EU payment laws can be applied to mobile customer contracts, says CJEU

The Court of Justice of the EU (CJEU) said that sections of the Directive that give individual member states freedom to ban payment surcharging can be said to apply to contracts between mobile providers and their customers.

Technology and payments expert Angus McFadyen said that reforms to the PSD could deliver a widespread ban on surcharging.

"The latest proposals from the European Parliament on the reform of the Payment Services Directive have strongly indicated that all member states should ban surcharging across all payment instruments, whether that’s cards or cheques or similar," McFadyen said. "This isn’t mandated as member states will be able to allow surcharging that is in line with the direct costs incurred, but I would expect a number of member states to follow the direction set by the Parliament."

The CJEU was ruling in a case referred to it by the Austrian Supreme Court. That court is tasked with resolving a dispute between mobile provider T-Mobile Austria and consumer group the Verein für Konsumenteninformation (the Verein).

The Verein challenged a clause in T-Mobile's customer contracts which gave the company the right to "deduct a service charge" when customers elected to pay bills "by means of a paper transfer order or by telebanking". For one particular tariff it offered, T-Mobile charged consumers a €3 monthly surcharge if they elected to pay for the services it provided otherwise than by direct debit or credit card.

The Verein said that T-Mobile's contract clause and its practice of levying charges on consumers that paid via certain means infringed Austrian laws that ban payment service providers from levying a surcharge on payments made via "a given payment instrument".

Those Austrian laws are derived from the PSD. However, T-Mobile claimed that it could not be forced to comply with the Directive and the relevant national framework in Austria as it was not a payment service provider (PSP). As a mobile operator it should not be subject to the rules, the company argued.

The Austrian Supreme Court asked the CJEU to determine primarily whether the Directive can be applied "to the contractual relationship between a mobile phone operator, as payee, and that operator’s private customer (the consumer), as payer". The CJEU has now ruled that it can.

"[The PSD] states that the payment service provider may not prevent the payee from requesting from the payer a charge or from offering him a reduction for the use of a given payment instrument," the CJEU said in its ruling. "However, [the PSD also] gives member states the power to forbid or limit the right of the payee to request a charge from the payer for the use of a given payment instrument, taking into account the need to encourage competition and promote the use of efficient payment instruments."

"In this respect, it must be noted that a mobile telephone operator may be considered to be a ‘payee’ within the meaning of [the PSD] when it is the recipient of funds which have been the subject of a payment transaction. Furthermore, the customer of that mobile telephone operator may be considered to be a ‘payer’ within the meaning of [the PSD] when he allows a payment order from a payment account which he holds or when he gives a payment order," it said.

"However, it is apparent from the very wording of Article 52(3) of that directive, which governs the right of a payee to request from the payer a charge for the use of a given payment instrument, that that provision concerns the relationship between the payee and the payer. It follows that that provision applies to the use of a payment instrument in the course of the contractual relationship between a mobile phone operator, as payee, and that operator’s customer, as payer," the CJEU ruled.

The court said that the Directive gives member states the power to prevent businesses from levying surcharges on certain forms of payment if national rules banning such surcharging account for "the need to encourage competition and the use of efficient payment instruments, which it is for the referring court to ascertain".