European Union: European Commission Investigates E-Payment Standardisation Initiative

Last Updated: 25 November 2011
Article by Rachel Iley

The European Commission has announced1 that it is looking into the standardisation process for payments made over the internet that is being led by the European Payments Council ("EPC"). The investigation is another example of the Commission's interest in standardisation and interoperability. The Commission recognises that standard setting can be efficiency enhancing and promote interoperability and competition; however, how standards are set, used or accessed also has the potential to restrict competition, including by restricting the opportunities for non-participants.

What is the background to this?

The EPC is the co-ordination and decision making body for the European banking payments industry2. Its membership comprises some of the EU's largest banks. The EPC has been working since 20083 to develop a Europe-wide standard for online payments, through its self-regulatory project the Single Euro Payments Area ("SEPA") for cards4.

As things stand currently, the majority of e-payments systems only work within national borders. SEPA will establish a standard framework for e-payments, to enable internet users to buy online regardless of where they are located in Europe, and pay the merchant using their own internet banking services and their current bank account. The aim is to eliminate differences between national and cross-border payments, which could achieve significant cost savings and efficiencies, and to bring benefits such as equal time limits, fraud risk levels, and processes. It is also hoped that SEPA will increase competition between banks and enable them to consolidate their payments processing onto common platforms across Europe. To facilitate this, SEPA would see the development of common financial instruments, standards, procedures and infrastructure.

In June, the EPC published its latest draft document, version 5.5 of the Standardisation Volume, for public consultation5 . This defined the functional and security standards requirements as well as an evaluation methodology designed to achieve interoperability based on open and free standards within SEPA.

What is the Commisson concerned about?

The investigation has been prompted by a complaint – the identity of the complainant has not been revealed but it is known that this follows a complaint made by the German online payment provider, Payment Network AG, earlier this year.

The Commission has made clear that it supports the work of the EPC to develop standards in this area. However, the Commission intends to examine the standardisation process carefully to ensure that competition is not unduly restricted, for example by excluding new entrants and payment providers who are not controlled by bank.

The EPC has promoted the creation of the Cards Stakeholders Group ("CSG") together with representatives of five sectors also active in the cards domain, including retailers, vendors (e.g. of card payment devices and related IT systems), processors, card schemes and banks. Nonetheless there seems to be some concern on the part of the Commission that competitors in the online payments market, particularly payment solutions providers that are not linked to a bank (such as PayPal and Hipay), have been or are being excluded from the process, and that this could result in higher transaction prices for web merchants and ultimately consumers.

This could breach the EU rules against restrictive business practices set out in Article 101 of the Treaty on the Functioning of the European Union6.

How do the competition law rules apply to standardisation?

Standardisation can be efficiency enhancing for a number of reasons. For instance, standards can establish technical interoperability and so encourage competition between technologies developed by different companies, reduce the time it takes to bring a new technology to the market, facilitate innovation by allowing companies to build on top of agreed solutions, and reduce transaction costs for sellers and buyers.

However, there is potential concern under competition law that how standards are set, used or accessed can discriminate against, or even exclude, certain parties. Further detail on how the competition law rules apply to standard setting is provided in the Commission's new guidance on horizontal co-operation agreements, published in January7, and our recent article summarising this8.

The Commission has not indicated exactly what aspect of the EPC's standards initiative is being investigated. However, a number of fundamental principles that govern how standard setting is carried out, would seem to be particularly relevant in this context:

  • the standard setting organisation (SSO) should guarantee that all relevant actors can participate in the process leading to the selection of the standard - an appreciable proportion of the industry should be involved in setting the standard transparently;
  • the information needed to apply the standard must be available to all those wishing to enter the market;
  • the rules of the SSO should also safeguard against the process from being biased towards certain participants: the solution adopted should ideally be technologically neutral and it must be objectively justifiable why one solution is adopted over another;
  • any industry standard must remain as open as possible and be applied in clear, non-discriminatory manner;
  • access to the standard must be possible for third parties on fair, reasonable and non-discriminatory terms; and
  • there should be no restrictions placed on the parties' freedom to develop alternative standards or products.

What can the Commission do if it considers there to be a competition law problem?

The Commission has a range of sanctions it can adopt to deal with any breach of competition law it identifies. The restrictions (and sometimes the entire agreement) can be rendered unenforceable, and parties may be ordered to cease or modify the arrangement. Parties may be fined up to 10% of their worldwide turnover. Third parties can also bring an action for damages or, in appropriate cases, an injunction in the civil courts.

The resulting adverse publicity and reputational damage can also be of concern. Added to this, those under investigation usually have to dedicate significant time and resources to dealing with the investigation or case and there is also an increased risk of on-going surveillance by the competition authorities following an infringement, as well as of future complaints and investigations under EU or national competition law.

The EPC has made clear that its standardisation project is a work in progress and that no final documentation has been published. Therefore, in practice, if the Commission does have concerns, there might still be room for the EPC to change any practices that are found to be problematic, such as taking positive steps to ensure that competitors in the online payments market are informed and involved to the extent necessary to fulfil the EPC's obligations under competition law. However, at present, the EPC has emphasised that it does not agree with the allegations that its work in this area could potentially discriminate against certain market participants.

What will happen next?

The initiation of proceedings does not imply that the Commission has made a finding of an infringement; only that the Commission will deal with the case as a matter of priority. The Commission will start by gathering information and views from those involved, and other interested parties. There is no deadline to complete the investigation and its duration depends on a number of substantive and procedural factors.

To ready KL Bytes - Third Edition in full, please click here


1. The Commission's announcement is at:

2. For further information on the role of the EPC, see:

3. The SEPA project, in fact, can be traced back to 1990, with the publication of a European Commission report 'Making Payments in the Internal Market'. This outlined a vision for a single payments area, stating that "the full benefits of the single market will only be achieved if it is possible for business and individuals to transfer money as rapidly, reliably and cheaply from one part of the Community to another as is now the case with(in) most Member States". There then followed a number of legislative acts designed to work towards achieving an integrated e-payments system, such as Regulation (EC) No 2560/2001 on Cross-Border Payments in Euro (now repealed), Regulation (EC) No 924/2009 on Cross-Border Payments in the Community and Directive 2007/64/EC on Payment Services in the Internal Market, all accessible at:

4. For further information about SEPA, see:

5. This can be accessed via:

6. Text of Article 101, Treaty on the Functioning of the European Union:

7. Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to horizontal co-operation agreements:

8. Surviving Standards Wars and the Commission's New Horizontal Guidance:

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.