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To Process or Not to Process: a Scheme’s Question

EBA hosted public hearing on draft technical standards under the Interchange Fee Regulation.

Out of the issues covered by the draft RTS and the accompanying notes the following was most highlighted:


  • the file is a “fire and forget” for EBA – EBA was granted no power to monitor and ensure consistent implementation and application of the RTS across the Member States in this case,
  • EBA has no power to exclude three party schemes,
  • EBA sees no point in clarifying processing services,
  • proportionality principle applies.
  • no separate balance sheet for scheme unit and processing unit is required - the only requirement is that the accompanying financial information demonstrates the information required by the RTS,
  • any requirements are understood to refer solely to the statutory accounting,
  • ABC methodology (activity – based costing) is not an option, it is obligatory if the provider reaches this stage in the expenses allocation sequence provided for in the draft RTS.
  • one office space (although with separated workspaces subject to restricted controlled access) is OK,
  • one CEO is OK, one management body is OK, but “appropriate composition” must be ensured (part of the board unambiguously dedicated to scheme and part to the processing),
  • senior management must be separate and report only to “their” part of the management body.
Where a scheme decides to transform the existing processing unit into legally separated entity (subsidiary), such transformation does not ensure per se compliance (i.e. does not release the scheme from monitoring and ensuring compliance with the RTS).

The EBA officers seem to understand that all the separation principles set forth in both the Regulation and RTS will apply to strategic partnership between a scheme and independent processor (not linked to the scheme) either. This means that the RTS extends the Regulation’s approach “don’t prefer your own processing” into “don’t prefer any processing” which overlaps with general antitrust principles.

Final draft RTS are expected in June 2016. Hopefully it takes places at least couple weeks before 9 June 2016 when the schemes need to comply with Article 7 of the Regulation regardless whether the RTS is in force.