European Court of Auditors Raises Red Flags on EU Price Interventions in Card Market

Between 2017 and 2023, digital payments for retail sales in the EU have experienced an impressive surge, more than doubling in value and exceeding €1 trillion. These digital payments play a vital role in ensuring the smooth operation of the EU’s internal market, particularly in cross-border transactions. As such, the European Union has a significant responsibility to guarantee their efficiency and effectiveness.

Key Insights from the European Court of Auditors’ Report

A recent report by the European Court of Auditors (ECA) highlights the advancements and challenges concerning the EU’s digital payment landscape. The report emphasizes that the EU’s approach has made digital payments “safer, faster, and cheaper for users.” However, it also raises critical concerns regarding specific price interventions.

Concerns Over Price Interventions

• The report critiques the interchange fee cap for card payments and the surcharge ban on card and SEPA payments.
• Ildikó Gáll-Pelcz, an ECA Member, points out a lack of clear criteria for evaluating the justification of price interventions.
• There are currently no requirements for periodic reviews of these interventions.
• The European Commission failed to demonstrate that the benefits for consumers outweigh the potential downsides of these interventions.

Issues with Monitoring and Data Access

One of the significant findings of the report is the absence of an effective monitoring system to assess the impact of the EU’s digital payment policies. The Commission’s lack of access to relevant data further complicates this issue. As stated in the report:

“The impact of the EU’s digital-payment policies remains largely unknown.”

Challenges with Open Banking Framework

The report also questions the EU’s open banking framework, particularly the requirement for firms to provide third-party providers with free access to payment user data. This could potentially discourage account data holders from delivering high-quality services.

Need for Standardization

Furthermore, the report highlights a pressing need for standardized APIs, which are essential for enabling third-party providers to effectively utilize user data. The lack of standardization continues to hamper the growth and efficiency of digital payment services.

In conclusion, while the EU has made significant strides in enhancing digital payments, addressing the highlighted concerns is crucial for ensuring that these systems continue to benefit consumers and businesses alike. For more information on digital payments and their impact, visit the European Commission’s website.