Payment Services Directive
The Payment Services Directive (PSD, 2007/64/EC) was a regulatory initiative from the European Commission (Directorate General Internal Market) which regulates payment services and payment service providers as defined in the Directive throughout the European Union (EU) and European Economic Area (EEA). The Directive's purpose was to increase pan-European competition and participation in the payments industry also from non-banks, and to provide for a level playing field by harmonizing consumer protection and the rights and obligations for payment providers and users. The final adopted text of the Directive (2007/64/EC) was officially published on 5 December 2007, to be transposed into national legislation by all EU (and EEA) Member States by 1 November 2009 at the latest. Although the PSD is a maximum harmonisation Directive, certain elements still allow for different options or choices by individual countries.
From the EC document: What it Means for Consumers EU-wide rules to increase customer rights; Faster payments: From 1 January 2012, payment had to be no later than next day; Refund rights; Clearer information on payments.
Technical Overview The SEPA (Single Euro Payments Area) is a self-regulatory initiative by the European banking sector represented in the European Payments Council, which defines the harmonization of payment products, infrastructures and technical standards (Rulebooks for Credit Transfer/Direct Debit, BIC, IBAN, ISO 20022 XML message format, EMV chip cards/terminals). The Payment Services Directive (PSD) was written by regulators and provides for the legal framework within which all payment service providers must operate. The PSD contains two main sections: the 'market rules' for payment service providers and the 'business conduct rules'.
The 'market rules' defined in the PSD describe which type of organizations can provide payment services. Next to credit institutions (i.e. banks) and certain authorities (e.g. central banks, government bodies), the Payment Services Directive mentions Electronic Money Institutions (EMIs), created by the E-Money Directive (EMD) in 2000, and created the new category of 'Payment Institutions' with its own prudential regime rules. Organizations that are not credit institutions or EMIs, can apply for an authorization as a Payment Institution provided they meet certain capital and risk management requirements, in any EU country of their choice where they are established and then "passport" their payment services into other EU member states without additional PI authorization requirements.
The business conduct rules specify the requirements around transparency of information to be provided by payment service providers to payment users, including any charges, exchange rates, transaction references and maximum execution time. It also stipulates the rights and obligations for both payment service providers and users, including how to authorize and execute transactions, liability in case of unauthorized use of payment instruments, refunds on payments, revoking payment orders, maximum execution time and value dating of payments.
Each country must designate a Competent Authority to provide prudential supervision of the PIs and to monitor compliance with the business conduct rules, as transposed into national legislation.
- March 2000: Through the Lisbon Agenda Europe’s leaders decided to make Europe “the world’s most competitive and dynamic knowledge-driven economy” by 2010
- December 2001: Regulation EC 2560/2001 on cross-border payments in Euro
- 2002: Creation of the European Payments Council (EPC) by the banking industry, driving the Single Euro Payments Area initiative to harmonize the main non-cash payment instruments across the Euro area (by end 2010)
- 2001–2004: Consultation period and preparation of a Directive to create a new legal framework for payment services in the EU
- December 2005: Proposal for directive by DG Internal Market Commissioner McCreevy
- 5 December 2007: Official publication of the adopted 'Payment Services Directive'
- 1 November 2009: deadline for implementation in national legislation
- Removed barriers for payment service providers to access any EU country so that cross-border service offerings became much easier
- "EU Commission Web site".
- Text from the Official Journal of the European Union
- "Transposition status by country". ec.europa.eu.
- "Member State options". ec.europa.eu.
- "What it means for Consumers". European Commission. Retrieved 20 March 2014.
- List of currently designated Competent Authorities
- "PSD – Business opportunities and challenges for different players (presentation at Edgar, Dunn & Company Cards & Payments Council)". Frankfurt: edgardunn.com. June 12, 2008.
- Dimitrios Linardatos: "Das Haftungssystem im bargeldlosen Zahlungsverkehr nach Umsetzung der Zahlungsdiensterichtlinie", Nomos-Verlag, 2013, ISBN 978-3-8487-0709-6. (German)