Key Benefits:
The Autorité de la concurrence (commission permanente),
In view of the letter dated 8 June 2009 by which the Minister of Economy, Industry and Employment seized the Autorité de la concurrence on the basis of theArticle L. 462-2 of the Commercial Codea request for advice on a draft order on the terms and conditions governing the provision of payment services and establishing payment facilities and transpositioning Directive 2007/64/EC of the European Parliament and of the Council of 13 November 2007 on payment services in the domestic market;
Considering articles 81 and 82 of the Treaty establishing the European Community;
In view of Book IV of the Commercial Code on Freedom of Price and Competition;
Rapporteurs, the General Rapporteur and the Commissioner of the Government and representatives of the European Commission heard at the meeting on 19 June 2009;
Representatives of the French Banking Federation and Leroy Merlin Company heard,
Is it in the opinion to respond to the application in the direction of the following observations:
I. ― The legal framework for the draft order.
I. ― The general framework.
A. ― The creation of a single European market for payment instruments and the deadline of 1 January 2011.
B. ― The role of contentious actions brought before the competition authorities.
1. Context.
2. Litigation cases.
II. ― The legal framework specific to referral.
A. ― General description of Directive 2007/64/CE on payment services in the domestic market.
B. ― The field of referral of the Autorité de la concurrence.
1. Section 26 of the directive.
2. Articles 47-3° and 48-3° of the directive.
3. Section 52-3 of the directive.
(a) History of section 52-3 of the directive.
(b) What are the limits of the option open to Member States by Article 52-3?
4. Section 72 of the directive.
III. ― The draft order transposing Directive 2007/64/CE.
1. The draft transfer of section 26 of the directive.
2. The draft provision of sections 47-3 and 48-3 of the Directive.
(a) The transposition of articles 47-3 and 48-3 of the directive in other Member States.
(b) The transposition of articles 47-3 and 48-3 of the directive by France.
3. The proposed transfer of section 52-3 of the directive.
(a) The current state of French law.
(b) The transfer of Article 52-3 of the Directive into other Member States.
(c) The proposed transfer of section 52-3 of the directive.
4. The draft transfer of section 72 of the directive.
IV. ∙ Analysis.
I. ― Analysis of the transposition of sections 47-3 and 48-3 of the Directive.
II. ― Analysis of the transposition of section 52-3 of the directive.
A. ― Economic analysis of competition in payment systems: level of interbank commissions and effect of "no overload rule".
1. Costs and benefits of payment transactions.
2. The risk of underutilizing effective means.
3. The optimal level of interbank committees.
4. Because of the low resistance of traders, the level of commission chosen by banks can be excessive (bearing at the optimal level).
5. The possibility of overloading traders increases transparency, facilitates consumer arbitration and encourages competition between means of payment.
6. The market power of traders may, in some cases, lead to too high overloads.
7. Should price increases be feared if traders had the practical possibility to put in place tariff overloads?
8. Analysis of the utility of different consumer categories.
B. ― Study of the experience in Australia and recall of the particular case represented by the Danish experience.
1. Study of experience in Australia.
(a) Control measures implemented and their motivations.
(b) The Board ' s contradictory assessment of the regulatory measures adopted.
(c) The Australian experience.
2. Recall of the particular case represented by Denmark.
C. ― The progressive development of SEPA payment methods.
V. ― Conclusion.
I. ― Conclusion on the transposition of articles 26, 47-3, 48-3 and 72 of Directive 2007/64/CE.
II. ― Conclusion on the transposition of section 52-3 of Directive 2007/64/EC.
A. ― The situation resulting from a ban on merchants to differentiate their prices according to the payment instruments used by their customers.
1. The ban on differentiating prices makes that the costs of the different payment instruments are impacted on consumers but in an occult way.
2. The ban on differentiating prices organizes a "backward subsidy" at the expense of users of the cheapest payment instruments.
3. The ban on differentiating prices impoverished the offer of cheap payment instruments and reduced the acceptance of the most expensive payment instruments.
B. ― The beneficial effects of the ability to differentiate prices based on payment instruments used by consumers.
C. ― Support measures could be taken to avoid any possibility of drifts related to the ability of payment recipients to apply differentiated prices according to the payment instrument.
D. ― Editorial proposals.
I. - The legal framework for the draft order
1. On 8 June 2009, the Government seized the Autorité de la concurrence, on the basis of Article L. 462-2 of the Commercial Code, of a draft order transposing Directive 2007/64/EC of the European Parliament and of the Council of 13 November 2007 concerning payment services in the domestic market, amending Directives 97/7/EC, 2002/65/EC, 2005/60/EC and 2006/48/EC and repealing Directive 97/5/EC.
2. Indeed, under Article L. 462-2 of the Commercial Code:
"The Authority is obligatoryly consulted by the Government on any draft regulatory text establishing a new regime that directly affects:
1° To subject the exercise of a profession or access to a market to quantitative restrictions;
2° To establish exclusive rights in certain areas;
3° To impose uniform pricing or sales practices. »
3. The main provision of the draft order submitted by the Government which justifies the referral for advice from the Autorité de la concurrence concerns the prohibition on payment recipients to "propose fees to payers according to the means of payment used". This practice, commonly referred to as the English "overcharging" (1), is for merchants to apply fees related to the use of certain payment instruments, i.e. to rely on their selling prices on the means of payment chosen by their customers.
4. By prohibiting any differentiation of selling prices according to the payment instruments used, the draft order submitted to the Autorité imposes on merchants "uniform practices in respect of prices or conditions of sale". Such a provision, contained in a text of a regulatory nature, falls within the scope of Article L. 462-2-3° referred to above.
5. Before starting the examination on the merits of the draft notice order, it should be emphasized that this provision and its consistency with the objectives of competition law in terms of means of payment cannot be analysed without recalling that it is indivisibly linked to other issues, including the legality of interbanking commissions and their level as well as the legality of the standard clauses inserted by the providers
6. It is also important to recall that the Autorité de la concurrence is currently dealing with these issues in a contentious setting, which justifies particular vigilance.
I. General framework
7. Changes affecting the means of payment sector can only be understood provided that they are placed in a more general framework. For more than twenty years, the initiatives have been numerous to build a single European market of payments by displacing national markets through harmonization of national laws, on the one hand, and by submitting to the appraisal of competition law all the rules defined by banking institutions that govern the management of means of payment, on the other.
8. The directive transposed by the draft order is part of the first objective (to build a single European payment market by harmonizing national laws), but its article 52-3, which deals with the issue of "overloading", is intimately linked to the contentious actions brought before the competition authorities.
A. ― Creating a Single European Market
payment instruments and the deadline of January 1, 2011
9. This process is now being completed. It required a combination of considerable means to overcome national barriers that were, in the context of payments, particularly important.
10. First, there was the implementation of the euro, which required a change of the treaty. Then, the operating principles of European payments were established through a series of regulations and directives. The main instrument is the directive that is based on this entry: Directive 2007/64/EC on payment services. But important texts were adopted, including Directive 97/5/EC on cross-border transfers, Regulation 2560/2001 on cross-border payments in euros, as well as its recent revision, and various non-binding instruments referred to in Guideline 3 2007/64/EC.
11. In addition, community institutions have decided to entrust market actors with the task of setting the rules of detail and technical supervision of future European payment methods, under the supervision of the European Commission. This exercise takes place as part of the SEPA (Single Euro Payment Area) discussions within the ESC (European Payment Council). In concrete terms, three valid payment methods throughout the European Union will gradually replace the strictly national means of payment:
– the European transfer (SEPA Credit Transfer) launched in January 2008;
– European automatic sampling (SEPA Direct Debit) which will be launched in November 2009;
― with regard to the payment card, it was decided not to design a European card, but to define a set of common rules (the SEPA Card Framework) that all payment cards must respect. When a card complies with this set of rules, it can therefore be used throughout Europe (subject to its acceptance by each merchant, the latter remaining free to accept or not to accept a particular card, even compatible with the SEPA Card Framework), the deadline being January 1, 2011.
12. In conclusion, Europe's payments are already very advanced for two means of payment on the three on which efforts are being made. The year 2011 should be a pivotal year from which competition between payment systems will become truly European, with all the opportunities it entails for EU consumers.
B. ― The role of contentious actions
brought before competition authorities
1. Context:
13. The creation of a unified payment space is not only through the harmonization of applicable rules, but also through the analysis of the practices found in the means of payment sector, and the elimination of anti-competitive practices, unless they are considered exempt. On the contentious field, the debates on means of payment have gradually narrowed the discussion on two main topics: on the one hand, the question of interbanking commissions and their level and, on the other hand, that of the standard conditions that payment systems generally impose on merchants and which are intimately linked to the existence of interbanking commissions.
14. Multilateral interbank commissions are the result of agreements between members of a payment system, most often banking institutions. These agreements provide that, in each previously defined transaction (the act of paying, the rejection of a payment, etc.), one of the two banks involved (the payor's or the payee's) will have to pay a sum of money to the other bank. For example, most payment systems (bank card, Visa, Mastercard, etc.) provide that, at each payment made by a card holder, the bank of the payment recipient (most often a merchant) must pay to the payer's bank (most often a consumer) a given sum of money (2).
15. However, as noted by the European Commission (3), an interbanking commission represents for the bank that bears a charge, which is therefore likely to affect its customers. In general, the interbanking commission is paid by the acquirer banks (the merchant's bank) to the issuing bank (the consumer's bank), so that the acquirer banks will be prompted to repercuss these charges on merchants. According to the European Commission, the system of multilateral interbanking commissions has the effect of restricting "competition between acquirer banks by inflating the basis on which they are based to set the costs charged to traders and thus is to establish a floor level for traders. If these multilateral interchange commissions did not exist, the prices applied by the acquirer banks would be lower, which would favour traders and their customers" (4). In this paragraph, the European Commission explains that the price charged by banks to merchants is composed, on the one hand, of the price of the service rendered and, on the other hand, of the interbanking commission that the merchant bank pays to the consumer bank. However, since this interbanking commission is due for each operation, it does not benefit from any scale effect and the share it occupies in the price charged to the merchant by the bank therefore remains fixed, regardless of the volume of operations of the merchant: that is what justifies the term "floor price". Finally, for the European Commission, since the interbanking commission is a charge to the merchant, in the absence of an interbanking commission, the price charged to the merchant by his bank would necessarily be lower than its current level.
16. In addition to interbanking commissions (5), banks introduce model clauses in contracts signed with merchants. These conditions apply to merchants who wish to accept payment cards. They usually come in the form of a triptych:
The so-called "No Surcharge Rule" or "non-surcharge" rule, also known as "No Discrimination Rule" or "non-discrimination rule". This rule imposes on merchants a uniform price, independent of the payment method chosen by their customers. When acceptance of different means of payment results in different costs for merchants, they may want to practice different prices, so as to reflect the cost differences. The "No overload Rule" rule, imposed by banks, prohibits it.
This contractual rule exists today in France for all merchants who accept bank cards. In the case of France, it is written in the following way: the acceptor (the merchant) undertakes to apply "to the holders (the holder of the bank card) of cards (in France, the "CB" and approved "CB" cards) the same prices and rates as to all its customers. In any case, the acceptor must not directly or indirectly bear any additional costs."
The so-called " Honour All Cards Rule" (HACR) or "required to accept all cards". Banking institutions insert these rules into the contracts they make to the merchants. The purpose of the HACR is to impose on the merchant who signs it to accept all cards from the same payment system (e.g., a merchant who signs an acceptance contract with Visa must accept all VISA cards), regardless of the costs involved to him because of the acceptance of the entire range of cards of the system.
Finally, the so-called "mixing" practice (or "one-time average price practice") that involves a bank to make the average of the costs that all bank cards of a payment system (e.g. Visa) represent for a particular merchant, and only charge it this average without submitting an invoice detailing the price of each card. In this way, the merchant cannot know the actual cost represented by a particular card of the range: it only perceives the total cost created by the acceptance of all cards of a payment system.
17. In summary, there are many maps associated with very different levels of interbanking commissions, with these interbanking commissions, according to the European Commission, almost systematically impacted on traders. At the same time, the banks have signed to the merchants standard clauses that first require them to accept all the cards in the range without being able to choose which card(s) they want to accept or refuse and which, secondly, prohibit them from practicing different prices, regardless of the cost involved by a particular card due to its interbanking commissions. Finally, payment service providers practice the "mixing", i.e. they address to the trade of global invoices that do not allow it to know the cost level of each of the cards in the range.
18. As a result, since merchants are prevented from differentiating their prices according to the means of payment used, they cannot transmit to their customers any incentive price signal to encourage the use of the payment method with the best cost-effectiveness. Their selling prices necessarily include all the costs induced by the means of payment they accept, and in the end, all end-users who finance all the means of payment, including the most expensive. The costs induced by means of payment are therefore shared: consumers using the cheapest means of payment subsidize those who use the most expensive. In other words, consumers pay the interbank boards well, but in an ineparate and indifferent way.
19. Thus, a consumer who has different payment cards is encouraged to use the ones that bring them the most benefits (e.g. "air miles") as their use does not impose any additional costs. The interbanking commission associated with prestige cards and the corresponding bank charges for merchants are, at least in part, reflected in the selling prices charged to all customers, including those who use less expensive means of payment. Such cross subsidies, coupled with the absence of a price signal, are economically ineffective.
20. If, on the other hand, the merchant does not want to raise his retail prices of the extra costs incurred by the most expensive cards, he has no choice but to refuse these cards and, as a result of the " Honour All Cards Rule", to refuse all the cards in the range to which the expensive card he does not want to accept. It is because of the existence of this choice without nuance ( accepting or not accepting, without being able to play on the prices) that the bearers of expensive cards always have a less expensive but more commonly accepted card, which they will use in the absence of being able to use the most advantageous card for them and whose benefits are largely financed by users of less expensive means of payment.
2. Litigation cases:
21. These developments allow us to explain the evolution of the analysis made by the competition authorities in terms of means of payment. They have thus moved from decisions focused on the issue of interbank commissions to a much more comprehensive approach integrating the evaluation of the model clauses inserted in the contracts signed by the recipients of payment.
22. The litigations have been very numerous (6) and continue to be, but to stick to the most important milestones of the past ten years, these are:
– Visa 2001 and 2002 decisions. The focus is mainly on interbank committees, even if the issue of "No Surcharge Rule" is addressed: at that time, the European Commission's reflection begins and the role of this clause is imperfectly understood. The standard conditions are therefore exonerated; as for interbanking commissions, the Commission exempts them for five years after having supervised them;
― the Green Paper of the European Commission on Retail Services in the Single Market of April 30, 2007 (7), which specifically addresses the issues of interbanking commissions, "overloading" and "mixing" by calling them "practices that will weaken competition". Indeed, the joint use of these practices disrupts arbitrations that consumers and traders can make when they decide to use a particular payment instrument;
– Mastercard decision 2007. The importance of the "No Surcharge Rule" is further highlighted, but, to the extent that Mastercard renounced its own leader in 2005, the decision focuses on interbanking commissions and considers that this is a restrictive competition practice that is not exempt;
- Mastercard 2009. The Commission agrees not to continue Mastercard on the condition that this company adds two additional commitments to previous commitments (which do not prohibit "overloading" to merchants): lower the level of its interbanking commissions and remove the "mixing". At this point, therefore, the environment is considered to be competitive by the Commission if there is no "No Surcharge Rule", no "mixing" and interbank commissions reduced to a low level (0.2% (8) of the transaction amount for debit cards and 0.3% of the transaction amount for credit cards).
As a comparison, the level of the card-specific interbanking commission used in France is, on average, 0.46%.
The Visa 2009 case (notification of grievances). Since Visa did not wish to propose to the Commission any commitments equivalent to those of Mastercard, a notification of grievances was sent to him, which emphasizes the "No Surcharge Rule", the "mixing" and interbanking commissions;
In France, the Autorité de la concurrence will decide at the end of 2009 on the legality of the interbank boards relating to the bank cheque. In addition, in February 2009, it received a complaint regarding all interbank commissions applicable in France, as well as the model clauses in the contracts that payment service providers have signed to the payment recipients (including the "No Surcharge Rule" and the HACR).
The national competition authorities of the other Member States are very mobilized at this moment by means of payment since there are shares in more than half of the Member States, which represent the vast majority of the payment volumes exchanged in Europe.
23. It is seen, between the first decisions of 2001-2002, very close to the decisions of the Conseil de la concurrence at the end of the 1980s on the French bank card, and the most recent ones, the European Commission was obliged to integrate in its analysis the increasingly numerous elements. At first focused on interbank boards, the recent procedures now incorporate considerations related to the "overloading" rules, the " Honour All Cards Rule" and the "mixing" practice.
24. In conclusion, the analysis of the question of "overloading" cannot be done by leaving it from its context, which is that of a strong and former interest of public authorities and competition authorities in regulating competition in the area of means of payment, both at the community level and at the national level. In addition, the steps mentioned above show that this regulation of competition cannot be limited to a single axis of intervention, whether interbank commissions, "overloading", "mixing" or HACR. These four mechanisms play collectively and must therefore be analysed and treated together, as the European Commission does and as the Australian authority has done (cf. infra).
25. In this case, however, these topics will need to be addressed separately, taking into account the referral of the Autorité de la concurrence for advice on the draft order transposing Directive 2007/64/CE.
II. - The legal framework specific to referral
A. ― General description of Directive 2007/64/CE
concerning payment services in the domestic market
26. The primary purpose of Directive 2007/64/CE is to provide the European Union with a harmonized body of rules to determine in a uniform manner that can offer payment services, under what conditions – especially prudential – which information must be provided to users of payment services and what are the mutual responsibilities of the parties to a payment transaction.
27. The European text aiming to move from partitioned national markets to a real domestic payment market, it is a maximum harmonisation directive to the numerous and precise provisions. However, to take into account differences in approach between Member States on certain points, the Directive provides national legislators with the possibility of using several options limitingly listed.
28. As for the substance, the Directive, 96 articles long and illuminated by 63 considerations, includes:
a title I relating to the object of the text, its scope and definitions;
– a title II that contains the rules relating to payment service providers and sets out the conditions under which they may apply for their approval, the initial capital, the requirements on the equity, the withdrawal of approval, the conditions of control, the question of liability, the European passport, and finally, the cases in which Member States may decide, due to the smallness of the structure envisaged, not to submit to the whole of these rules the small means of payment;
— a title III relating to the provision of information to be provided to users of means of payment by payment service providers;
– a title IV relating to rights and obligations on parties to a payment transaction, namely providers and users. This title covers the issue of irrevocability of payments, the costs that may be requested from the parties, the deadlines in which payment orders must be executed — including the very important issue of value dates — and the mutual responsibilities of the parties in the event of the diversion or theft of payment instruments;
– a title V and a title VI relating to enforcement measures and the final and transitional provisions of the directive.
B. ― The field of the referral of the Autorité de la concurrence
In order to transpose Directive 2007/64/EC into national law, the Government chose to request Parliament to enable it to do so by order.
29. Empowerment was granted to the Government by the Act No. 2008-776 of 4 August 2008 the modernization of the economy, which mentions Directive 2007/64/CE at c of 4th of its Article 152. The main provisions are as follows:
"The Government is authorized to take by order, under the conditions provided for in Article 38 of the Constitution, the measures in the area of the law necessary to modernize the legal framework of the French financial place. The purpose of these provisions is to:
(...)
4° To adapt legislation to community law with a view to:
(...)
(c) Transpose Directive 2007/64/EC of the European Parliament and of the Council, of 13 November 2007, concerning payment services in the domestic market, amending Directives 97/7/EC, 2002/65/EC, 2005/60/EC and 2006/48/EC and repealing Directive 97/5/EC, and taking measures to adapt the legislation related to this transfer;
(...)
Such orders shall be made within six months of the date of publication of this Act, with the exception of the provisions provided for in b and c of 4° and 5° which are taken within 12 months, and those provided for in 2° which are taken within 18 months. A bill on ratification is tabled before Parliament on or before the last day of the third month following the issuance of the order under consideration."
30, The deadline for the Government to transpose the directive by order expires at the beginning of August 2009.
31. This notice will not relate to the provisions of the draft order, which, while entering the scope of Article L. 462-2 of the Commercial Code, only reclaim the provisions of the Directive. For example, the future article L. 133-13 of the monetary and financial code derived from section 1 of the draft order provides that the value dates used by payment service providers must be set to J+1 for the payment date between payment service providers and that the customers of these service providers must be credited and debited at the same time. To the extent that managers of means of payment today pay heavily on the shift between the day they settle the payment orders between them and the day they debit/credit the current accounts of users of the payment system, the draft order has the effect of imposing "uniform practices in terms of prices or conditions of sale", which would justify that the Authority give its opinion on this provision. However, to the extent that the Government, as it was to do, did not take over the measures set out in the Maximum Harmonization Directive, it is not necessary to rule on the new article L. 133-13 of the Monetary and Financial Code.
32. On the other hand, the Directive provides for a number of options open to Member States, which then have a more or lesser margin of appreciation. With respect to these options, and if the choices made by the Government enter the scope of Article L. 462-2 of the Commercial Code, the Autorité de la concurrence must express its opinion.
33. Section 86 of the Directive lists the options left to the transposition authorities and, among them, some enter the scope of Article L. 462-2 of the Commercial Code. In the first analysis, the options involved are:
― article 26 of the directive: it allows Member States not to impose on the most marginal actors the requirements laid down by the directive in terms of accreditation, conditions of equity, archiving and control. The draft order does not allow this flexibility and this falls within the scope of Article L. 462-2-1;
― article 47-3 of the directive: it allows Member States to impose on payment service providers to provide the payor free of charge on paper, at least once a month, the information that concerns it regarding individual payment transactions. The proposed order has chosen to impose this free monthly supply, which requires payment service providers to propose at a uniform price (in this case, free of charge) this information service, which is well under section L. 462-2-3;
― article 48-3 of the directive: it allows Member States to impose on payment service providers to provide the beneficiary on paper free of charge, at least once a month, the information concerning the individual payment transactions. The proposed order has chosen to impose this free monthly supply, which requires payment service providers to propose at a uniform price (in this case, free of charge) this information service, which is well under section L. 462-2-3;
― article 52-3 of the directive: it allows Member States to prohibit or limit the capacity left by the directive to payment recipients to "overload" payments made to them. By prohibiting any "overloading" capacity for payment recipients, the proposed transfer prohibits recipients from performing different prices based on the costs they face. This general prohibition therefore leads them to practice uniform prices and the proposed choice is well under Article L. 462-2-3;
― section 72 of the directive: the directive allows Member States to impose on payment service providers, for purely national payment transactions, a time limit for the execution of payment transactions shorter than the J+1 provided for in the directive: the use of this option by the draft order could lead to the imposition of uniform prices, which falls under Article L. 462-2 3.
1. Article 26 of the Directive:
34. The Directive contains an article 26-1, which reads as follows:
“Article 26. Conditions: 1. Notwithstanding Article 13, Member States may derogate or authorize their competent authorities to derogate from the application of all or part of the procedure and conditions set out in Sections 1 to 3, with the exception of Articles 20, 22, 23 and 24, and to authorize natural or legal persons to be registered in the register provided for in Article 13, where:
(a) the average total amount, for the preceding 12 months, of the payment transactions carried out by the person concerned, including any agent of which the person bears full liability, does not exceed 3,000 euros over a month. This criterion is assessed against the total planned amount of payment transactions in its business plan, unless the competent authorities require an adjustment of this plan;
and
(b) none of the natural persons responsible for the management or exercise of the activity has been convicted of offences related to money laundering, the financing of terrorism or other financial offences. »
35. The immediate objective of this article is to allow Member States who wish to develop a very light regime (no necessary accreditation, no rules on capital, no rules on equity, no rules on legal control of accounts, etc.) to minors who would like to offer payment services for limited amounts, according to the directive, to a maximum of 3 million euros per month, or 36 million euros per year.
36. Considering the 15GA explicit the real objective of section 26: "Because it is desirable to record in a register the identity and location of all providers of money transfer services and to grant them to all a certain recognition, regardless of their ability to fulfil all the conditions of registration as a payment establishment, so that no one can be traced back to the underground economy, and For these purposes, Member States should record these providers in the register of payment establishments, without applying all or part of the conditions of approval. However, it is essential to subject the possibility of a waiver to strict conditions regarding the volume of payment transactions. Payment institutions with an exemption should not have the right to establishment or the right to free service and should not indirectly exercise these rights when they are members of a payment system" (our emphasis).
37. The presentation made by the Minister of Economy of this article in his consultation document (9) confirms that the objective is not here to stimulate competition by opening the market to minor actors who do not have the capacity to comply with all the rules imposed on actors who have exceeded a certain size, but rather to know whether it is best to legalize a practice (in this case, the provision of payment services) to avoid keeping certain actors in hiding and
38. These debates on the merits of legalization, or not, of certain practices, have little to do with the objectives and requirements of competition law. In addition, if reference is made to the forecasts made by the United Kingdom (10) which estimates that the operative part of section 26 could relate to approximately 2,500 entities, the maximum amount of payment transactions through these structures would be approximately 90 billion euros per year. If this figure is compared to 25,000 billion euros that are exchanged each year in France by means of the only instruments of scriptural currency, the activity that these marginal actors could represent would eventually sum up 0.36% of the exchanges carried out in France via scriptural payment instruments. The weakness of these values is that the option opened by paragraph 1 of Article 26 of the Directive is not likely to exert a significant influence on the level of observable competition in the French market of means of payment. Finally, the directive excludes any possibility of passports for these minor actors, which gives them no influence on trade between member states.
39. For all of these reasons, the Autorité considers that it does not have any comments on the choice made by the draft order not to use the option of section 26-1 of Directive 2007/64/CE.
2. Articles 47-3° and 48-3° of the directive
40. The directive contains two articles relating to the information obligations that the payment service provider has with respect to the users of these services.
41. These articles are thus written:
Article 47. “Information for the payer regarding individual payment transactions:
1. After the amount of an individual payment transaction has been debited from the payer's account or, where the payer does not use a payment account, after receipt of the payment order, the payer's payment service provider shall, without delay and in accordance with the terms and conditions set out in section 41, paragraph 1, provide the following information:
(a) A reference allowing the payer to identify each payment transaction and, where applicable, information relating to the recipient;
(b) The amount of the payment transaction expressed in the currency in which the payor's payment account is debited or in the currency used in the payment order;
(c) The amount of all fees applied to the payment transaction and, where applicable, their breakdown, or interest due by the payer;
(d) Where applicable, the rate of exchange applied to the payment transaction by the payer's payment service provider and the amount of the payment transaction after that currency conversion; and
(e) The debit value date or the date of receipt of the payment order.
2. A framework contract may provide for a condition that the information referred to in paragraph 1 must be provided or made available periodically, at least once a month, and in agreed terms that allow the payer to store and reproduce the information on an identical basis.
3. However, Member States may require that the payment service provider provide paper information free of charge once a month. »
Rule 48. “Information intended for the recipient regarding individual payment transactions
1. After performing an individual payment transaction, the recipient's payment service provider shall, without delay and in accordance with the terms and conditions set out in Article 41, paragraph 1, provide the following information:
(a) a reference allowing the recipient to identify the payment transaction and, where applicable, the payer, as well as any information provided during the payment transaction;
(b) the amount of the payment transaction expressed in the currency in which the beneficiary's payment account is credited;
(c) the amount of all fees applied to the payment transaction and, where appropriate, their breakdown, or interest due by the recipient;
(d) where applicable, the exchange rate applied to the payment transaction by the recipient's payment service provider and the amount of the payment transaction prior to that monetary conversion; and
(e) the credit value date.
2. A framework contract may provide for a condition that the information referred to in paragraph 1 must be provided or made available periodically, at least once a month, and in agreed terms that allow the recipient to store and reproduce the information on an identical basis.
3. However, Member States may require payment service providers to provide free paper information once a month."
42. These two articles are very similarly written, the main change to the recipient of the information: section 47-3 concerns the payer, and section 48-3 concerns the recipient of the payment.
43. On the merits, there is little to say about these two articles, very prescriptive and which therefore leave only a margin of appreciation reduced to the Member States. They can only decide whether or not to provide this information on a monthly basis. The primary objective of the directive is to promote transparency of relations through detailed information; the secondary objective is of a consumerist nature, as confirmed by the option open to 3° of articles 47 and 48 which allows to impose free.
3. Article 52-3 of the Directive
44. The Directive contains an article 52-3 relating to fees applicable to a payment transaction in writing (11).
"Art. 52-3. - The payment service provider does not prevent the recipient from applying fees or proposing a reduction to the payer for the use of a particular payment instrument. However, Member States may prohibit or limit the right to apply for costs in view of the need to encourage competition and promote the use of effective means of payment.
Considering 42 concerning article 52-3: (42) In order to promote transparency and competition, the payment service provider should not prevent the recipient from claiming to the payer fees related to the use of a specific payment instrument. Even if the recipient should be free to charge costs for the use of a particular payment instrument, Member States may decide to prohibit or limit this practice when they consider that this is justified by an abusive pricing or may have a negative impact on the use of a particular payment instrument, given the need to encourage competition and the use of effective payment instruments.
45. Section 52-3 is therefore composed of two parts:
The first concerns the payment service provider (most often a bank) and prohibits it from inserting into its contracts any "no overload rule" also called "no discrimination rule". The directive does not open any option on this point: for payment service providers, it is absolutely "prohibit" and Member States have no discretion.
Moreover, in terms of the transfer technique, since the guidelines do not have a direct effect in the horizontal relations between private persons, this obliges the State that transposes the directive to insert into its legal corpus a rule prohibiting payment service providers from prohibiting "overloading".
Finally, this first sentence prohibits payment service providers from prohibiting recipients from making discounts. This "ban to ban" is not optional either.
The second is concerned with the recipient of the payment (most often a merchant) whose freedom to overload or offer discounts is rendered total as a result of the first sentence. Considering 42, the objective of this measure is to promote transparency and competition in the area of means of payment.
However, the directive leaves Member States with an important margin of appreciation for what the beneficiaries of the payments can do with their new freedom: in fact, Member States may decide to ban "overload" or to limit it, with little guidance on the prohibitions and/or limitations that can be made. While the margin of appreciation left to the Member States is broad in comparison with the other options opened by the Directive, it is not total, however, since the Community text regulates this freedom of appreciation by enjoining Member States to take into account two criteria, namely the need to "encouraging competition and (to) promote the use of effective means of payment". Article 52-3 requires that these two principles be respected at the same time and therefore does not offer the option of choosing between these two principles. In other words, they are cumulative and non-alternative.
46. Before approaching the substance of this article, it is necessary to briefly recall its origin to understand its spirit.
(a) History of Article 52-3 of Directive (12)
47. The proposal for a directive adopted by the College of Commissioners on December 1, 2005 did not contain an express provision on "the prohibition of prohibiting": there was therefore no express condemnation of the "no overload rule", but a simple mention (draft article 40 of the proposal) of the capacity left to users of payment instruments (beneficiary and payer) to agree on a discount or discount. The draft directive was then forwarded to the European Parliament and the Council of the European Union for adoption in the co-decision procedure.
48. With regard to the European Parliament, the draft legislative resolution of the European Parliament, prepared on the report of Mr.Jean-Paul Gauzès, proposes to significantly amend Article 40 of the proposed directive. Indeed, the statement of the reasons for the text from the commission notes that the main obstacles to "overloading" are not included in national laws but in contracts that payment systems and banking institutions have signed to traders (the "no overload rule").
49. The amendments adopted by the Parliamentary Committee are as follows:
Added a dash: "1. Payment service providers not more than third parties may not prohibit the payment service user from requesting an increase or offering a discount in the event of use of a particular payment instrument. »
The advanced justification is: "The new dash removes the non-discrimination clause that many payment service providers or banks enter into their contracts with merchants. The non-discrimination clause prohibits merchants from intelligible for their customers the costs of payment services and thus prohibits them from using the most effective method of payment. The competition authorities of several States have since abolished this clause. »
In addition, the bill emphasizes the importance of the ability of the merchant to "overload" the use of a given payment instrument by adding another drawer to the draft directive: "2. When, for the purpose of using a particular payment verification instrument, a payment service provider or a third party requests an increase, an agreement on this point is reached between the payment service provider and the payment service user before the start of the payment transaction. »
The explanation is as follows: "The text proposed in paragraph 2 gives the issuing bank (the service provider) the possibility to forbid the merchant (third party) to request an increase to the consumer (the user of the payment service). It seems essential to allow the merchant to request an increase, as it would give him a broader negotiating margin in his relationship with the payment service provider. On the other hand, the cost of different payment instruments would become more transparent to the consumer. Finally, this solution would be beneficial to all users of payment services, given that transparency will result in a decline in interbanking commissions and, consequently, a lower price of goods. »
50. The proposed amendments from the perspective of the adoption in plenary of the opinion of the European Parliament in first reading are, however, an evolution from the amendments that have just been recalled. Indeed, in order to speed up the adoption of Directive 2007/64/CE, which was considered very important, an "informal trilogue" (13) was put in place. As part of this trilogue, the specificity of Danish law (14) was referred to as a system prohibiting banks from collecting fees from traders for the encumberment of payment cards issued in Denmark and prohibiting, incidentally, any "overloading" by traders. This second prohibition was logical since traders, paying nothing, had nothing to "overload."
51. The compromise text from the informal trilogue, which was adopted in identical terms by the European Parliament and the Council of the European Union, is the current article 52-3 of the directive and its drafting reflects the willingness of European parliamentarians to make the market more transparent for the consumer, while authorizing the maintenance of the balance found by Denmark. In principle, he reiterates the amendments that had been proposed by the parliamentary commission (the prohibition of the "no overload rule" and the ability to "overload" reaffirmed for the merchant), but sets this principle with an exception to take into account Danish specificity. This filiation makes it possible to understand why the Directive's No. 42, when it refers to the possibility of prohibiting "overloading", refers to cases in which the Member States "deem that this is justified by an abusive pricing": in fact, any "overloading" practised by a merchant who does not suffer a fee is a form of abuse.
52. However, since the option opened by Article 52-3 of the Directive was not restricted to the particular case of Denmark but was drafted in general terms, the European legislator had been instructed to supervise this option by two limitations also drafted in general terms: the use of the option should be taken into account the need to encourage competition and the need to promote the use of effective means of payment.
(b) What are the limits of the option open to Member States by Article 52-3?
53. What freedom does the recall of these two principles in article 52-3 leave each Member State, and in this case to France, to transpose article 52-3? In order to know this, the two principles must be analysed separately and taken into account that France must respect them cumulatively. However, the first principle (encouraging competition) clearly argues in the sense of a freedom left to the merchant to practice, if he wishes, the "overloading" as unambiguously expressed in the view of 42 that the ability left to the recipient of the "overload" payment has the objective of "encouraging transparency and competition" in the area of means of payment. Therefore, a pure and simple ban covering all possible assumptions cannot be interpreted as respecting this first principle of the directive, even taken in isolation.
54. On the other hand, the prohibition of "overloading" could, to some extent, be compatible with the second principle (favoring an effective means of payment) and, more so, in the hypotheses referred to in Considering 42. Indeed, this consideration lists some hypotheses for which it would be legitimate, according to the European legislator, to prohibit or limit the "overloading": for example, in order to allow Member States to fight certain practices of payment recipients such as the practice of "abusive pricing": thus, it might be envisaged to forbid the beneficiary from "overloading" if he himself does not suffer any cost, as the Danish case is. If we go beyond the particular case of Denmark, it would also be possible to prohibit payment recipients from "overloading" more than the costs they actually face, as this surplus "overload" would constitute an abuse on their part.
55. Apart from these assumptions to prevent abuse by the recipients of payment, the main objective that could legitimately pursue a Member State that would like to use the option of Article 52-3 is to "facilitate the use of effective means of payment" or, to resume the terms of Considering 42, to combat any phenomenon "that could have a negative impact on the use of a given payment instrument".
56. This second principle is more equivocal and assumes that all means of payment do not have the same efficiency. Beyond the debates on the partially substituteable nature of the various payment instruments (15), it is generally accepted that the effectiveness of the various means of payment is not the same: the fiduciary currency is thus frequently presented as a means of inefficient payment, posing problems of fraud (fals currency, money laundering, tax evasion, etc.) and presenting a significant cost to the community (attacks of the vans distributions In the same way, the so-called "paper" means of payment are generally considered to impose significant processing fees to the various actors involved (the cheque is edited on a special paper, pre-filled and requiring a special ink on line CMC7, it requires a lengthy cash passage time, it presents a higher rate of fraud than other means of payment, etc.) and thus are considered less effective than more recent means of payment. It is for this reason, moreover, that the cheque does not appear in the list of European means of payment of tomorrow (the so-called SEPA payment means) (16).
57. Conversely, dematerialized means of payment (mainly the card, the transfer and the automatic debit) are considered less expensive, better protected against fraud and faster to exchange than others. However, there may be situations in which a total freedom left to beneficiaries to "overload" means of payment could lead to a less effective means of payment compared to a more effective means of payment. Indeed, to the extent that one of the cost stations experienced by the trade holds to the interbanking commissions affecting the use of certain means of payment, it is possible that a merchant is tempted to "overload" the payment card in relation to the use of the fiduciary currency since the cost it feels is more important in the case of the card: this "overloading" could in turn lead the payors to profit In the same spirit, a merchant could decide to "overload" the card (which includes interbank commissions) in relation to the cheque (which, in France, no longer includes a commission to the transaction since 2007): there again, this "overloading", if it were generalized, could favor the check in relation to the card, thus promoting a means of payment considered "globally less efficient" compared to a means of payment considered "effective". These are the assumptions that Directive 2007/64/CE has heard to cover when it has allowed Member States to prohibit or limit "overloading" "in view of the need (...) to promote the use of effective means of payment".
58. However, if the indiscriminate use of "overloading" could, at least in theory (17) and in the limited assumptions that have just been recalled (18), lead to a less effective way of payment at the expense of a more effective means of payment, the general prohibition of "overloading" will have exactly the same effect of risking to promote ineffective means of payment, but in far more assumptions than in the previous case.
59. Indeed, prohibiting overloading will make that, in comparable quality, the use of such payment card with very high interbanking commissions will be charged to the user at the same price as the use of such other card with lower or zero interbanking commissions. In a normal competition situation, and since the hypothesis is that of two cards of comparable quality, the card with the lowest cost should normally prevail over the card with the highest cost; However, this is not what will happen in the event of a general ban on "overloading" since:
“– issuing banks are encouraged to provide consumers with cards with the highest interbank commissions as these interbanking commissions are incomes for them;
"– the merchant will be obliged to accept all the cards (HACR rules) and will not be able to send to the price signal user as he has the prohibition of "overloading" the most expensive card (no overload rule);
“– the consumer, deprived of any price signal and of comparable quality, will use indifferently any card that the bank will distribute to it, so preferably the card with the highest interbanking commissions.
“– the map that will most develop is the most expensive card.
60. Here, it can be seen, the general prohibition of "overloading" favours the use of the least effective means of payment, because users do not have the right rate signals. It is for this reason that the competition authorities have already stated in the past, and continue to do so today, that the prohibition of "overloading" means that competition specific to the means of payment plays in favour of rising prices (in favour of, in comparable quality, the most expensive instruments of payment at the expense of the cheapest instruments) and not in favour of lower prices.
61. More importantly, not only can the total prohibition of "overloading" promote the use of the most effective means of payment, but it will still tend to produce this effect more and more as the payers abandon themselves the least effective means of payment, a trend observed in Europe, especially in France (19). Indeed, the assumptions in which the prohibition of "overloading" promotes modern means of payment against cash and paper means such as the cheque will gradually disappear, while the assumptions in which the total prohibition of "overloading" promotes both modern and uneffective means of payment (20) against modern and effective means of payment go, they multiply.
62. In addition, if the "overload" is allowed, the banking system will have an interest in offering models of low-cost payment cards. Indeed, if we look at things from the perspective of the consumer now, the ability of the merchant to "overload" allows the consumer to perceive, through the differential rates offered at the payment, the costs associated with the use of the various means of payment. Consumers are then able to adjust their demand at prices and substitute for the most expensive means of payment of cheaper means. These consumer arbitrations will put banks in competition and, ultimately, push financial institutions to lower the level of interbank commissions.
63. It is the result of all of the foregoing that, if a targeted prohibition of "overloading" may, in some cases, "facilitate the use of effective means of payment" as required by the directive, it is also certain that a total prohibition of "overloading" may promote the use of ineffective means of payment, which is contrary to the second principle laid down in section 52-3 of the directive.
64. In conclusion, a total ban on "overloading" does not appear to be consistent with the first principle laid down by the directive in section 52-3 of the directive and is only partially compatible with the second principle laid down by the directive in the same article. This analysis is a fortiori when the two principles of Article 52-3 are applied cumulatively since each ban or limitation measure taken by a Member State must simultaneously respect both principles.
65. It may be noted that Member States, including France, could not fully ignore these limitations on their freedom of appreciation since the European Commission had distributed in September 2008 a document (21) on how to interpret article 52-3 and considering it 42.
66. Therefore, what the Directive imposes on Member States that wish to prohibit or limit "overloading" is to target the prohibition and/or limitation measures(s) by justifying each infringement so made to the freedom of the merchant in the light of the double principle established by the Directive: greater competition and the development of effective means of payment.
4. Section 72 of the directive.
67. The draft order chose not to transpose this article, which allows Member States to impose on payment providers, for purely national operations, shorter execution times than those provided by the directive. To the extent that the directive imposes J+1 for non-paper payment instruments and leaves the possibility of authorizing J+2 for paper instruments, this means the French Government has decided not to impose shorter deadlines than those just recalled.
68. Unlike the options for the other sections of the directive dealt with in this notice, the non-taxation of a shorter period will not lead to a uniform practice of operators since, on the contrary, this non-tax will allow them to propose a diversified offer (some will therefore, for example, propose J+1, and others of J). In the absence of a uniform practice, it is not necessary for the Autorité de la concurrence to issue an opinion on the subject.
III. ― Proposed Order transposing Directive 2007/64/CE
1. The draft transposing of Article 26 of the Directive.
69. As noted above, the Autorité de la concurrence has no observations to be made on the choice of not using the option opened by section 26-1 of Directive 2007/64/CE.
2. The proposed transfer of articles 47-3 and 48-3 of the Directive
(a) The transposition of articles 47-3 and 48-3 of the directive in other Member States.
70. According to the document provided by the European Commission as the state of the transfers already made or under way in the Member States, the Member States that represent the largest volumes of payment have chosen not to exercise the option opened by the directive in articles 47-3 and 48-3 and thus not to impose on their payment providers the free monthly supply of various information relating to payment transactions. In fact, to mention only the largest pay volume providers, the UK and Germany have decided not to charge this information free of charge.
(b) The transposition of articles 47-3 and 48-3 of the directive by France.
71. On the formal level, the draft order has chosen to transpose into a single article the double article of the directive, this editorial economy using the term "user" of payment, instead of first considering the case of the "payer" and then that of the beneficiary as the directive does. As a matter of fact, the government project submitted to the Authority is as follows:
"Art. L. 314-14. I. - After the completion of a payment transaction, the payment service provider will promptly provide the information specified in a Minister's order for the economy to the user on paper or on another sustainable basis.
“II. ― For payment transactions under a framework contract for payment services, the parties may, however, make a contractual decision that such information will be provided or made available on another periodicity that may not exceed one month, without prejudice to the provisions of Article L. 314-7 II.
"The payment service provider may not refuse to issue free of charge on paper, at least once a month, the information referred to in I of this article, without prejudice to the provisions of Article L. 314-7.
"III. ― The provisions of I and II of this Article shall apply to payment transactions made under an account agreement as provided for in Article L. 312-1-1".
72. With regard to the merits, as indicated by the emphasis made by us, France has chosen to impose the monthly free supply of the information that will be detailed by decree of the Minister responsible for the Economy.
3. The draft transfer of section 52-3 of the directive
(a) The current state of French law.
73. There is no provision that, under national law, restricts the freedom of payment recipients to claim fees to payers as a result of the use of a particular means of payment, with the exception of payments made by fiduciary currency. Indeed,Article R. 642-3 of the Criminal Code obliges the recipient to accept the tickets and coins "for the value for which they are priced".
74. Apart from this restriction, traders are now free to differentiate their selling prices according to the means of payment chosen by their customers. If such a differentiation remains rare in France, it is because French banks insert in the contracts signed with traders the "No Surcharge Rule" or " rule of non-discrimination". The ban on differentiating prices is therefore contractual, not legislative or regulatory.
75. Therefore, the draft order could be limited to prohibiting banks from restricting the tariff freedom of merchants, in accordance with the directive; for the rest, the principle of the directive corresponds to the current state of French law.
(b) The transposition of Article 52-3 of the Directive in other Member States
76. The Autorité de la concurrence has, at the time this notice is rendered, only intentions expressed by the Member States regarding the option opened by Article 52-3 of the Directive and the texts of transposition of the United Kingdom and Spain.
77. With regard to Member States that have decided not to limit the right left to the beneficiary of the payment to "overload" a payment, the United Kingdom is found, with a text thus written:
"(3) The payee's payment service provider may not prevent the payee from : (a) requiring payment of a charge by ; or (b) offering a reduction to, the pay for the use of a particular payment instrument. »
78. And Spain, with the following text:
“3. Será nula toda cláusula que impida al beneficiario de una orden de pago exigir al ordenante el pago de una cuota adicional u ofrecer una reducción por la utilizacián de un instrumento de pago específico. En todo caso, las cuotas adicionales que pudieran imponerse por el uso de instruments de pago específicos no podrán superar los gastos diferenciales en que efectivamente incurra el beneficiario por la aceptación de tales instrumentos.
Cuando, en la utilización de un determinado instrumento de pago se exija el pago de una cuota adicional por su uso, se informaróde ello al usuario de servicios de pago antes de llevarse a cabo la operación. » (23)
79. In addition to the United Kingdom and Spain, there are Germany, the Netherlands, the Czech Republic, Hungary, Slovenia and Latvia. Moreover, without their final decisions, Sweden, Ireland and Estonia informed the European Commission that they intended to allow "overloading".
80. The following countries have not yet made their choices known to the Commission: Italy, Portugal, Austria and Belgium.
81. Without finalizing the issue, they indicated that they intended to ban or limit "overloading": Poland, Slovakia and Malta.
82. Finally, decided to limit the "overloading": Finland and Bulgaria while announced their intention to ban the "overloading": France, Denmark, Luxembourg, Romania, Lithuania and Cyprus.
83. The examination of the state of the transpositions within the European Union is of particular importance in relation to the issue of "overloading": in fact, unlike other options opened by the Directive, the issue of "overloading" is considered central by several competition authorities who have had to analyse it recently. The two best known examples are the European Commission in the case of Mastercard commitments and in the case of the notification of grievances sent to VISA on the one hand, and the Australian authority on the other.
84. With regard to a major issue, it is preferable, in order for the domestic market to become a reality, that an instrument of community harmonization as set out in Directive 2007/64/EC will receive the most uniform transposition possible, including the options it opens. From this perspective, if the volumes of operations covered by the Member States that have announced to the European Commission their intentions to Article 52-3, it is interesting to note that:
“—States that will allow the “overloading” in a certain way represented (24) in 2004 about 57% of the payment volumes exchanged by users of means of payment (excluding financial institutions);
“—States that, outside France, will limit or prohibit in a certain way “overloading” accounted for less than 4% of the payment volumes exchanged by users of means of payment (excluding financial institutions);
"—States that have not yet chosen the way in which they intend to transpose Article 52-3 of the Directive accounted for approximately 18% of the payment volumes exchanged by users of means of payment (excluding financial institutions);
“At last, France alone represented 21.48% of the payment volumes exchanged by users of means of payment (excluding financial institutions);
85. The creation of a real domestic payment market, which will allow competition at the European level, would argue that France, which represented 21.48% of the payments in 2004, opts instead in favour of a solution chosen by the States that together account for 57% of the volumes of payment than for a solution chosen by the States that together represent less than 4% of the volumes exchanged. Indeed, if France allowed the "overload" in turn, it would ensure a common rule of almost 80% of the payment volumes exchanged in Europe, instead of splitting the European market in two.
86. Beyond this aspect which is not decisive in law, the substance of the draft Government's transposition remains to be examined.
(c) The draft transfer of section 52-3 of the directive
87. With respect to section 52-3 of the directive, the draft order is to add a section in the monetary and financial code as follows:
“Section 5
« Fees or discounts for the use of a given payment instrument
Art. L. 112-11. ― When the recipient of a payment proposes a reduction to the payer for the use of a particular payment instrument, he shall notify the payer before the initiation of the payment transaction.
On the other hand, the recipient cannot apply fees for the use of a particular payment instrument."
88. Concretely, this means that France generally prohibits payment recipients from being able to "overload".
89. However, we saw in the previous part that it was doubtful that such a transfer would be consistent with the requirements of the directive at the end of section 52-3 and that Member States should both encourage competition and encourage the most effective means of payment.
4. The draft transfer of section 72 of the directive.
90. As stated above, since the option preferred by the draft order in its transposition of Directive 2007/64/CE is not to impose a uniform practice on payment service providers less than J + 1 in respect of the time limits for the execution of national payment transactions, diversity remains the rule and the Autorité de la concurrence does not have to decide on the choice made by the Government.
IV. Analysis
91. In the first place, the Autorité de la concurrence has only arranged a very limited time to give an opinion on the complex topics described above, which must be analysed taking into account the also complex environment in which they register. The most sensitive question about competition is that of "overloading". That is why the Autorité will focus its remarks on this point. The other subject (articles 47-3 and 48-3) will be dealt with more quickly.
I. ― Analysis of the transposition of sections 47-3 and 48-3 of the Directive.
92. The possible breaches of competition constituted by the proposed option (to impose a uniform practice on operators who prevent them from pursuing independent strategies and creating a charge for them, which may not exist for operators of other Member States) are weak given the limitedness of the obligation to the payment service provider. On the other hand, the value of the measure for good information from users of means of payment is undeniable. The Autorité de la concurrence can only approve the choice made by the draft order in its proposed transfer, without further analysis being required.
II. ― Analysis of the transposition of section 52-3 of the directive.
93. As we have seen, it does not seem possible to impose a total ban on "overloading" because section 52-3 of the directive regulates the freedom of appreciation enjoyed by Member States by requiring them to justify each ban and/or limitation measure based on the double principle of "encouraging competition" and "encouraging the use of effective means of payment".
94. Therefore, a faithful transposition of section 52-3 requires work on the scope of the prohibition and/or limitation measures of "overloading". To do so, it should be recalled the results obtained by the academic work on the issue of "overloading". Then an empirical study of the results obtained by the Australian Central Bank will be proposed. Finally, a number of avenues will be submitted to the Government, which aims to reconcile an accurate transposition of the Directive, respect for the objectives of competition law and the pursuit of the purposes sought by the Government. Drafting proposals will be attached to the notice.
Economic analysis of competition in payment systems:
level of interbank commissions and effect of the "no overload rule"
1. Costs and benefits of payment transactions
95. A payment transaction involves two players: the payer and the recipient of the payment. The recipient is an offerer of goods or services, for example a merchant who sells goods or services. The payer is the customer who buys these goods or services. Different payment methods allow these transactions to be carried out: cash, cheques, payment cards (immediate debit, deferred debit, credit cards), electronic money carrier. Each of these methods brings benefits and costs to the payer and the recipient of the payment.
96. The costs and benefits of the different payment methods are financial (e.g. buying a safe) and non-financial (e.g. time spent managing species); some vary with the number or amount of transactions, others are fixed. The risk dimension (e.g. probability of a burglary) must also be taken into account. The European Commission is currently launching an investigation to identify and measure the relative costs and benefits of different means of payment for traders. This survey will last seven months from the signing of the contract and will cover State territories covering most of the payment volumes exchanged in Europe.
2. The risk of underutilizing effective means.
97. In a payment transaction, the payer decides on the method that he uses among those accepted by the payment recipient. To make this decision, the payer compares the advantages and disadvantages of the different payment methods. It does not take into account the impact of its decision on the recipient.
98. For example, the recipient may benefit from a dematerialized payment. The customer does not take into account this advantage of the merchant in his or her own arbitration, which may result in under-optimal use of this means of payment (if the payer withdraws from that means a lesser utility than that of the beneficiary).
99. In general, a means of payment is effective if the benefits it brings to all parties concerned (commerant, customer and banks) are higher than the costs it entails for them. When deciding to use such or such means, the customer does not integrate the costs and benefits that its decision engenders to the merchant, which may lead to non-effective collective choices.
100. The most natural way to solve this problem would be for the merchant to encourage customers to use the means of payment that provide the highest net profit, by granting a discount to customers who use these means. Historically, such discounts were not often observed in practice, either because they were not legally or contractually permitted, or because of the transaction costs they would have involved for customers and traders.
3. The optimal level of interbank committees.
101. A more practical method is based on the use of interbank commissions paid by the bank (trader's bank) and collected by the issuing bank (card holder's bank).
102. These commissions increase the cost of acquiring banks, which widely affect their merchant customers. They therefore pay fees from their banks, and thus contribute to financing the payment service.
103. On the other hand, interbanking commissions reduce the cost received by issuing banks (which perceive the said commissions) and can therefore encourage them to reduce prices paid by cardholder consumers. The objective of interbanking commissions is therefore to give price signals to consumers, signals that allow them to learn about the relative effectiveness of the means of payment.
104. The level of interbank commissions that maximizes the surplus of the two categories of users (payers and beneficiaries of payments) depends on the extent to which issuing banks affect them on their cardholder clients.
105. If the issuing banks repercuss the commissions on the carriers, the optimal level of the interbanking commission from the user's point of view can be relatively high, as the commission fully plays its role as a incentive to use the cards. On the other hand, if the issuing banks have little impact, the optimal level of the commission is low, as it leads the banks to extract surplus from the merchants (on whom they impact the commission) without substantially benefiting the cardholders or, therefore, inducing them to use their card.
4. ― Because of the low resistance of traders, the chosen level of commission
by banks can be excessive (superior at optimal level)
106. In practice, banks and payment platforms choose the level of interbank commissions. There is a presumption that the banks collectively set too high commissions over the optimal level described above, taking advantage of what the merchants, on whom the said commissions are impacted, could not refuse certain cards: in fact, a merchant who would refuse the cards while the others would accept them would be penalized against their competitors; merchants are thus caught in a "prisoner's dilemma", which explains their weak "resistance" in the face of high bank rates.
107. The fear of losing customers thus pushes traders to accept means of payment even when they are expensive for them. If they cannot overload the payment transactions carried out by this means, they will affect the corresponding costs in the prices of goods sold to end consumers.
108. All consumers, whether or not they use these expensive means of payment, support their costs through the prices of the products they buy. Those who do not use costly cards subsidize those who use such cards. Not using costly cards does not allow consumers to escape the general price increase.
5. The possibility of overloading traders increases transparency, facilitates consumer arbitration and encourages competition between means of payment.
109. When selling prices depend on the means of payment, consumers refer to different means at their disposal. Such consumer arbitrations were observed in Great Britain after the Ikea distributor started overloading credit cards: many consumers turned to cheaper debit cards.
110. The direct effect of an overload on a payment method is therefore to reduce the use of that payment method by consumers. The indirect effect of such overload, however, is to exert pressure on banks to reduce the level of commissions: overloads prevent, at least in part, banks (auto-limitation) from exploiting the inability of traders to refuse cards.
111. In addition, overloads prevent consumers who use low-cost species or cards from subsidizing those who use costly cards, by supporting (without knowing and any means of payment used) too high prices for the goods they buy. Overloads are a price signal that allows consumers to take into account all the costs of the cards they use.
112. The freedom for traders to overload the means of payment chosen by their customers allows them to exercise their choice of use by taking into account all the relevant costs. In the long term, price transparency and competition between means of payment exerts pressure on the banking system to reduce interbanking commissions.
113. It is important to note that the possibility for traders to practice tariff overloads is not equivalent to the possibility of making discounts. It may be that interbanking commissions (and the charges made by the resulting acquisition banks) are so high that a merchant prefers to be paid in cash only with a payment card. But the merchant is unable to make discounts for cash payments, as the prices are expressed by agreement in the case that the payment is made in cash (the liberating value of the species). The only way to transmit a price signal is to defer bank charges on customers, using a "overload" for card payments. The only capacity to apply discounts therefore does not guarantee that sufficiently clear price signals can be sent to consumers.
6. The market power of traders may, in some cases, lead to too high overloads:
114. If a merchant is in monopoly or has a strong market power, he is not (or is little) disciplined by fear of losing customers to the benefit of his competitor.
115. If overloads are not allowed, it may exercise its market power by increasing the prices of the goods or services it offers, but this does not affect the total cost of the means of payment for users, nor, therefore, their arbitrations between different payment methods.
116. On the other hand, if overloads are allowed, the merchant can charge his customers a surcharge higher than the net cost that the payment method represents for him (27). In doing so, it reduces the number of transactions per card, but gains more on each payment. Like any operator with market power, it will refer between reduction of quantities and increase of unit margin.
117. The market power of some traders could, in theory (28), lead to high overloads and suboptimal transaction volumes. The risk could exist that in the presence of overloads, the market power of merchants is added, by a mechanism similar to the phenomenon of double marginalization, to that of the issuing banks to increase the price of the means of payment supported by consumers, thus limiting its use (29).
7. Should price increases be feared if traders had the practical possibility to put in place tariff overloads?
118. An essential question to consider is the possible inflationary effect of the possibility left to traders to apply tariff overloads on means of payment. Several elements must be considered to address this issue.
119. In the current situation where, because of the clauses imposed by the payment systems or by the banks, merchants cannot impose tariff overloads for all means of payment, merchants transmit the net costs induced for them by the use of the means of payment on their customers, in the same way that the costs of supply, logistics, etc. are transmitted. However, this transmission is done indifferently: costs for the merchant induced by payment transactions are shared with all consumers, whether they use expensive means of payment or, on the contrary, very economical and effective. To determine the amount of fees to be charged to the consumer in its prices, the merchant must calculate the weighted average of the average net cost that the merchant must pay with his bank for the use of the means of payment. According to its market power, the elasticity of the demand, etc., it then integrates a little more or a little less than this amount of reference in its prices.
120. In other words, in the current situation, consumers already pay for the use of their means of payment but they pay in a hidden way (the price displayed by the trade already incorporates the cost of the means of payment, but there is no repository that would allow consumers to become aware of the existence of this cost and measure it), and costly (as long as it is the total of the costs of all the means of payment accepted
121. By comparison, if the possibility of overloading was left to merchants, the merchants would cease to indifferently impact the net costs associated with payment transactions, and would proportionate the amount of payment services charged to the net costs induced by each consumer category. For example, if the cost of using credit cards exceeds the average cost of using the means of payment, the amount of the invoice paid by credit card would be higher than the amount claimed in the current situation without overload. Conversely, if one imagines that the use of debit cards has a net cost less than the average cost of using the means of payment, the amount of the invoice paid in debit card would likely be less than the amount of the same invoice in the current situation without authorized overloads.
122. If tariff overloads were allowed, consumers would therefore be billed according to the costs they induce for traders, thus allowing them to perceive clear price signals and thus determine the optimal way of payment for the whole (consumer; merchant). In general, in the event of "overloading" authorization, users of less expensive payment instruments than the average for traders would pay less than in the event of a "overload" ban, while the inverse situation would prevail for users of means of payment at high net costs.
8. Analysis of the utility of different consumer categories (30)
123. In the light of previous developments, it appears that all categories of consumers would not be affected in the same way by the authorization of the overload. In general, and if one does not take into account any changes in the use of means of payment (31), one may consider that users of low-cost means of payment for merchants would gain in relation to a situation where overloads are prohibited, while those using expensive means of payment, in particular credit cards whose net cost exceeds the average cost of the instruments of payment, prefers. That is what was observed in Australia (see next part).
124. However, with respect to consumers using means of payment whose net costs to merchants are higher than average net costs, the possibility for merchants to practice tariff overloads would have a positive effect: a merchant who can overload a means of payment that is expensive has no interest in refusing this means of payment. He prefers to accept this payment method, even if he applies a tariff overload. Therefore, expensive means of payment from the point of view of merchants, in a situation of non-ban of overloads, will be more likely to be overloaded but also more often accepted by traders. This situation would limit the use of expensive means of payment by users.
B. ― Australian Experience Study
and recall of the particular case represented by the Danish experience
1. Study of experience in Australia:
125. The Australian experience gives interesting insight into the impact, in practice, of the "overloading" on the economy. Indeed, in this country have been put in place a number of regulatory measures relating to means of payment, in particular on payment cards, including the prohibition on payment systems and payment service providers to prohibit merchants from applying fees for the use of a given payment instrument (in other words, Australia has made the equivalent of a transfer of knowledge from the first sentence 52-3). Before returning to the measures taken, it is useful to point out that several card systems coexist in Australia: Australia has for many years a widely used low-cost debit card system (EFTPOS system). These cards are, to some extent, in competition with credit or debit cards marketed by Visa, Mastercard or American Express.
(a) Control measures implemented and their motivations.
126. It should be noted that the above-mentioned regulatory measures were adopted by the Payments System Board (hereinafter the Board), emanating from the Australian Central Bank established in 1998. The purpose of the Board is to determine the Central Bank's payment system policy, taking into account three objectives:
– risk control in the financial sector;
the effectiveness of payment systems;
competition in the payment services market (while taking into account the stability of the financial system).
127. In order to achieve these objectives, the Board took steps from 2002 to improve system transparency, to require the modification or removal of certain restrictions imposed on merchants by payment systems (especially the "No-Surcharge Rule", or NSR, which was deleted, and the " Honour-All-Cards Rule", or HACR, which was amended [32]) and to define a body of rules to send consumers of real-value means. In addition, the Board reduced the level of interbank commissions applicable to credit and debit cards (33). In fact, on a $100 transaction, the level of commissions was reduced by nearly $1 before the reform to $0.5 after on credit cards, by nearly $1 before the reform to $0.12 after for Visa and Mastercard debit cards, and by $0.20 to $0.05 for EFTPOS card It is useful to note that interbanking commissions are paid by the bank of the purchaser to that of the holder for all cards except those of the EFTPOS system (34) (35).
128. These various reforms have been carried out to address the previous situation: that of an insufficient level of competition in the area of means of payment, resulting in a lack of pressure on the level of interbank commissions. One of the main underlying arguments concerns the incentives of traders. According to the Board, there is a significant risk that the overall costs incurred by merchants as a result of the acceptance of a particular payment instrument (especially credit cards) exceed the overall benefit withdrawn by these same merchants of this acceptance. Indeed, when a new payment instrument appears, a merchant, taken individually, can conclude, by confronting the costs and expected profits, that it would be interesting to accept this new payment instrument, in part because it takes into account in the expected profits the fact that this acceptance will allow it to attract to it a larger clientele. However, it does not take into account the negative externality that it exerts at the same time on other traders by taking them market shares. To balance, which is once again reached when all traders accept the new payment instrument in question, and that each merchant has kept, in the end, the same customers as at the beginning, it is possible to arrive at such a situation where the overall costs induced by the payment instrument exceed the total profits when the payment instrument in question proves to be relatively expensive: a prisoner would have too much to lose in terms of customer refusal The additional costs generated can be used to subsidize the use of certain payment instruments, as it can be for credit cards, leading to observable competition distortions in the relationships between different means of payment.
(b) The Board ' s contradictory assessment of the regulatory measures adopted.
129. Between 2006 and 2008, the Board established a multi-time procedure to allow for a conflicting assessment of the consequences of the reforms adopted. For example, financial institutions, merchants, consumer associations, payment systems or banks were able to comment on a Board's preliminary conclusions document.
130. In practice, with regard to the removal of the NSR, it had an impact on the rates practiced by some Australian merchants. According to the category of merchants studied (very large trade, large trade, small trade and very small trade), the proportion of traders who overwhelm credit cards increases at the same time as the size of traders increases; This was between 14 (36) and 29% (37) in December 2008, and was between 1 and 7% in June 2005. Credit cards with the highest costs for traders have been more overcrowded than others (especially credit cards for tripartite systems). In addition, the Board considers that this reform, coupled with other measures, has led to a relative increase in the use of EFTPOS cards compared to credit cards.
131. With regard to consumers, they shared some concerns with the Board that it is interesting to recall in this opinion, as they could serve as a guide to the Government to limit the potential risks associated with the practice of "overloading".
132. For example, with regard to the level of overloads, the Consumer Law Action Centre, supported by payment system operators, argued that overload levels were, in some cases involving traders with high market power, higher than the actual levels of card acceptance costs. The parade envisaged by the Board was a time to explore the possibility of limiting the level of overloads to actual costs incurred by traders. However, the Board presented studies showing that the level of overload was, in fact, very similar, on average, to the costs incurred by traders, or even slightly lower 38). It was therefore rather reserved for a limitation of the level of overloads at the cost level for the merchant, considering that such a rule would limit, if at the margin, the pressure on interbank commissions.
133. In addition, the Consumer Law Action Centre has denounced overloads in cases where the beneficiary of the payment nevertheless offers the consumer only one means of payment. One of the examples cited is that of some low-cost airlines. The imposition of overloads would then hide part of the actual ticket price to the consumer. The Board did not express itself on this point.
134. Finally, an overload display deficit was noted, resulting in a lack of consumer information. The Consumer Law Action Centre noted that, in some cases, overloads were only revealed when the consumer was already engaged in the purchase. The Board addresses these concerns, and emphasizes that overloads on credit cards must be clearly revealed before the transaction begins, and even, ideally, at the entrance of the stores. It refers, in support of this, to the content of a guide on the "Tarification of Credit Cards by Contractors" that outlines the requirements in terms of posting overloads by merchants (39). In this guide, it is also reported that merchants should not remind consumers that they are forced to charge for the use of credit cards, nor assert that the overload only corresponds to the recovery of costs induced for themselves by the use of credit cards when the overload, in reality, exceeds these costs.
(c) Australian experience balance sheet
135. From a general perspective, the Board considers that the measures it has taken, in particular the removal of the SSR, have increased, although insufficiently, pressures on the levels of the interbanking commissions of payment cards. However, it considers that the reforms have achieved their main objectives, including, in particular, the improvement of price signals sent to users of means of payment, the improvement of transparency, especially for payment systems, and the creation of a more healthy competitive environment. It is estimated that social well-being gains are significant, and, with some assumptions in particular on the number of credit card transactions that have been replaced by EFTPOS card transactions, argued that these gains were in hundreds of millions of dollars (40). It should be noted, however, that this evaluation was much discussed by payment system operators and by the banking industry, which feels it overvalued.
136. If the Board takes a globally positive assessment of its reforms, it considers that they have not gone far enough and remain incomplete. But in all cases, the Board is very clear that it does not consider reverting to the reforms that have been put in place regarding the removal of the SSR and the changes already in force on the HACR. These measures are essential to strengthen the pressure to contain the levels of the interbank committees.
2. Recall of the particular case represented by Denmark:
137. As stated above, the study of the case of Denmark, cited by the French Government in support of its draft order, could not usefully guide the reflection because of the fundamental differences between the Danish system and the French system: in fact, the rule that prohibits "overloading" in Denmark only exists because, at the same time, Danish banks cannot take costs to the merchants for the fact that they are issued to the merchants for the encumbering of the credit cards.
138. In France, there is no more prohibition to charge merchants than a ban on interbank commissions or a prohibition on "overloading". Thus, market balances did not form the same way and it is not possible to reason by analogy.
C. ∙ Progressive implementation of SEPA (41)
139. "overloading" is a vector of transparency since it allows these consumers to send the right price signals. To resume the analysis in the amendment proposals made for the first reading of the directive proposal before the European Parliament, "the non-discrimination clause prohibits merchants from making intelligible for their customers the costs of payment services and thus prohibits them from using the most effective method of payment", or "It seems essential to allow the merchant to request a increase, because (...) the cost of the various payment instruments would become more transparent. Finally, this solution would be beneficial to all users of payment services, given that transparency will lead to a decline in interbanking commissions and, consequently, a lower price of goods".
140. However, the progressive development of the unique space for payments in euros (SEPA), which will be fully effective in 2011, will make consumers benefit from a choice of payment instruments much more varied than today. These instruments will have different uses, but also, for a given use (e.g. the general payment card), various profiles depending on the added value services that will be offered. Already in France there are payment cards that allow downloading music titles, or that have a custom drawing, etc. Each of these value-added services will give the payment instrument to which it is attached a cost profile that will make it unique. If the "overload" is prohibited, the consumer trading couple will never be able to arbitrate between these different payment instruments, and it is the general level of prices practiced by the trade that will be affected.
V. ― Conclusion
I. ∙ Conclusion on the transposition of articles 26, 47-3, 48-3 and 72 of Directive 2007/64/CE
141. With regard to the transfer of articles 26 and 72 of the Directive, the Autorité de la concurrence has no specific observations to be made.
142. With regard to the transfer of sections 47-3 and 48-3 of the directive in a new article L. 314-14 of the monetary and financial code, the Autorité de la concurrence issues a favourable opinion on the draft order.
II. ― Conclusion on the Transposition of Article 52-3 of Directive 2007/64/EC
143. With regard to the transfer of section 52-3 of the directive in a new article L. 112-11 of the monetary and financial code, the Autorité de la concurrence issued an unfavourable opinion on the draft order. Beyond the question of the non-compliance of this transfer with what is permitted under Directive 2007/64/CE, the draft order will not encourage competition between payment service providers and between the various payment instruments offered to the public.
A. ― The situation resulting from a ban on traders
differentiate their prices according to payment instruments used by their customers
1. The ban on differentiating prices makes the costs of different payment instruments
are impacted on consumers but in an occult way
144. This situation – which prevails today because of the standard clauses that banking institutions are signing today to merchants, and will prevail tomorrow if the draft order was to be maintained without change – that consumers are already paying for the use of their means of payment, but without being aware of it and without measuring its actual level. Indeed, as noted above, merchants include in their retail prices the sum of the costs associated with means of payment.
145. Therefore, the choice between the permission or the prohibition of "overloading" is not to choose between making the consumer pay for the use of his means of payment or exonerate him from that cost, but between masking him the price he actually pays or show him.
2. The ban on differentiating prices organizes a "backward subsidy"
to the detriment of users of the cheapest payment instruments
146. This effect has already been described in the notice: since traders can only offer a single price, regardless of the payment instrument used and its associated costs, this unique price they offer is the sum of the bank charges generated by all the instruments they accept. The user of inexpensive payment instruments will therefore pay more than it should because it subsidizes the user of more expensive payment instruments.
3. The ban on differentiating prices impoverished the offer of cheap payment instruments
and reduces acceptance of the most expensive payment instruments
147. The ban on differentiating prices crushes the market both at the bottom and at the top.
148. To the extent that consumers currently do not benefit from a full price signal (42) regarding the use of their payment instruments, they have no reason to choose such a card, whose value would be better, rather than any other card. As a result, issuing banks have no reason to put on the market cards whose costs would be particularly low as the consumer has an incomplete price signal and the merchant can only accept or refuse the card, too binary choice to be effective. In France, the level of interbank commissions for debit cards is considerably higher than, for example, in Australia, which allows "overloading".
149. On the other hand, if the most expensive payment instruments benefit from the "No Surcharge Rule" which allows them to be subsidized by the cheapest payment instruments, this advantage finds certain limits. Indeed, if a merchant wants to accept all the payment instruments that exist, he will have the choice between raising his prices up to the point where he will cover all the bank charges associated with this choice, or take on his margin so as not to increase his prices and risk losing customers. Many merchants therefore prefer not to take the most expensive cards because the clientele it would allow them to capture would not be sufficient to compensate for the loss of customers due to too high prices (if they choose to mount their prices to cover their expenses) or to compensate for the loss they consent on their margins. The acceptance of the most expensive cards is thus shattered by the ban on differentiating prices.
B. ― The beneficial effects of the ability to differentiate prices
based on consumer payment instruments
150. The advantages of this differentiation are the opposite of the disadvantages that have just been recalled. On the one hand, consumers will become aware of the real cost they take as a result of the use of means of payment and will be able to begin to refer between the different payment instruments available to them. In addition, "overloading" will stop the subsidy backwards that operates today at the expense of consumers who use the least expensive payment instruments. Finally, differentiation will encourage payment systems to diversify their offer and offer cheap payment instruments, a product that does not exist at the moment in France. With regard to prestige cards, the result will be more mixed: their porters will face the real cost of their payment instrument, which will not be favorable to them, but, on the other hand, they will be able to use their card more often than today.
151. On the other hand, with regard to the risk that there would be to promote uneffective means of payment such as the fiduciary currency or as the "paper" payment instruments, this risk seems limited for the following reasons: on the one hand, there is a generational effect that makes recent generations prefer the most modern means of payment as shown by the progress of the use of the card in France, a country traditionally attached to the cheque, or in Germany, a country attached to the trustee. It is unlikely that the ability to "overload" trade could only reverse this trend. In addition, merchants have a unique interest in accepting the cards due to the benefits of the cards (fraud, theft, etc.): their interest will therefore not be to discourage payers from using the card, unless the bank charges associated with the cards are at this high point that it is sufficient to make the card less attractive than the cheque or the cash. On this point, the appearance of cheap cards related to overloading will make that, for these cards at the very least, the merchant will not practice overload compared to the fiduciary currency as shown by the experiences made so far (e.g., Australian, example of the IKEA company in the UK), and the risk of a return to the species at the expense of payment cards seems to be all the more reduced.
C. ― Accompaniment measures may be taken to avoid any possibility of drift related to the ability of payment recipients to apply differentiated prices according to the payment instrument
152. If the Government intends to follow the advice of the Autorité de la concurrence, it may, however, decide to support the principle set out in the above-mentioned provision of various measures to prevent any possible abuse by the beneficiaries of payment. Indeed, even though it would not be demonstrated that the concerns raised by some Australian consumer associations are based on facts actually observed, the Autorité de la concurrence is of the opinion that the French Government could usefully take the lead.
153. The objective here is to decide on preventive measures that would respect the limits set out in section 52-3 of the directive, while being in a position to guarantee consumers against possible "overloading" drift.
154. The possible drift is as follows:
– merchants with strong market power can abuse this power and charge higher than those they actually suffer;
– merchants who offer only one means of payment can also abuse this situation by imposing fees;
– merchants can take advantage of a lack of information from their customers by imposing additional costs when the consumer is already engaged in the purchase act;
―even good consumer information can cause problems, for example by complexing outward the act of purchase (assuming that each property would experience a complex display of as many different prices as accepted means of payment).
155. What solutions can be made?
― in respect of costs greater than the expenses incurred by the merchant, it is possible to limit the ability of the merchant to propose "overloading" at the level of fees that he actually incurred. The Spanish transposition of Article 52-3 is in this sense;
― in the case of a single payment method, it may be deemed undue to allow the recipient to apply fees since this option, which aims to instil competition between different means of payment, is useless where there is only one means of payment. In this case, the overloading would be prohibited;
― in terms of public information, an important pedagogy effort appears to be a priority by 2011. It should be emphasized that the French consumer is already changing in a certain complexity: all means of payment are not accepted (the cheque is increasingly refused, without it being displayed at the entrance of the store; the specific cards that are, for example, American Express or Diner's Club cards, are not necessarily accepted, etc.), the use of the bank card may be refused below a certain amount, since this amount is only displayed at the caisse and varies from one merchant to another; cases of "overloading" (which, let's recall, are today not prohibited by French law) exist, often to sanction the use of means of payment unwanted by a particular merchant: there are therefore cases in which the use of the cheque is authorized but subject to additional costs, etc.
The generalisation of differentiation by the cost of the different payment instruments, whose beneficial aspect to the consumer may seem counterintuitive, must thus be accompanied by a wide public information, which must be done in a more educational form than today. Given that such measures are not legislative, the draft order should indicate that the terms and conditions of public information will be clarified by order of the Minister of Economy.
D. ― Editorial proposals
156. For the above reasons, the Autorité de la concurrence recommends that the Government not amend the French law, in that it does not limit today the capacity of payment recipients to differentiate their prices according to the payment instruments used.
157. However, given that the limits that the "overloading" is not to be sought in the law but in the contracts that the banking institutions have signed to the merchants, it is necessary to transpose the principle in the directive that prohibits payment service providers from inserting into the contracts that they have signed to the payment recipients any limitation of their ability to foresee expenses.
158. In practice, if the Government had to choose the solution recommended by the AMF, it would be appropriate to substitute for the current draft article L. 112-11 of the monetary and financial code a new draft article as follows:
"Art. L. 112-11. ― The payment service provider does not prevent the recipient from applying fees or proposing a reduction to the payer for the use of a particular payment instrument.
When the recipient of a payment provides a fee or a reduction for the use of a particular payment instrument, he shall inform the payer of the payment before the initiation of the payment transaction".
159. With regard to accompanying measures, the Autorité proposes below the form that these measures could take to prevent possible abuses that might arise in the future.
160. On the prohibition of exercising fees greater than expenses incurred:
"In any event, the recipient may not charge the payer any fees greater than that caused by the use of a given payment instrument."
or (inspired by the Spanish transposition):
"In all cases, any costs charged as a result of the use of a particular payment instrument may not exceed the actual costs incurred by the recipient as a result of the acceptance of that instrument."
161. In case of a single payment method:
"The recipient of a payment may also not apply fees for the use of a particular payment instrument when it does not allow the payer to use alternative payment instruments."
162. Finally, with regard to the display: amend the information paragraph to read as follows:
"When the recipient of a payment provides a reduction or a fee for the use of a particular payment instrument, he shall inform the payer before the initiation of the payment transaction under the terms defined by order of the Minister responsible for the economy (43).
*
*
163. In the end, the Autorité de la concurrence considers that the authorisation of tariff differentiation according to payment methods is a crucial tool to allow real competition in the area of means of payment and ultimately benefit the concommator. This tool, however, cannot be considered alone and must be accompanied by great vigilance on the justification and on the level of interbank commissions and the resulting charges for merchants. It must also be accompanied by an in-depth reflection on all banking contractual practices, including the Honour-all-cards rule and the blending.
164. Except in particular cases, most competition and regulatory authorities that have intervened in the sector have allowed traders to differentiate their selling prices according to the method of payment or have expressed their intention to do so. But they simultaneously chose, at least on a temporary basis, to regulate the level of interbank commissions and to examine all banking practices and associated conditions. For example, the European Commission is considering imposing that the charges incurred by merchants remain less than or equal to the profits they withdraw from the corresponding payment methods (see annex to the details of the device studied, known as the tourist test).
Deliberated on the oral report of Mr. Maximin Sanson and Mr. Cédric Nouel de Buzonnière, and the intervention of Ms. Virginie Beaumenier, General Rapporteur, by Ms. Françoise Aubert, Vice-President, Session Chair, Ms. Anne Perrot and Mr. Patrick Spilliaert, Vice-Chairs.
A N N E X E
THE "TEST OF TOURIST" (OR "TEST OF INDEPENDENCE")
AND THE PERFECTIVE DIFFERENTCIATION
In order to assess the level of interbanking commissions and the resulting charges for merchants, the European Commission promotes the "test of the tourist" or "test of indifference": the charges incurred by the merchant pass the test if the latter is not penalized each time it accepts the corresponding means of payment, i.e. if the charge that it pays to its bank is less than or equal to the benefit it withdraws from this mode of 4. The charge must therefore be less than or equal to the level that makes the merchant indifferent between accepting and refusing the card.
Rochet and Tirole (2008) (45) establish a relationship between the optimal level of the interbanking commission from the point of view of users (customers and traders) and the threshold of the tourist test (commission level that makes the merchant indifferent between accepting and refusing the card).
When issuing banks repercuss perfectly (in a one-for-one report) the interbanking commission on their customers (46), the optimal level of the interbanking commission from the point of view of the users corresponds exactly to the threshold of the tourist test.
On the other hand, when issuing banks imperfectly affect the interbanking commission on their cardholder customers (47), the optimal level of the interbanking commission is less than the threshold of the tourist test, implying that at the optimum merchants strictly prefer the card payment. In addition, merchants may find it advantageous in such a situation to make a discount for payment card users in order to encourage consumers to use cards.
The tourist test aims to ensure that the level of interbanking commissions is not excessive in terms of their objective, which is to correct the too low use of cards. In fact, it would be paradoxical that the interbanking commissions penalize merchants, whereas they are precisely intended to take into account the profits of the latter in the arbitrations of the cardholders. However, if it is recognized that issuing banks imperfectly affect their cost savings on their customers, the threshold of the tourist test provides only a majorant of the optimal level (from the user's point of view) of the interbanking commission.
When merchants can apply overload for payment methods submitted to high interbank committees, they are no longer placed in the binary choice to accept or refuse the card and therefore no longer face the prisoner's dilemma described above.
If merchants can apply an overload without causing transaction costs for themselves or their customers, the competition to which they engage leads them to fully impact on their customers the net costs of the means of payment (48). In this case, merchants are therefore exactly indifferent between accepting or refusing the card. Their profit does not depend on the level of the interbanking commission, since they affect it on their customers. They are also indifferent to the level of the commission: their decision to use the card depends only on the total price of the card, the sum of the price paid to the issuing bank and the overload paid to the merchants.
When merchants can overload costlessly, competition between issuing banks is about the total price of payment for customers (principle of neutrality of the commission). This competition leads to the same economic configuration (even volume of transactions, same total price for customers) as the limiting situation of the tourist test where traders are exactly indifferent between accepting or refusing the means of payment.
Thus, there is a certain substitute between the authorization left to merchants to apply overloads for card payments and the regulation of interbank boards by the tourist test (plaferral of commissions to a level such that merchants are not penalized at each operation).
However, this result is only under restrictive assumptions: homogeneity of traders (from the point of view of the profits and costs of the means of payment), possibility of overloading without causing transaction costs, competition between traders ensuring a perfect repercussion by traders of the costs (nets of profits) that the different means of payment represent for them.
The meeting secretary,
Véronique Letrado
The Vice-Chair,
Françoise Aubert
