Evolution of EU retail payments law

This paper traces the evolution of EU payments law for retail payments, identifying four phases of its development. In spite of the EU’s founding principle of free movement of payments, the first two phases of EU payments law were characterized by negative integration and soft law measures with limited effects on the performance of cross-border payments. The introduction of the euro started the third phase of EU payments law in which the EU became more aggressive in its approach to regulating payments. Nevertheless, EU legislation was mainly aimed at triggering and supporting “voluntary self-regulation” by the banking industry. As a result, EU payments law acquired a hybrid character. The ensuing Single Euro Payments Area (“SEPA”) is composed of publicly- and privately-made rules which became mingled together into a single system. Finally, the fourth phase of the development of EU payments law has witnessed, on an unprecedented scale, EU public regulation colonizing areas that used to be in the private domain. It also marks a nuanced shift of objectives of EU payments law: integration is no longer the overarching objective but “regulation for competition” has surfaced as an equally important goal.