ECB proposes new legal framework for card schemes

ECB proposes new legal framework for card schemes

The European Central Bank is proposing to establish a new cross-border legal framework to oversee all card payment schemes operating in the euro zone.

The central bank has been monitoring developments in the use of payment cards - particularly for cross-border transactions and Internet - as well as the risks to which card payment schemes are exposed.

The ECB says the new framework - which has been developed in parallel to, but independently of the Sepa initiative - will "promote a level playing field across the euro area" and help maintain the public's confidence in card networks.

The oversight framework covers the entire payment cycle and card schemes will have to comply with requirements in five areas - legal issues, transparency, operational reliability, governance and clearing and settlement.

Each card scheme will be expected to make sure that information - including data on financial risks - is available to all parties involved in the payment, and to ensure "an adequate degree of security, operational reliability and business continuity".

Card companies will also be required to implement effective, accountable and transparent governance arrangements and manage and contain financial risks in relation to clearing and settlement processes.

Companies providing credit and debit cards in the euro zone, including pre-paid card and gift card schemes, whill be expected to comply with the new rules. But the framework will not apply to card providers that have issued fewer that one million cards a year over the past three years. Companies that have recorded less than EUR1 billion in annual average transactions over the past three years will also be exempt, as will non-card e-money providers.

The ECB says it will consult on the proposal until 2 August 2007.

Read the ECB's proposal document here:» Download the document now 98.1 kb (Adobe Acrobat Document)

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