The EU's online
payments sector has notably been growing in the last decade with almost a third
of EU citizens now utilising e-purchasing. Banks and card scheme companies such
as MasterCard no longer have complete control over the industry as some
up-and-coming payment services companies may soon be backed by the European
Commission and the European Parliament.
To begin from a local
perspective, the regulator of e-commerce in Malta is the Malta Communications
Authority, which supports competition in the communications sector and is also
involved in proliferating ICT-use amongst private businesses and persons. By
mid-July of last year, a survey published by the Malta Communications Authority
(MCA) and completed by M. Fsadni & Associates depicted that out of 700
businesses solely 13% used the internet as their primary sales portal. This is
a drop from 14% in 2012 and is in contrast with the upsurge in telesales from
12% (2012) to 18% (2013). As is currently the trend in Malta, walk-in trade is
often the most efficient option, unlike the United Kingdom where the British
digital economy has contributed approximately €146 billion to the country's
entire economy. However, a more encouraging statistic of 69% shows that Maltese
businesses are increasingly using their own websites, with a majority of them
utilising them so
as to sell goods and services online.
Figure 1 conveys how in 2012, more
than twice as many enterprises made use of e-commerce purchases than e-commerce
sales. 37 % of enterprises in the EU-28 made purchases electronically during
2012, whilst only 17 % of enterprises engaged in e-sales during the same
period.
Figure 2 shows the percentage of
e-sales and e-purchases on a country-by-country basis, with Malta notably
lagging behind. Among the EU28, the percentage of enterprises utilising
e-purchases varies considerably, from the lowest at 6% in Bulgaria to the
highest at 78% in Denmark. In Malta slightly more than 20% of enterprises make
use of e-purchases, whilst less than 20% operate through an e-sales approach.
However the e-sales figure is not a drastic one, with Malta surpassing the EU28
e-sales average of 17%.
The European Union of course has set
up its own legislation on the matter of e-commerce, with the establishment of
the E-Commerce Directive that was adopted back in 2000. The scope of this
Directive is to set up an Internal Market framework for e-commerce that can
deliver legal certainty for both businesses and consumers. The Electronic
Commerce Directive sets up a foundation for the harmonisation of rules on
transparency and information requirements for online service providers,
electronic contracts and commercial communications. The Directive covers a wide
range of forms of e-commerce, such as internet information services (online
newspapers), the online selling of products and services, online advertising
and entertainment services. The e-commerce Internal Market follows the Internal
Market clause which states that, in principle, information society services are
subject to the law of the Member State in which the service provider is
established. Additionally, Member States are prohibited from restricting
incoming services from other Member States without any valid reasoning.
The European Commission aims to
increase competition in the market for online payments in the hope that it
could improve the use of e-commerce across Europe. There exist companies
throughout the Union, such as "Trustly" in Sweden and "Sofort" in Germany that
aid consumers that are not in possession of a debit or credit card to shop
online. The importance of increased competition is also highlighted by the fact
that MasterCard, Visa and Pay Pal – the most widely used online payment
providers – are all based in the United States. The Commission's urgency to
increase competition is a welcome one for consumers in particular as it
prevents the oligopolistic approach of these companies and forces them to
compete with emerging businesses such as Sofort and be somewhat more
transparent in their business. In fact, a number of banks have attempted to
block Sofort as it also rivals the banks' own online payment services. These
emerging payment services companies operate by using their clients' accounts in
order to make payments.
Unsurprisingly the threat of
competition has led a number of banks to lobby hard against the Commission's
proposal to open up the online payments market to several small European
companies, arguing that the practice of providing such companies with bank
details could conjure up increased fraud and identity theft. The European
Central Bank echoed this same argument in its opinion to the EU Member States.
However, the Commission aims to ensure that the current market operators do not
block new entrants by building up artificial barriers to entry.
