On Friday, the EU Affairs Committee discussed Estonia’s positions on the reviewed Payment Service Directive and the draft regulation on interchange fees for card-based payment transactions. The Committee does not support setting a limit to interchange fees for card-based payment transactions because this might impede free competition and entry to market of new service providers.

“Estonia, along with the Nordic countries, is among the top users of card payments in Europe. Using electronic payment methods instead of cash is cheaper and more secure, and also reduces shadow economy. Having said that, we do not support setting up interchange fee limits with administrative means, because this does not promote market competition and might jeopardise the security and development of services,” said the Chairman of the EU Affairs Committee Arto Aas. He added that the European Commission should focus on steps to improve the transparency of payment services and the openness of the market.

The draft regulation on interchange fees for card-based payment transactions sets a 0.2 % upper limit to interchange fees on debit card payments and 0.3 % on credit card payments. The draft prohibits asking for additional service fee from the client.

The regulation is aimed at reducing the use of cash, increasing the number of electronic payments and lowering the cost of card payments. It should also eliminate obstacles to competition, especially in case of card and internet payments. The regulation contributes towards establishing common technical standards and co-functioning of card, internet and mobile payments.

The Payment Service Directive complements the valid 2007 Directive. European retail payment market has undergone a speedy innovation over the last years. New payment methods, such as internet and mobile payments, and particularly card payments, have developed. In order to ensure the cross-border functioning of these payment methods, technical standardisation and interoperability are crucial, so that the makers and receivers of payments and the providers of payment services can communicate with each other. Amendments must be made in the provisions of the Directive dealing with trade agents, limited networks, m-services of mobile operators and ATM-operators. This also concerns payments with service providers operating outside the European Economic Area and in currencies of other EU states. Member States have wildly varying rates and applications of interchange fees, as well as card system rules that hinder the integration of markets.

Estonia supports the updating of the current Payment Service Directive with the aim of improving the integration and transparency of payments market, guaranteeing protection for consumer interests, promoting innovation and security, and better harmonising national regulations with the Directive.

The Riigikogu Press Service