ECB releases its opinion on the proposal for a new EU Regulation on cross-border payments

In this opinion the ECB notes that the scope of the proposed regulation covers not only cross-border electronic payment transactions and credit transfers but also cross-border direct debits. This is in line with efforts to achieve the Internal Market for payment services and with the launch of the Single Euro Payment Area (SEPA) in particular, and is highly welcomed by the ECB. However, the proposed regulation also raises some issues which require careful consideration.

On 31 October 2008, the European Central Bank (ECB) received a request from the Council of the European Union for an opinion on a proposal for a Regulation of the European Parliament and of the Council on cross-border payments in the Community, replacing and repealing Regulation (EC) Nº 2560/2001.

Specific observations made by ECB on a proposal for a Regulation on cross-border payments within the EU

Provisions on the balance of payments reporting (b.o.p.)

The development of Single Euro Payment Area (SEPA)  implies that b.o.p. reporting systems mainly based on payments data cannot be maintained as they are, regarding payments in euro within the EU. The reform of those systems may involve not only substantially lower reporting obligations for banks but also an increase in the reporting burden on non-banks.

The ECB considers it essential that a solution is found that puts at risk neither the essential user needs for euro area and national balance of payments statistics nor the timely emergence of SEPA.

  • The ECB welcomes the proposal to increase the exemption threshold for b.o.p. reporting to 50,000 € and acknowledges that it is already in place in the majority of Member States.
  • In order to benchmark and to focus the scope of surveys related to b.o.p. reporting, the ECB suggests that other administrative and statistical data sources, such as VAT data files, INTRASTAT, Company Registers and Structural Business Statistics, are enhanced where needed and possible, so that they can be used for the identification of the entities to be surveyed or for collecting information on cross-border transactions.
  • The ECB regards payments data as a potentially useful tool in particular to identify the reporting population to be surveyed, i.e. to set up and maintain a register of internationally active firms.
  • In order to further alleviate the reporting burden of both financial and non-financial agents, the ECB supports all initiatives that facilitate the exchange of information between b.o.p. compilers, for statistical purposes only. This may require the elimination of legal impediments to the exchange of information among EU statistical authorities, while maintaining the required confidentiality safeguards.
  • Regarding the proposal to remove settlement-based national reporting requirements on payment service providers from 1 January 2012, as stated in the proposed regulation, the ECB highlights the need for an interim solution for Member States still relying on settlement-based reporting until a fully harmonised pan-European solution has emerged.

Review clause — use of the Bank Identifier Code (BIC)

According to the proposed regulation, the Commission must, by December 2012 at the latest, present to the European Parliament, the Council, the European Economic and Social Committee and the ECB a report on the use of International Bank Account Number (IBAN) and BIC in relation to the automation of payments, accompanied by an appropriate proposal.

On the assumption that the aim of this provision is to facilitate and make more efficient the initiation of payments, the ECB would support the possible abolition of the need for retail customers to use the BIC if the use of IBAN only is technically possible, as this would ease the burden of providing two different identifiers.

The ECB strongly recommends retaining the mandatory use of IBAN, and further notes that the introduction of a similar standard format for securities accounts comparable with the regime for IBAN could enhance the conflicts of law regime for intermediated securities.

Charges for cross-border payments and corresponding national payments

The ECB is concerned that the criteria set by the proposed Regulation do not provide payment service providers with adequate interpretation guidelines with regard to the notion of “the corresponding domestic payments”. Hence, the ECB proposes introducing a paragraph setting out the basic assessment criteria in order to ensure its uniform application within the Community, instead of allowing payment service providers a wide margin of discretion as regards its interpretation.

Scope of application

According to Regulation (EC) Nº 2560/2001 neither the ECB nor national central banks (NCBs) were covered by its provisions when not acting in their capacity as monetary authorities. With the revised provision, the proposed regulation would apply to cross-border payments up to 50,000 € made by the ECB or NCBs when they are acting outside the scope of their capacity as monetary authorities and when such transactions are not made for their own account. The ECB welcomes the extended scope of the proposed regulation in this respect, which is in line with the principles of SEPA.

As general conclusion, the ECB supports the proposed regulation's objective of complying with standards of good legislation and agrees with the introduction of the simplified definition framework. However, a certain overlap seems to exist between the notion of ‘cross-border payments’ and ‘payment transaction’ contained in the proposed regulation.

The ECB is of the opinion that if a defined concept appears in more than one secondary Community legislation, the corresponding definition should, as far as possible, be identical in all such legislation to ensure legal certainty, especially in closely related legal acts.

The ECB therefore suggests that these two legal acts be aligned with respect to the definition in question.