals in this revision: firstly, to include cross-border direct debits within the regulation's scope; secondly, to establish procedures for the out-of-court handling of problems that might arise from the application of the regulation; and, thirdly, to ease the balance-of-payments statistical reporting obligations.
The European Parliament has, on the whole, agreed with this approach, but it has made three significant changes: a clarification to the legal definitions laid down by the regulation, a warning or reminder to the Member States that they should comply with the regulation more effectively than they have done in the past and, thirdly, a call for significant cooperation between the Member States.
My concern was the issue of balance-of-payments statistical obligations, which has been resolved by agreement between the separate institutions. I can therefore say that I am fully satisfied with the result achieved.
Pervenche Berès
Madam President, I would like to talk about the report by Mr Purvis on electronic money.
First of all, I think that if we consider the reasons why electronic money is less developed here than in Hong Kong, it is undoubtedly because European citizens have become used to using their bank cards much more easily.
This Parliament has had two concerns in drawing up this legislation: firstly, at a time when the issue of supervision is on everybody's lips, we do not want to deregulate the supervision of electronic money institutions solely because of the latter's lobbying. This is why the European Parliament has above all insisted that these institutions that issue electronic money and manage electronic money should be subject to genuine supervision, and I think that we have obtained a number of guarantees in this area. I welcome this.
In the same way, we were anxious to take into account the interests of citizens and those who use electronic money, particularly when they want to end their contracts, so that they did not have restrictions and fees imposed on them by the institutions managing electronic money that we would have seen as excessive.
This is the spirit in which we have supported this proposal, in the hope that it would make our fellow citizens' lives easier through the use of electronic money, but that this would not result in excesses, particularly in terms of supervision mechanisms.
Mariela Velichkova Baevа
The proposal for a regulation of the European Parliament and of the Council on cross-border payments in the Community, which aims to replace the current applicable regulation, is linked to the creation of an integrated European payments market. The proposal is also aimed at increasing the protection of consumers' interests and rights and easing the burden with regard to reporting statistics.
Article 5 on the balance of payments and Article 12 relating to the review clause are the subject of a compromise which our rapporteur, Margarita Starkevičiūtė, is aiming for and is supported by Bulgaria. The compromise offers an opportunity for a timely, adequate assessment.
The current global financial crisis focuses attention on the need for relevant statistical data. Bulgaria is in favour of removing settlement-based reporting obligations on payment service providers for balance of payments statistics under a threshold of EUR 50 000.
Bulgaria supports the removal of Article 5(2) as the reservations which have been expressed are made in the context of the potential loss of information and a deterioration in the quality of the balance of payments statistics, as well as to do with the need for a technical period for implementing the switch to the direct reporting system.
Antonio Tajani
Vice-President of the Commission. - (IT) Madam President, ladies and gentlemen, once again I would like to express my appreciation for the way in which Parliament has managed these two issues. It means that the new regulation on cross-border payments will enter into force as scheduled on 1 November this year, and the e-money market will thus have a second chance to take off.
In parallel with the directive on payment services, these two pieces of European legislation will make it possible to create a modern, comprehensive legal framework for the Community market in payments and will smooth the path so that the European payments industry will be able to fully develop the Single Euro Payments Area project. This project will offer European consumers and firms a fully integrated payments market that is efficient in terms of costs and is of the highest quality.
The Commission therefore thanks - and I do so with particular pleasure - the European Parliament for this latest sign of its commitment to the SEPA.
Nils Lundgren
on behalf of the IND/DEM Group. - (SV) Madam President, electronic money that can be used across borders represents considerable progress. It is important for the EU to improve the internal market in this way by promoting its use. However, I would like to take the opportunity to recall what it is that we are actually talking about.
When we introduced the euro in a large number of European countries, it was based on the analyses carried out on the value of a monetary union. The value is that we reduce the costs involved in exchanging money as well as other transaction costs. We reduce information costs by having a common currency. The price that we pay for this is to have more unstable economies. It is more difficult for us to maintain even and high rates of employment and to maintain stable state finances. We are seeing this right now as everything is going pear-shaped in this regard in countries such as Ireland, Spain, Italy and Greece.
Take note, then, that the victims should be counterbalanced by the benefits gained in lower transaction costs as a result of a common currency, but the benefits are continually diminishing precisely because progress with regard to the payment system is so rapid. Within a short time, we will be in a position where we find that we have such an effective payment system that the costs have become negligible. Then we will have a common currency that actually only guarantees us instability in our European economy. This is something I have said before and now you can see it happening. I urge you all to reflect on this.
Margarita Starkevičiūtė
rapporteur. - (LT) I would like to say that the text before us is a compromise, which has been reached through complex negotiations between the Council, the Commission and Parliament.
However, it is a positive result and I would like to thank the Council representative Mr Trinka and the Commission representatives for their cooperation, and would also like to thank staff of the Committee on Economic and Monetary Affairs, who helped to prepare this document. It will answer those questions which were raised by Mr Lungren, that is, it will help to bolster the whole euro area, because the procedures for euro transactions will be strengthened. As a representative of a country, which is not in the euro zone, I am delighted that this regulation can also be applied, if non-euro zone Member States wish, to payments in national currency, which in Lithuania would be the litas.
For the time being, in our countries prices for cross-border payments and prices for domestic payments in the national currency still differ. This is partly determined by the fact that we are not euro zone Member States. I think that the first step and one of the steps towards the euro zone would be for us, non-euro zone Member States, to begin to apply this principle to national currencies. The other important thing is that the fostering of cross-border payments by this regulation opens the way to modernising the European banking sector, because banks have a transition period of three years to prepare a new business model, which would make payments more efficient.
This is very important as we often talk about innovations, new initiatives and modernisation. This document creates exactly the right conditions for all this.
John Purvis
rapporteur. - Madam President, just to satisfy the prudential concerns mentioned by Mrs Berès, I would point out that we have insisted in this directive and report that e-money funds are not deposits; credit cannot be created upon them. We have opened the door for e-money only a bit wider.
The basic capital requirement is reduced to EUR 350 000; the Committee on Economic and Monetary Affairs would have preferred EUR 200 000. The own-funds requirement is to be 2% of outstanding e-money funds; we would have preferred 1.6%, but with the 20% flexibility up or down that is allowed, the more liberal Member States can go down to 1.6% and the conservative Member States can go up to 2.4%.
It is not ideal that we still have the prospect of such an uneven playing field in the European Union, especially when we have insisted that e-money users' funds will be fully safeguarded and there are also other important user-friendly protections, for example in redemption, as Mrs Berès mentioned. Because of the level of capital required, the waiver level has also had to be set for purely national e-money operators at EUR 5 million instead of EUR 2 million.
All in all, this is a very cautious step forward. It is not perfect. Compromises seldom are. Almost certainly it will have to be revisited in three or four years' time and, by then, I hope more operators will have entered the business. Users and merchants will be clamouring for more choice. The more doubtful regulators, banks, Mrs Berès - and even the European Central Bank - will have become reconciled that this is a beneficial, user-friendly service which holds no risks to the European economy. We in Europe can at last take up all the opportunities which e-money offers.
President
The joint debate is closed.
The vote will take place today.
