Finland Times

 

The European Union (EU) is planning to update rules on payment services so as to open up the online payments market.

 

     The European Parliament (EP) adopted the new rules in a vote on Thursday. By enabling new market players to use mobile and online tools to make payments on a client's behalf, the new rules will cut the cost of paying bills and avoid fraud risks, EP said in a statement.

 

     "The EU payment services market remains fragmented and expensive, costing 130 billion euros (147 billion U.S. dollars), or over 1 percent of EU GDP a year. The EU economy cannot afford these costs, if it wants to be globally competitive," said Antonio Tajani, member of European Parliament (MEP).

 

     The MEP added that, "the new regulatory framework will reduce costs, improve the security of payments and facilitate the emergence of new players and innovative new mobile and Internet payment methods."

 

     Under the new rules, a customer using an online account will have the right to use payment software, devices and applications provided by an authorized third party and to have payments executed on his or her behalf by this provider.

 

     For example, customers who have no credit or debit card will be able to authorize new market entrants such as SOFORT in Germany, Trustly in Scandinavian countries or IDEAL in the Netherlands to use their bank details to make payments from their accounts.

 

     The EP said opening up the market will encourage innovators to offer cheaper, safer payment tools.

 

     Meanwhile, by laying down data protection and liability rules for all online payment service providers, the new rules will make online payments easier and safer.

 

     A bank servicing a customer's account could deny a third party service provider access to it only for objectively justified and substantiated security reasons which have been reported to the supervisory authorities.

 

     This safeguard should preclude any possibility of banks "blocking" the market for new payment services, the EP said.

 

     At the same time, third-party payment service suppliers, for their part, would be required to ensure safe authentication of the user and reduce the risk of fraud. They would have to ensure that a user's personal payment data pass through the safe channels and that they are shared only with the user's consent.

 

     However, in the event an unauthorized payment is made from an account, the account holder should not lose more than 50 euros if the payment instrument was lost, stolen or misused, according to the new law.

 

     A service provider that fails to act to prevent such a fraud after a notification of a loss, or does not require strong customer authentication when necessary, could be deemed liable for its client's losses and ordered to remedy the financial damage.

 

     The draft law was approved in EP by 578 votes to 29, with 52 abstentions. The law now needs to be officially endorsed by EU member states before it can enter into force.