UK: The ECJ’s First, ‘Bullish’ Foray Into Payments Regulation

Last Updated: 12 August 2014
Article by Paul Graham and Clare Burman

In its recent decision in T-Mobile Austria GmbH v. Verein für Konsumenteninformation (Case C- 616/11) the ECJ wholeheartedly supported an Austrian consumer group's contention that T-Mobile Austria was in breach of the Austrian Payment Services Law when it sought to charge an additional fee to customers paying their bills via online banking or a paper transfer order. In this article, Paul Graham and Clare Burman consider the case and whether any ripples from the decision are likely to be felt on UK shores.

Facts of the case and the ECJ's decision

T-Mobile Austria's general terms and conditions included a clause that imposed a €3 service charge on customers who chose not to use a credit or debit card when paying their bill (for example, they chose to use online banking services or a paper transfer order instead). An Austrian consumers' association successfully argued in the first two tiers of the Austrian courts that this clause breached the Austrian Payment Services Law, which provides that, 'The payment service provider shall not prevent the payee from offering the payer a reduction for the use of a given payment instrument. The payee is not permitted to charge for the use of a given payment instrument.' This represented the transposition into Austrian law of Article 52(3) of the Payment Services Directive 2007 (the 'PSD').

Arguments raised by T-Mobile and the reference to the ECJ

T-Mobile Austria argued that:

  • the prohibition in the Austrian Payment Services Law did not apply to it as it is not a payment services provider;

  • a transfer order form (whether completed on paper or online) was not a 'payment instrument' as it had no personalised security features; and

  • the prohibition was not consistent with the PSD as the Austrian legislature had failed to give reasons for prohibiting the levying of charges for the use of given payment instruments (as indicated in Recital 42 of PSD).

Austria's Supreme Court, the Oberster Gerichtshof, referred the case to the ECJ for interpretation of three questions relating to the PSD:

  1. Could Article 52(3) of the PSD be interpreted to apply to the contractual relationship between a mobile network operator (as payee) and a consumer (as payer)?

  2. Would (a) a paper transfer order form signed by the consumer and/or the procedure for ordering transfers based on such a form and (b) the procedure for ordering online banking transfers, be 'payment instruments' within Articles 4.23 and 52(3) of the PSD?

  3. Does Article 52(3) of the PSD prevent national laws from prohibiting payees from levying charges in general and from levying different charges for different payment instruments in particular?

In a relatively short judgment, the ECJ held that:

  1. Article 52(3) of the PSD must be interpreted as being applicable to the use of a payment instrument in the course of a contractual relationship between a mobile network operator, as payee, and a customer, as payer;

  2. Article 4.23 of the PSD must be interpreted as meaning that both the procedure for ordering transfers by means of a transfer order form signed by the payer in person and the procedure for ordering transfers through online banking constitute payment instruments within the meaning of that provision; and

  3. Article 52(3) of PSD must be interpreted as giving Member States the power to prohibit generally payees from levying charges on the payer for the use of any payment instrument, if the national legislation, taken as a whole, takes into account the need to encourage competition and the use of efficient payment instruments, which it is for the referring court to ascertain.

Why does this matter?

It is worth noting that, not only was the ECJ's decision emphatic, but T-Mobile Austria had already lost the argument twice before the Austrian Courts and the governments of Austria, Germany, France, Italy and Portugal and the European Commission all disagreed with T-Mobile Austria's position. This begs the question: why did T-Mobile choose to fight such an apparently hopeless case? We suspect that this may be because it could see the substantial commercial consequences that would result if (as eventually happened) the Court ruled against it.

Important regulatory precedent

This case is the first time that the PSD has been considered in the ECJ, so we finally have an insight into the ECJ's approach to payments regulation - and it appears that the ECJ is willing to take a bullish line.

It is also important to the future of payments regulation: the definition of 'payment instrument' is almost unchanged in the text of PSD2 as adopted by the European Parliament in April 2014.

Check your terms and conditions

The commercial impact of the ECJ's ruling could be significant: effectively, any payee (regardless of whether it is a payment service provider or not) should be reviewing its terms and conditions to see if it makes any distinction in the price which consumers pay when using different payment methods.

As UK consumers, we have become used to seeing discounts offered to us by utility providers, mobile phone operators, the travel industry, online and physical retailers where we pay by direct debit, or to paying an additional fee if we pay by credit card. The ECJ's ruling affirms that national governments can, in certain circumstances, prohibit payees from levying charges for the use of a particular payment instrument, and Regulation 54(3) of the UK's Payment Services Regulations 2009 (SI 2009/209) (the 'PS Regulations') contains a very similar prohibition to that in Austria.

Note though the distinction between surcharging (which can, and will, be more closely controlled - particularly once the impending EU regulation governing interchange fees in card-based payment transactions is introduced) and offering a reduction to encourage the use of a payment instrument (which is not prohibited).

Mission creep? Extension of PSD into paper instruments

From the outset, there has been a general understanding that paper transactions are entirely outside the scope of the PSD as the issuance of various paper-based payment instruments is expressly excluded from the definition of a 'payment service' in the PSD 1. Even the Financial Conduct Authority ('FCA') has expressed the view that: 'Nor if the payment transaction is initiated by paper, would that document be considered to be a payment instrument' (at Q20 PERG 15 of the UK's Perimeter Guidance Manual). In the TMobile Austria case, the ECJ has chipped away at that tenet by focussing on the procedure for ordering a payment.

Article 4.23 of the PSD defines a payment instrument as, 'any personalised device(s) and/or set of procedures agreed between the payment service user and the payment service provider and used by the payment service user in order to initiate a payment service' (although the ECJ noted a disparity between different language versions of that definition, with some - including the German language version - limiting the adjective 'personalised' to apply to devices only). Note that no distinction is drawn in Article 4.23 between paper and other instructions to initiate the payment service.

In its deliberations on the scope of the definition, rather than looking first at whether a payment service was initiated, the ECJ instead focussed on whether the procedures for ordering payment were 'personalised' - namely that they allowed a payment service provider to verify that the payment order was initiated by a user authorised to do so (as opposed to a 'non-personalised' set of procedures that would allow a payment order to be made anonymously). On that basis, paper instructions (and not merely online instructions) by which a payment order can be initiated could amount to payment instructions, and so be subject to PSD, depending on the service being provided 2.

The payments industry, including the FCA, will need to consider the consequences of such a change - and in the FCA's case, update PERG to reflect this interpretation.


1. See Article 3(g), PSD.

2. N.B. issuing paper cheques, bankers' drafts, paper-based vouchers and paper postal orders is still expressly excluded from the definition of 'Payment Services' - see Article 3(g) PSD and also paragraph (g), Part 2 of Schedule 1 in the PS Regulations.

Article first appeared in E-Finance & Payments Law & Policy - May 2014

Click here to download a pdf of the article

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.