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The Norwegian Financial Supervisory Authority (FSA) has issued a notice urging improved transparency and functionality regarding payment brand choices for co-badged payment cards.泭
With the development of digital solutions, questions have arisen about the use of combined payment cards in digital wallets, and the current solution for physical payment terminals, the regulator conceded in a media.泭
The statement follows concerns that current systems do not adequately support the consumer and merchant rights enshrined in the EUs (IFR), which is applicable to intermediary fees for card-based payments.
The IFR has been integrated into Norwegian law because Norway is a European Economic Area (EEA) member.泭
According to the IFR, the payer and payee must be given the opportunity to choose a payment brand or payment application when using a co-badged payment card with several brands.泭
The regulation mandates that merchants can suggest a preferred payment brand, but the final decision rests with the consumer. Any system preventing the consumer from making this choice violates the law.
Today's solution, where the payer can choose a payment brand by using the yellow button on the payment terminal, has, in the Finanstilsynet's assessment, weaknesses related to information to consumers as well as the functionality itself, and which should be improved.
The FSA said that combined payment cards, often containing dual payment brands such as BankAxept, the national payment card, as well as international schemes such as Visa and Mastercard, are increasingly used both physically and in digital wallets.泭
The regulator highlighted that current solutions, such as using the "yellow button" functionality on payment terminals to override the merchants preferred brand, are not functioning effectively.泭
Many consumers remain unaware of their right to choose a payment brand, leading to widespread confusion at points of sale, according to the regulator.泭
The FSA said that it perceives that the solution has been little communicated to cardholders (payers), and is virtually unknown.泭
When testing the solution, in several cases it has not been possible to change the brand and the staff at the trading locations have not been able to provide guidance, the regulator said.泭
In sum, the solution therefore appears to be of little use in its current form.
The FSA emphasised the need for improved communication and technological solutions that clearly present payment options, especially as digital wallets continue to grow in popularity.泭
It called on card issuers and merchants to develop better systems that respect both consumer and merchant rights.
