Out-Law News 2 min. read

EU payment law reforms delayed until after European Parliament elections

Reforms to the EU's Payment Services Directive (PSD) will not be voted on before the European Parliamentary elections this spring, a spokesman for the Parliament has said.

Jaume Duch Guillot said that there was insufficient time to finalise the proposed updated Directive (PSD2), and related rules on interchange fees, before the elections, according to a report by EurActiv.

"We have just concluded the stage of tabling amendments to the report," Duch Guillot said, according to the report. "You will have to wait for the election in May and the establishment of new members before the proposal is discussed and voted on in plenary. The debate on the issue could then resume in conjunction with the Italian Presidency [of the Council of Ministers]."

Technology and payments law expert Angus McFadyen of Pinsent Masons, the law firm behind Out-Law.com, said that the proposals have been "subject to heavy lobbying" and that "a number of controversial requirements", principally as part of the reforms to interchange fees rules, had been tabled.

"This delay may well lead to the reforms of the PSD and E-money Directive being brought back onto parallel tracks, as was originally intended," McFadyen said. "There is some much needed change contained within PSD2 that will help services operate more effectively across the European region and provide a solid footing for newly regulated services and it is unfortunate to see these being pushed back."

The original PSD, introduced in 2007, sets rules governing electronic means of payment. Its purpose has been to enhance efficiency, competition and innovation in the European payments market by integrating national payment markets. The rules affect banks, e-money issuers, payment service providers, mobile operators and merchants, among others. The PSD was implemented into UK law by the Payment Services Regulations in 2009.

Last summer the European Commission outlined plans to replace the PSD with PSD2 to account for gaps in the regulatory framework as well as problems with, and the fragmentation of, existing national laws and how they applied to card, internet and mobile payments.

In addition to PSD2, there are a number of other reforms affecting the EU payments industry in the pipeline.

In an effort to standardise payment schemes and boost cross-border electronic payments across the 'Single Euro Payments Area' (SEPA) the banking industry has been involved in developing new rules and standards to govern how such transactions should be made. In geographical terms, SEPA refers to all 28 EU member states, Iceland, Liechtenstein, Norway, Switzerland and Monaco.

A variety of different payment processing systems conforming to a range of different standards are currently in operation across the SEPA zone, but new technical specifications, which include requiring SEPA payments to be made using a particular "payment account identifier" and in accordance with certain "message formats", have been agreed. EU member states have a legal requirement to comply with the new standards under the SEPA Regulation and accompanying rulebooks.

The final deadline for EU countries to comply with the new requirements for euro currency transactions is set to be pushed back until August.

In addition, a new Payment Accounts Directive has also been drafted and is under consideration by EU law makers. The changes would see banks and other payment service providers face new obligations on transparency over charges applied to payment accounts and require banks to operate a "switching service" that would allow customers to transfer their accounts to them from a rival provider.

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