Payment Services [EU]

Table of Contents

Revised rules for payment services in the EU

Directive (EU) 2015/2366 on EU-wide payment services

Directive (EU) 2015/2366 (Payment Service Directive 2 — PSD 2) provides the legal foundation for the further development of a better integrated internal market for electronic payments within the EU.

It puts in place comprehensive rules for payment services*, with the goal of making international payments (within the EU) as easy, efficient and secure as payments within a single country.
It seeks to open up payment markets to new entrants leading to more competition, greater choice and better prices for consumers.

It also provides the necessary legal platform for the Single Euro Payments Area (SEPA).
It repealed Directive 2007/64/EC (PSD) from 13 January 2018.

Key Points

The directive seeks to improve the existing EU rules for electronic payments. It takes into account emerging and innovative payment services, such as internet and mobile payments.

The directive sets out rules concerning:
strict security requirements for electronic payments and the protection of consumers’ financial data, guaranteeing safe authentication and reducing the risk of fraud;
the transparency of conditions and information requirements for payment services;
the rights and obligations of users and providers of payment services.

The directive is complemented by Regulation (EU) 2015/751 which puts a cap on interchange fees charged between banks for card-based transactions. This is expected to drive down the costs for merchants in accepting consumer debit and credit cards.

Towards a better integrated EU payments market

The directive establishes a clear and comprehensive set of rules that will apply to existing and new providers of innovative payment services. These rules seek to ensure that these players can compete on equal terms, leading to greater efficiency, choice and transparency of payment services, while strengthening consumers’ trust in a harmonised payments market.

Opening up the EU market to new services and providers

The directive also aims to open up the EU payment market to companies offering consumer- or business-oriented payment services based on access to information about the payment account, particularly:

account information services which allow a payment service user to have an overview of their financial situation at any time, allowing users to better manage their personal finances;
payment initiation services which are services to initiate an order at the request of the payment service user with respect to a payment account held at another payment service provider.

Consumer rights

Consumer rights are enhanced, including:
reduced liability for non-authorised payments from €150 to €50;
unconditional refund right for direct debits in euro for a period of 8 weeks;
removal of surcharges for the use of a consumer credit or debit card.

The European Commission was to produce a ‘user-friendly’ electronic leaflet by early 2018 listing consumers’ rights under the directive and related EU law.

Authorisation of payment institutions

The directive does not substantially change the conditions for granting authorisation as payment institutions, although payment institutions offering payment initiation services or account information services will be required to have professional indemnity insurance as a condition of authorisation or respectively registration. The directive also contains rules on the supervision of authorised payment institutions, as well as measures in case of non-compliance.

Role of European Banking Authority (EBA)

The role of the EBA is strengthened to:

develop a publicly accessible central register of authorised payment institutions, which shall be kept up to date by the national authorities;
assist in resolving disputes between national authorities;
develop regulatory technical standards on strong customer authentication and secure communication channels with which all payment service providers must comply;
develop regulatory technical standards for cooperation and information exchange between supervisory authorities.

Implementing Acts

The Commission has adopted the following implementing and delegated acts:

Regulation (EU) 2017/2055 on regulatory technical standards for the cooperation and exchange of information between competent authorities relating to the exercise of the right of establishment and the freedom to provide services of payment institutions;
Regulation (EU) 2018/389 on regulatory technical standards for strong customer authentication and common and secure open standards of communication;
Regulation (EU) 2019/410 laying down implementing technical standards with regard to the details and structure of the information to be notified, in the field of payment services, by competent authorities to the EBA;
Regulation (EU) 2019/411 on regulatory technical standards setting technical requirements on development, operation and maintenance of the electronic central register within the field of payment services and on access to the information contained therein.

Application & Context

It has applied since 12 January 2016. EU countries had to incorporate it into national law by 13 January 2018.

For more information, see:

Directive on Payment Services (PSD) (European Commission).
KEY TERMS

Payment services: services enabling cash to be placed on or withdrawn from a payment account, as well as all the operations required to operate the account. This can include transfers of funds, direct debits, credit transfers and card payments. Paper transactions are not covered by the directive.

MAIN DOCUMENT

Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on payment services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and Regulation (EU) No 1093/2010, and repealing Directive 2007/64/EC (OJ L 337, 23.12.2015, pp. 35-127)

Successive amendments to Directive (EU) 2015/2366 have been incorporated into the original document. This consolidated version is of documentary value only.

Fees for card-based payments

Regulation (EU) 2015/751 on interchange fees for card-based payment transactions

This regulation caps interchange fees. It increases transparency on fees thus permitting retailers to know the level of fees paid when accepting cards. It enhances competition by providing consumers with more and better choices between different types of payment cards and service providers.

Key Points

Specifically, the regulation:

caps interchange fees at 0.2% of the transaction value for consumer debit cards and at 0.3% for consumer credit cards;
as regards consumer credit cards, allows EU countries to define percentage caps lower than 0.3%;
as regards consumer debit card transactions, allows EU countries to impose a fee of no more than 5 eurocents per transaction interchange fee in combination with the 0.2% cap;
provides for a limited number of exemptions, such as business cards used only for business expenses being charged directly to the account of the company;
increases transparency on the level of fees paid by retailers, thus enabling them more easily to select which payment cards to accept.

The regulation is part of a package that includes also the revised Payment Services Directive (PSD2), on which political agreement was reached in May 2015. The package aims to promote the digital single market by making payments safer and cheaper and paves the way for innovative payment technologies.

Application & Context

It has applied since 8 June 2015.

For more information, see:

Card, internet and mobile payments (European Commission)
Payment services (European Commission).

MAIN DOCUMENT

Regulation (EU) 2015/751 of the European Parliament and of the Council of 29 April 2015 on interchange fees for card-based payment transactions (OJ L 123, 19.5.2015, pp. 1-15)

Electronic money: business and prudential supervision

Directive 2009/110/EC — the business and supervision of electronic money

The electronic money directive (EMD) sets out the rules on the business and supervision of electronic money* (e-money) institutions in order to contribute to the emergence of a true single market for e-money services in the European Union (EU).

It also seeks to ensure consistency with the EU’s payment services directive (Directive 2007/64/EC, known as the PSD), thus contributing towards a single EU market for payments for the benefit of consumers, business and the wider EU economy.

Key Points

In general, the EMD aims to:

facilitate the emergence of new, innovative and secure e-money services;
provide market access to new companies;
encourage effective competition between all market participants.

Specifically, it modernises EU rules on e-money, in particular bringing the prudential regime for e-money institutions* into line with the requirements for payment institutions in the PSD.

It introduces proportionate prudential requirements in order to ease market access for newcomers. This includes reducing the initial capital requirement to €350,000 and new rules on calculating own funds.

The institutions covered by the EMD include banks, e-money institutions, the European Central Bank and national central banks.

The activities which e-money institutions are permitted to carry out include providing payment services and granting credit related to these payments.

In October 2015, the EU adopted a new directive on payment services known as PSD2. It repeals Directive 2007/64/EC with effect from 13 January 2018. PSD2 aims to improve security, widen consumer choice and keep pace with innovation.

Application & Context

It applies from 30 October 2009. EU countries had to incorporate it into national law by 30 April 2011.

European Commission website on e-money

KEY TERMS

Electronic money is the digital alternative to cash, which enables users to store funds on a device (card or phone) or through the internet and to make payment transactions.

E-money institutions are organisations that have been authorised to issue electronic money.

ACT

Directive 2009/110/EC of the European Parliament and of the Council of 16 September 2009 on the taking up, pursuit and prudential supervision of the business of electronic money institutions amending Directives 2005/60/EC and 2006/48/EC and repealing Directive 2000/46/EC (OJ L 267, 10.10.2009, pp. 7–17)

RELATED ACTS

Directive 2007/64/EC of the European Parliament and of the Council of 13 November 2007 on payment services in the internal market amending Directives 97/7/EC, 2002/65/EC, 2005/60/EC and 2006/48/EC and repealing Directive 97/5/EC (OJ L 319, 5.12.2007, pp. 1–36). Successive amendments to Directive 2007/64/EC have been incorporated in the original text. This consolidated version is of documentary value only.

Payment Services [EU]

Revised rules for payment services in the EU

Key Points

Towards a better integrated EU payments market

Opening up the EU market to new services and providers

Consumer rights

Authorisation of payment institutions

Role of European Banking Authority (EBA)

Implementing Acts

Application & Context

MAIN DOCUMENT

Fees for card-based payments

Key Points

Application & Context

MAIN DOCUMENT

Electronic money: business and prudential supervision

Application & Context

ACT

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