Author name: Bara Addison

On 27 July, HM Treasury published a consultation on the application of the Interchange Fee Regulation in the UK, asking for feedback on their proposals on credit and debit card caps, a time-limited exemption from the rules for three-party schemes, and the regulatory structure. The EMA’s response to each question is below:

• Credit cards: The EMA agrees with HMT’s plans to apply the same cap on interchange fees as set out in the regulation (i.e. maximum of 0.3% per domestic or international transaction).
• Debit cards: The EMA agrees with HMT’s plans to apply a “weighted average” (i.e. interchange fees cannot exceed more than the equivalent of 0.2% of the annual average transaction value of all domestic debit card transactions within each payment card scheme). However the EMA raises concerns about the uncertainty this may bring for industry, and supports a review of the policy once its impact has been measured and analysed by the PSR.
• Three-party schemes: The EMA agrees with HMT’s proposal to exempt three-party schemes that do not exceed 3% of market share across all card products for the maximum 3 year period permitted under the regulation. 
• Regulatory oversight: Agrees in principle with HMT’s proposed regulatory regime of splitting regulatory responsibilities between the PSR, the FCA, and the Trading Standards Institute. However the EMA raises concerns about the potential for duplication of effort for firms, and calls for guidance for firms setting out the remit and jurisdiction of each regulator.

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On 27th July, the Slovenian Office for Money Laundering Prevention from the Ministry of Finance published a new draft of their Prevention of Money Laundering and Terrorist Financing Act (ZPPDFT) to bring it in line with 4MLD. The EMA’s response raises 4 issues with the draft:

• The draft scope of the Act extends to credit institutions, payment institutions and electronic money institutions passporting into Slovenia on a cross-border basis under Freedom of Services, and should be limited to those authorised in Slovenia or operating in Slovenia under the Freedom of Establishment only; 
• The translation of the term “payment instrument” as “electronic medium” is legally unclear, potentially narrowing the e-money exemption from CDD, so the original EU translation should be used
• The draft has incorrectly transposed the e-money CDD exemption by requiring EMIs providing reloadable cards that can be used outside of Slovenia to conduct CDD, regardless of any limits on the amount.
• The current draft translation of the redemption provision under the e-money exemption from CDD doesn’t permit redemption transfers over €100 to a bank account to be exempt from CDD, so should be amended.

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