Payment Services Directive

Payment Services Directive Arie J.E. van den Bergen Tel: (+31) 10 440 6470 Fax: (+31) 10 440 6433 avdbergen @ plp . nl 8 May 2009

Subjects
Introduction
Scope (Title I)
Licence requirements (Title II)
Transparency requirements (Title III)
Rights and obligations (Title IV)
Implementation in The Netherlands
Conclusions

Introduction
May 1999: Financial Services Action Plan (FSAP):
Objectives:
Completion of single wholesale market (Prospectus Directive, MiFID)
Open and secure markets for retail services (Electonic Money Directive, Payment Services Directive, SEPA)
Continued stability of EC financial markets (Basel II)

PSD
Adopted on 13 November 2007
Implementation deadline: 1 November 2009
Creates a fully harmonized framework for the area of payments in all EU member states (Article 86)
Mixture of public law (Title II) and private law provisions (Title III and IV)

Full harmonization?
Applicability to micro enterprises (Articles 30(2) and 51(3))
Burden of proof with respect to information requirements (Article 33)
Definition of low-value payment instruments (Articles 34(2) and 53(2))
More favourable provisions to payment service users (Articles 45(6), 47(2), 48(3) and 52(3))
Reduction of liability (Article 61(2))
Maximum execution time for national payment transactions (Article 72)
Transitional provision for legal persons who have commenced the activities of payment institutions before 25 December 2007 (Article 88)
More beneficial national terms to payment service users possible (Article 86(3))

Scope (1)
Limited to ‘payment services’ listed in the Annex within the EU (Article 2(1)):
Cash deposits
Cash withdrawals
Payment transactions by transfer of funds
Payment transactions by credit line
Issuing and/or acquiring of payment cards
Money remittance services
Payment transactions by means of any telecommunication, digital or IT device
Common objective: transfer of funds to the payee and not the deposit of money from the payment service provider (see recital 11)

Scope (2)
Six categories of payment service providers (PSP’s) (Article 1):
Credit institutions
Electronic money institutions
Post office giro institutions (no licence requirements!)
Payment institutions ( new )
The ECB and national central banks and national authorities
Member states or their regional and local authorities

Scope (3)
PSD not applicable to e.g. (Article 3):
Cash-to-cash payment transactions, without any intermediary intervention (a)
Exchange of currency (f)
Paper cheques, promissory notes and paper-based vouchers (g)
Definition of payment system (Article 4(6)):
A funds transfer system with formal and standardised arrangements and common rules for processing, clearing and/or settlement of payment transactions

Licence requirements
Application should include e.g. (Article 5):
An programme of operations (a)
A business plan for the first 3 years of operation (b)
A description of the applicant’s governance arrangements and internal control mechanisms (e-f)
A description of the applicant’s structural organisation (g)
The identity of persons holding a qualified holding or representatives and the majority shareholders, as well as the identity of the lead manager (h-j)

Capital requirements
Initial capital (Article 6):
In case of money remittance: EUR 20,000
In case of p ayment transactions by means of telecommunication: EUR 50,000
In case of other payment services: EUR 125,000
Ongoing capital/own funds (Article 8):
Three different ways of calculation
Own capital may not fall below the amounts of initial capital and ongoing capital (Article 7)

Safeguarding requirements
Payment institution must safeguard funds received as follows (Article 9):
No commingling with the funds of any other person than PSU’s on whose behalf funds are held and (if applicable) deposit on separate account/investment in low-risk assets;
Funds are insulated in the interest of PSU’s against the claims of other creditors of the payment institution, in particular in the event of insolvency; or
Insurance policy or comparable guarantee from an insurance company or a credit institution
To be decided by Member States/competent authorities

Authorisation
Robust governance arrangements required, including (Article 10(4)):
A clear organisational structure with well-defined, transparent and consistent lines of responsibility
Effective procedures to identify, manage monitor and report risks
Adequate internal control mechanisms
A licence may be withdrawn in certain circumstances only (Article 12)

Ancillary services
Provision of ancillary services allowed, including (Article 16):
Ensuring the execution of payment transactions, foreign exchange services, safekeeping activities
The operation of payment systems
Business activities other than the provision of payment services
Holding payment accounts used exclusively for payment transactions
Granting of credit exclusively in connection with the execution of a transaction and payable within a short period not exceeding 12 months

Other requirements
Use of agents, branches or outsourcing (Article 17)
Liability of payment institutions for any acts of their employees, agent, branch or outsourcing entity (Article 18)
Record-keeping: 5 years (Article 19)

Supervision
Passport procedure (Article 25):
Home country control
Cross border services or banch office/agent
Notification period: one month
Home Member State (Article 4(1)):
registered office of PSP
If the PSP does has no registered office under its national law, the Member State in which its head office is situated
Waiver of PSD provisions for ‘microbusinesses’ (Article 26)

Transparency requirements
Distinction between:
Single payment transactions:
not covered by a framework contract (Article 35(1))
Framework contract
A payment service contract which governs the future execution of individual and successive payment transactions and which may contain the obligations and conditions for setting up a payment account (Article 4(12))

Single payment transactions
Precontractual information (Article 37):
A specification of the information or unique identifier to be provided by the payment service user
The maximum execution time
All charges payable, including (if applicable) a breakdown
The actual or reference exchange rate
Any other relevant information
Discharge by supplying a copy of draft single payment service contract or draft payment order (Article 36(3))

Framework contracts (1)
Precontractual information (Article 42):
The PSP
The use of the payment service
Charges, interest and exchange rates
Communication
Safeguards and corrective measures
Changes in and termination of framework contract
Redress
Discharge by supplying a copy of draft framework contract (Article 41(3))
Information on individual payment contracts under framework contract (Articles 46-48)

Framework contracts (2)
Changes in conditions (Article 44):
Notification no later than 2 months before proposed date of application
Provision of information/conditions specified in Article 42
Changes in interest/exchange rates
Termination (Article 45):
Payment service user may terminate at any time, unless maximum of one month notice agreed
Free termination after 12 months
Minimum notice period PSP: two months
Proportional payment charges

Rights and obligations
PSP’s may agree not to apply some provisions for payments in case of (Article 53):
Individual payment transactions not exceeding EUR 30; or
Individual payment transactions with a spending limit of EUR 150 or storing funds not exceeding EUR 150
Consent for transactions required, may be withdrawn until payment order irrevocable (Article 54)

Obligations PSU
Notification of loss, theft or misappropriation of payment instrument or its unauthorised use without undue delay (Article 56(1))
Notification of unauthorised or incorrectly executed payment transactions without undue delay (Article 58)
PSP may block payment instrument in case of suspicion of unauthorised or fraudulent use (Article 55(2))

Obligations PSP
Provision of personalised security features
Refrain from sending an unsolicited payment instrument
Enabling notification PSU in case of theft, loss or unauthorised use
Preventing use of payment instrument after notification of theft, loss or unauthorised use (Article 57)
Execution payment transaction (Article 69):
by payer’s PSP to payee’s PSP: by the end of the next business day / 3 business days if agreed (until 1 January 2012)
By payee’s PSP to payer’s PSP: Within the time limits agreed

Liability PSP (1)
Evidence on authentication and execution of payment transactions on PSP (Article 59)
In case of unauthorised payment transactions (Article 60):
obligation PSP to refund and restore debited payment account
further financial compensation under applicable law

Liability PSP (2)
In case of non-execution or defective execution (Article 75):
Strict liability, unless:
PSP can prove that payee’s PSP received the amount of the payment transaction (Article 75(1))
In that case: liability for the correct execution of payment transaction
PSU has violated notification requirements in case of theft, loss or unauthorised use (Article 58)
In case of incorrect unique identifiers provided by the PSU (Article 74(2) and (3))
In cases of abnormal and unforseeable ciurcumstances (Article 78)

Liability PSU (1)
In case of the unauthorised transactions (Article 61):
limitation to EUR 150
unless PSU acts fraudulently or fails to fulfil his notification obligations under Article 56
Liability may be further reduced by member states
No liability after notification of loss, theft or unauthorised use, or if PSP does not provide appropriate means for notification

Implementation in The Netherlands
Proposal for Act introduced in March 2009 after consultation market parties:
Implementation of supervisory rules in:
Act on the Financial Supervision (Wft)
Act on the money transfer offices (Wgt)
Implementation of civil law obligations in Book 7 Dutch Civil Code
Expected entry into force: 1 November 2009?

Supervisory rules
Licence requirement from the Dutch Central Bank (Section 2:3a (1) Wft)
Does not apply to licensed banks/electronic money institutions (Section 2:3a (2) Wft)
Safeguarding requirements to be determined by governmental decree (Section 3:29a Wft)

Civil law rules
Introduction title 7B in Dutch Civil Code: payment transaction
PSD has been implemented as literal as possible
4 Sections:
General provisions (Section 7:514-521)
Consent to payment order (Section 7:522-531)
Execution of the payment transaction (Section 7:532-548
Final provisions (Article 7:549-551)

Questions? Arie J.E. van den Bergen Tel: (+31) 10 440 6470 Fax: (+31) 10 440 6433 [email_address] nl 8 May 2009

http://wonderbank.blogspot.com	444
http://wonderbank.blogspot.fr	29
http://www.slideshare.net	4
http://wonderbank.blogspot.it	2
http://wonderbank.blogspot.in	2
http://www.lmodules.com	2
http://translate.googleusercontent.com	1
http://wonderbank.blogspot.com.proxy.bib.ucl.ac.be	1
http://wonderbank.blogspot.com.es	1
http://wonderbank.blogspot.com.br	1

Payment Services Directive

by arievdb on May 08, 2009

Accessibility

Tags

Upload Details

Usage Rights

10 Embeds 487

Statistics

Payment Services Directive — Presentation Transcript