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Consumer Credit Directive 2 (CCD2)

The new European CCD2 directive affects existing credit providers and brings new credit providers under supervision, such as providers of “Buy Now Pay Later” and crowdfunding platforms. The aim of CCD2 is to better protect consumers and impose the same rules on all credit providers in Europe.

Credit cards in the Netherlands

The credit cards commonly used in the Netherlands are also referred to as ‘deferred debit cards’ in European legislation. There are approximately 6.3 million credit cards in circulation in the Netherlands, most of which are ‘deferred debit cards’. With these cards, payments are debited from the cardholder’s payments account at the end of each month, without additional costs or interest.

Dutch people use their credit cards a lot for online purchases, ongoing online subscriptions, travel, reservations, and deposits. In the case of a reservation or deposit, the amount is blocked on the credit card balance but not immediately debited from the payments account. As a result, they do not affect the spending limit of that payments account.

No interest charges

With deferred debit cards, no interest or collection fees are charged as long as the cardholder repays their card payments on time each month. The costs of these cards usually consist of an annual or monthly fixed card fee (often also for insurance or loyalty programs). For certain transactions, such as cash withdrawals and payments in foreign currencies, the cardholder pays a small additional fee.

The monthly credit facility for the cardholder is therefore free of charge, even though the card issuer advances the cardholder’s payments to retailers and online service providers for up to one month.

Exemption under current directive (CCD1)

Under the current Consumer Credit Directive (CCD1), deferred debit cards were subject to a full exemption.

There are no signs that these cards lead to problematic debts in the Netherlands. The exemption has never led to worrying levels of excessive lending. Card issuers prevent cardholders from getting into payment difficulties by means of limited credit checks, BKR checks, and systems that quickly warn when someone is unable to repay. This is partly possible because the credit on a Dutch credit card must be repaid in full at the end of each month.

Exemptions remain necessary under CCD2

The Dutch Payments Association and the Dutch Banking Association (NVB) argue that deferred debit cards should remain exempt from certain obligations under CCD2.

They believe that further regulation is unnecessary and disproportionate for the following reasons:

  • 1. Consumer risks are low

    Deferred debit cards are a relatively safe and affordable payment instrument without interest charges, with limited and short-term credit facilities.

  • 2. The removal of the exemption actually targets BNPL providers

    The exemption is mainly being removed to prevent problems surrounding ‘Buy Now Pay Later’. CCD2 introduces a separate regulation (Article 2, paragraph 2, sub h) for this purpose, which covers abuse via the existing exemption. There is no substantive need to place deferred debit cards in the same category.

  • 3. Consequences for consumers could be negative

    Placing deferred debit cards under the full regulation of CCD2 is likely to lead to higher costs for providers. As a result, the product may disappear or be replaced by expensive credit cards with interest. Dutch consumers would then lose a secure payment instrument or be faced with a more expensive alternative.

  • 4. Privacy and proportionality

    CCD2 requires extensive financial data and a full credit check. For a payment instrument where the limited credit must be repaid within a month, this obligation is disproportionate to the risk and to the GDPR privacy regulations.

Preventing abuse without losing secure products

The Dutch Payments Association and the NVB recognize that a full exemption could be abused by providers of payday loans or BNPL products. However, this risk is already mitigated by the fact that BNPL will now be regulated separately in CCD2. This makes it possible to combat abuse without making secure products such as Dutch credit cards more expensive and inaccessible to some consumers.