17 February, 2014
Joint Letter on the revision of the Payment Service Directive
Subject: Revision of the Payment Services Directive and importance of mobile wallets, the ancillary exemption and limited network exemption for the digital economy.
Dear MEP Feio,
We are writing to you to share our views on the on-going review of the Payment Services Directive (PSD -Directive 2007/64/EC) and in particular on the importance of mobile wallets, article 3L (ancillary exemption) and article 3K (limited network exemption) in advance of the finalisation of the PSD compromise amendments and vote in the EP Economic and Monetary Affairs Committee on the 20th of February.
Overall, we are very supportive towards actions to strengthen the payment markets within the EU. However a right balance has to be found between innovation and security.
As telecom operators, we are at the forefront of developing consumer friendly and secure mobile payment solutions like mobile wallets that have the potential to unlock unprecedented opportunities for consumers and businesses. However during our discussion with the Commission and Co-Legislators on the importance of mobile wallets, we noticed there is some misunderstanding on the definition and functioning of mobile wallets. Mobile wallets function as technical enablers that aggregate payment instruments available to the payer similar to a pocket wallet. The mobile wallet acts as a user interface from which the consumer can choose and organise his/hers payment instruments. They enable customers to store and access their credit, debit and prepay cards on a SIM, in a secure section of the SIM that is managed by the individual payment card provider. As such, the mobile wallet never enters into the holding of funds transferred. The payment service provider at all times manages its own payment application, including the processing of transactions and management of customer data. At no time does the mobile operator providing the mobile wallet have access to any funds, card details or data relating to transactions. Therefore many of the compliance rules within the scope of the PSD, such as the payment initiator/mobile wallet provider being liable for improper execution or unauthorised transactions, are impossible to comply with for the mobile operators both from a technical and legal perspective.
Therefore in our opinion mobile wallets should not be included within the scope of PSD and we express our support towards submitted amendments clarifying the definition of mobile wallets and excluding mobile wallets from the scope of the PSD (amendments 226, 243 and 276).
In the current Commission proposal, certain business activities described in article 3L are exempted from its requirements. That is the case for the services provided by a mobile operator when it facilitates the purchase of third party digital services sent to and used through a digital device, but the operator goes beyond acting as a mere payment intermediary.
The European Commission’s rationale behind this exemption is to avoid enforcing financial regulation on operators providing premium rate services and other carrier billing services like directory enquiries, charity fundraising and voting services, as well as to allow new market entrants and new services to develop. The exemption is also justified by the amount of money spent by customers when using these services, which is normally very small with low risk of irregularities.
The provision of such services, however, has not been left unregulated. On the contrary, it is subject to consumer protection requirements under telecoms regulation or other consumer protection frameworks, which are regularly subject to the scrutiny of the relevant regulators. The ancillary exemption has proven to work well and we do not have any evidence of major problems in areas such as consumer protection, financial risks, money laundering or fraud prevention. On the contrary, this exemption has so far allowed the development of new digital content services and applications and facilitated the take-up of e-commerce services. This not only benefits the telecoms operators and the customers using such services, but also sustains a much wider value chain, including SMEs and start-up developers as well as contributing to job creations. In France alone, 500 SMEs and 10,000 jobs have been created over the last decade. If the digital goods exemption is removed, it will not only have an impact on job loss but also on consumer choice, as less of these value added services will be offered.
For the above mentioned reasons, we believe that it is crucial that the current ancillary exemption remains in place and we express our support towards submitted amendments supporting article 3L and Recital 13 and amendments increasing the scope of the exemption and thresholds (amendments 148, 235 and 236).
Ticketing, parking ticketing and charity donations
Furthermore we would like to express our support for submitted amendments on Recital 12 on the limited network exemption (article 3K) to include ticketing and parking ticketing under the scope of the limited network exemption (amendments 142, 143 and 145) as parking tickets and tickets e.g. for museums are comparable to public transport cards. In order to ensure that exemption 3K is technology neutral, the text should not only refer to bricks-and-mortar stores, but also include virtual equivalents.
Finally we welcome the submitted amendment 221 clarifying that payments for charity services can be covered under exemption article 3D, guaranteeing the offering of the same services to post-paid and prepaid consumers.
We remain available to provide further information and we are looking forward to continue working with you on this file and the development of the European digital economy.
Director GSMA Europe