TOWARD FAIRER AND COMPETITIVE PAYMENT SOLUTIONS IN THE EU
© 2013 EUROCOMMERCE | 2
SEPA — THREAT OF HIGH FEES ACROSS EUROPE
FEE TODAY
FEETODAY
TOMORROW?
TOMORROW?
FEETODAY
FEETODAY
FEETODAY
TOMORROW?
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CURRENT MIF SYSTEM ADDS COSTS
Consumer bank (issuer) Retailer bank (acquirer)
Card SchemeExclusive Clearing
& Settlement
MIF covers: marketing costs ‘free’
gifts; fraud costs, insurances and
payment guarantee
No access to
consumer account
information
MIF inflates the price of products
(may be additional surcharge)
Retailer receives
only part of the
product price.
Merchant Service Charge (MSC)
= MIF plus Processing FeesMSC
Retail Price minus MSC
Consumer account
Retailer account
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BASIC PAYMENT PROPOSAL
Consumer bank*(’issuer’)
Retailer bank*(’acquirer’)
Processing, clearing & settlement: • Unbundled fees• Choice of PSP, payment type
and clearing & settlement
Consumer account
Retailer account
INCREASED CHOICE
RETAIL COSTS OF PAYMENT ARE
FAIR AND TRANSPARENT
no more restrictive
contractual rules
access to clearing
and settlement
direct access to
funds availability
*or any other payment service provider (PSP)
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WHO SHOULD PAY FOR WHAT:
Fraud prevention
Paying for fraud when it happens
Chargebacks (the money the consumer gets back when they’re the victim of fraudulent transactions)
ISSUING BANK/PSP
Consumer can also choose to pay for extra services eg:• Credit facility• Extra insurances• Air-miles and preferential services
(Payment provider or retailer may also offer to cover these costs)
C O N S U M E R R E TA I L E R
Costs of authorisation
Clearing and settlementprocessing costs
Retailer may offer to cover some consumer costs
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BASIC PAYMENT BRINGS BENEFIT TO ALL
Low-cost basic debit service across EU
Freeing up of revenues results in lower costs and prices
Available for face-to-face, internet and mobile technologies
Full transparency on costs of different payment methods
Low-cost basic debit service which operates across EU
Removal of excessive costs for payment acceptance
Freeing up of revenues results in lower costs and prices
Freedom to choose payment provider
A lower-cost, efficient EU payments system
Open market allows competition and innovation
Growth of cross-border e-commerce market
Maximise potential of new technologies
S O C I E T Y A N DE U E C O N O M Y
R E TA I L E RC O N S U M E R
Basic payment opens access to pan-European market
Expanded market for electronic payments
A viable alternative to cash
Ability to choose which extra services attached to payment
No loss of security in payment system
Ease of cross-border and e-commerce purchasing
Card payments more available in small retail outlets
Small retailer can access low-cost electronic payment method
Access to cross-bordere-commerce
Enable retailer to benefit from new technologies
B A N K S A N D C A R D
C O M PA N I E SFacilitate shift from cash to electronic payment methods
No loss of security in payment system
Create incentives to combat fraud at source
Transparency and trust in banking payment services
Increased volume of transactions
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WHAT REGULATORS SHOULD DO :
• Remove MIF barriers:• Current debit MIF system should be removed• Fees for credit should be cost-based
• Unbundle fees: costs for extra services are transparent, paid by beneficiary of service
Remove MIF barrier
• Bring more third party PSPs under regulation • Allow PSPs access to verify availability of funds on consumer accounts• Ensure EU-wide, real-time processing and clearing & settlement• Separate authorisation services from clearing & settlement to allow
competition and retailer choice (card or other SEPA instrument)• Separate processing services from card schemes• Allow access to clearing & settlement for licensed PSPs
Open payments market to new players
• Remove honour-all-card rule restrictions • Enable retailer to electronically identify cost of card acceptance at POS• Allow account information access• Remove national/cross-border price differentials & allow pan-European
(x-border) acquiring • Enable consumer/merchant choice of payment application at terminal • Allow consumers to authorise payments through PSPs across EU
Remove restrictive contractual rules