Banking and investment services: Electronic payment instruments recommendation

United Kingdom
In what appears to be the first step leading to a new Directive, the Commission has published a non-binding Recommendation addressed to Member States and issuers of electronic payment instruments setting out minimum transparency, responsibility and customer redress requirements. The Recommendation applies to remote access payment instruments (including traditional payment cards, home and phone-banking applications) and electronic money products (including store-value cards and e-money).

The Recommendation updates the 1988 Recommendation on payment cards to take account of new payment methods and advances in technology. Its aim is to increase consumer confidence in electronic payment instruments by insisting that customers be given clear information both before and after each transaction and that, when problems (such as theft) arise, responsibility be fairly apportioned between issuers and holders.

This Recommendation is the first step towards implementing the programme set out in the Communication on enhancing consumer confidence. It is also part of the Commission's wider aim to develop user-friendly, efficient and secure electronic payment systems. Next steps include:


  • setting up a supervisory framework for issuers of electronic money. The Commission intends to propose a Directive by the end of this year;

  • clarifying the application of EC competition rules. Compatibility between electronic payment systems, which is in the interests of both customer convenience and business expansion, will mainly rely on agreements among operators. To ensure that such agreements conform with EC competition rules, the Commission will issue guidance in 1998; and

  • tackling the risk of fraudulent use and counterfeiting by improving security. One method of tackling fraud involves issues developing appropriate inscription processes, electronic signatures and similar techniques. The Commission is assessing the need for new EU-wide measures.

The Commission believes that electronic payment instruments will help to establish the Information Society and the development of electronic commerce, one of its pet projects. Electronic payment also has a role to play in facilitating the changeover to the single currency.