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(1) New technology in the banking sector, in particular new means of payment and of giving instructions for payment, is becoming increasingly accessible to consumers. It offers them a variety of cards, home banking, teleshopping, electronic payment at retail points of sale and machines which dispense banknotes, reveal the balance of his account, accept instructions for the transfer of funds from one of their accounts to another, or to the account of a third person and perform a variety of other operations as well. The Commission has endeavoured to define a concerted policy in this field. In January 1987, it published a document entitled "Europe could play an ace : the new payment cards"(2). The Commission's approach is essentially that of making the banking sector aware of the advantages of making the new payment systems interoperable in the single market and promoting crossfrontier cooperation so as to tackle the problems of technical standards, the relations between card issuers and retailers and the problems of protecting card users as consumers. In december 1987, the Commission therefore publised a code of conduct governing relations between card issuers and retailers who instal a payment terminal in their establishments. Today, the Commission adopted a recommendation addressed to payment card issuers, especially banks within the Community. This recommendation aims at establishing minimum rules for the protection of consumers in this field throughout the Community. The idea is to persuade card issuers to embody in the contracts they conclude with card users these minimum rules which protect the consumer, especially in the event of loss or fraudulent use of the card. The Commission is giving the banks a period of one year in which to implement these rules. It will stay in close touch with banks and other card issuers. If it should transpire that, when that period has elapsed, card issuers are not applying the rules, the Commission will take another look at the situation with a view to proposing a binding instrument. In the light of the success recorded in this field as regards the development of technology and the widespread introduction of electronic payment terminals, the Commission hopes that it will not be necessary to resort to a binding instrument to protect consumers' interests. Although one Member State - Denmark in 1984 - has adopted detailed legislation on payment cards, the other eleven apply their general law of contract and civil liability to this new branch of economic activity. The various national rules are often highly divergent and, if no action is taken at Community level, this divergence will persist, if not increase. (1) COM(88) 427 (2) COM(86) 754 final (published 1 January 1987) The practices which are growing up in many Member States as regards the consumer's liability in the event of fraudulent use, loss, theft or copying of cards or other means of using payment systems put consumers in situation which vary from Member State to Member State. These practices tend to become formalised by being written into standard forms of contract offered by issuers, so that the contract clauses applicable to a card issued in Belgium are different from those applied in Denmark, the Federal Republic of Germany, France, Greece, etc. The customer's liability thus varies, depending first on the type of card and secondly on the law which governs the contract, for the issuing of it or which governs the civil liability consequences which arise from its being lost, stolen or copied. This situation cannot but hamper the development of international and interoperable payment systems. THE CONTENT OF THE RECOMMENDATION Card issuers will be required to : - provide written terms of contract, full and fair, which are expressed in easily understandable words and in so clear a form that they are easy to read in the language or languages of the region(s) in which they are offered ; - discharge a rather particular burden of proof in any dispute with the holder of a card ; - carry liability for the consequences of defects in, or failure of operation of, the cards which they issue ; such liability may in certain circumstances have to be borne by the issuer jointly with another person or persons, e.g. a retailer and/or a network assembler ; - provide means whereby their customers may at any time of the day or night notify the loss, theft or copying of cards. Manufacturers will have to ensure that the networks, and in particular the equipment containing card-readers, are capable of producing records which are sufficiently substantial to enable transactions to be traced and errors to be rectified, and of supplying the cardholder with a written record of each transaction. Assemblers and issuers of cards (including petrol and oil companies and also rental businesses, e.g. car rentals) will also be involved in this aspect either directly or indirectly and retailers obviously have a special interest and involvement in it. Contracting holders will be liable for damage arising out of the loss of their payment devices up to the time they notify the issuer of that loss, but that liability may not exceed the equivalent of 150 ECU. However, this ceiling does not apply where holders have committed an act of extreme negligence or behaved fraudulently. ADVANTAGES OF THE NEW PAYMENT SYSTEMS a) Major savings Experts on the new technologies, including those from the banks themselves, have estimated that the credit institutions are on the way to reducing their overhead costs of providing payment systems (notably cheque payment) BY AS MUCH AS SIXTY PER CENT. b) Speed and security Retail outlets wishing to use this new technology will have to be equipped with lines, card-readers and pin-pads. They can either buy or rent these. Electronic funds transfer at point of sale, by direct debiting, will give the retailer the advantages of immediacy of payment (as compared with the delays involved for him in receiving payment by cheque or by credit card), more rapid movement of customers through the "pay lines", and reduction in the amount of cash held on the premises and thereby greater physical security for persons. These considerations would suggest that retailers will be served by these means. c) Convenience for the consumer The advantages which the new technologies provide for financial institutions and providers of goods and services will be shared by consumers, who will profit from the convenience they provide in making necessary payments.