The European Banking Authority (EBA) issued today an Opinion to the European Commission, expressing dissent over some of the proposed amendments to its final draft Regulatory Technical Standard (RTS) on the separation of payment card schemes and processing entities under the Interchange Fee Regulation (IFR). The EBA clarified that there is no clear requirement for a legal and structural separation between card schemes and processing entities.
In particular, the EBA agrees with three of the Commission's proposals, albeit in modified form, but disagrees with the other three, on the grounds that they appear to assume that card schemes and processing entities are, or should be treated as if they were legally and structurally separated.
As this is not a legal requirement imposed in the IFR, the EBA believes that several of these proposals might result in a disproportionate, difficult, and/or ambiguous application of the RTS for those payment card schemes and processing entities that are not legally separated, or that are organised in separate undertakings within the same group.
Legal basis and background
These final draft Regulatory Technical Standards (RTS) have been developed in accordance with Article 7 (6) of the IFR.
On 26 July 2016, the EBA submitted these final draft RTS to the European Commission, specifying requirements to be complied with by payment card schemes and processing entities to ensure the application of independence requirements in terms of accounting, organisation and decision-making process.
On 5 January 2017, the European Commission sent a letter to the EBA in which it proposed six amendments to the RTS, including to restrict the ability for entities to have shared benefits and plan; not to allow card scheme and processing entities to share staff for the purpose of innovation; to prevent the practice of ‘revolving doors', and to review the rules around directorship holding in both entities.