Interoperability Standards at Heart of New EU Antitrust Case

Interoperability standards are at the heart of a new antitrust probe launched by the European Commission into the online payments market.

Competition Commissioner Joaquín Almunia announced on Monday that the investigation will examine whether big players in Europe's banking sector are blocking other companies from entering the e-payments market.

The European Payments Council (EPC) is currently developing a standard framework for e-payments called the Single Euro Payments Area (SEPA) that will allow an Internet users to buy online regardless where they are located in Europe, and to pay the merchant using their own Internet banking services and their current bank account. Under existing systems, users can have payments debited from their accounts but only within national borders.

But a complainant to the Commission has alleged that the standardization process is locking out non-bank payment providers such as Paypal and Hipay. EPC members include Deutsche Bank, HSBC, BNP, Santander and Barclays, and the Commission is concerned that if new, non-EPC players are blocked from entering the market, consumers could end up forking out more for online transactions.

"Use of the Internet is increasing rapidly, making the need for secure and efficient online payment solutions in the whole Single Euro Payments Area all the more pressing. I therefore welcome the work of the European Payments Council to develop standards in this area. In principle, standards promote interoperability and competition, but we need to ensure that the standardization process does not unnecessarily restrict opportunities for non-participants," said Almunia.

On its website, EPC says that the SEPA e-payment framework is designed to support interoperability between existing e-payment plans as well as new e-payment plans. The EPC will define minimum criteria, including legal and security aspects, which must be fulfilled by the e-payment plan in order to be 'SEPA-compliant'.

There is no legal deadline for the Commission to complete antitrust investigations.

Follow Jennifer on Twitter at @BrusselsGeek or email tips and comments to jennifer_baker@idg.com.

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