The German competition authority has ruled that certain clauses in the general contract conditions used by the country's banking industry, breach national and EU competition rules. The clauses restrict customers from using their PINs (personal identification numbers) and TANs (transaction authentication numbers) in non-bank payment systems. This effectively prevents customers from using lower priced alternatives to bank providers for on-line purchases, including payment initiation service providers. Such services will be regulated under the new Payment Services Directive (PSD2), the package of measures aimed at modernising the European payments framework, which came into force on 12 January 2016 and must be transposed into national law by January 2018.
The banks argued that the purpose of the conditions is to maintain the security of their on-line customers, however, the authority's president said that "the rules currently used cannot be considered as a necessary part of a consistent security concept of the banks and they impede non-bank competitors". Dismissing the banks' defence, the authority found that the conditions restricted competition between on-line payment providers and hindered innovation.
What this means for you
This decision is perhaps an indication of how competition authorities, including the FCA and UK economy-wide competition authority, the Competition and Markets Authority, will go on to enforce competition law in light of the changes introduced as a result of PSD2, which, are likely to stimulate competition between banks and the new types of payment service provider it seeks to regulate – namely those that provide Payment Initiation Services and Account Information services.
The German Competition Authority has released a press release on this matter.