Payment Services Directive Arie J.E. van den Bergen Tel: (+31) 10 440 6470 Fax: (+31) 10 440 6433 avdbergen @ plp . nl   8...
Subjects <ul><li>Introduction </li></ul><ul><li>Scope (Title I) </li></ul><ul><li>Licence requirements (Title II) </li></u...
Introduction <ul><li>May 1999: Financial Services Action Plan (FSAP): </li></ul><ul><li>Objectives: </li></ul><ul><ul><li>...
PSD <ul><li>Adopted on 13 November 2007 </li></ul><ul><li>Implementation deadline: 1 November 2009 </li></ul><ul><li>Creat...
Full harmonization? <ul><ul><li>Applicability to micro enterprises (Articles 30(2) and 51(3))  </li></ul></ul><ul><ul><li>...
Scope (1) <ul><li>Limited to ‘payment services’ listed in the Annex within the EU (Article 2(1)): </li></ul><ul><ul><li>Ca...
Scope (2) <ul><li>Six categories of payment service providers (PSP’s) (Article 1): </li></ul><ul><ul><li>Credit institutio...
Scope (3) <ul><li>PSD not applicable to e.g. (Article 3): </li></ul><ul><ul><li>Cash-to-cash payment transactions, without...
Licence requirements <ul><li>Application should include e.g. (Article 5): </li></ul><ul><ul><li>An programme of operations...
Capital requirements <ul><li>Initial capital (Article 6): </li></ul><ul><ul><li>In case of money remittance: EUR 20,000 </...
Safeguarding requirements <ul><li>Payment institution must safeguard funds received as follows (Article 9): </li></ul><ul>...
Authorisation <ul><li>Robust governance arrangements required, including (Article 10(4)): </li></ul><ul><ul><li>A clear or...
Ancillary services <ul><li>Provision of ancillary services allowed, including (Article 16): </li></ul><ul><ul><li>Ensuring...
Other requirements <ul><li>Use of agents, branches or outsourcing (Article 17) </li></ul><ul><li>Liability of payment inst...
Supervision <ul><li>Passport procedure (Article 25): </li></ul><ul><ul><li>Home country control </li></ul></ul><ul><ul><li...
Transparency requirements <ul><li>Distinction between: </li></ul><ul><ul><li>Single payment transactions: </li></ul></ul><...
Single payment transactions <ul><li>Precontractual information (Article 37): </li></ul><ul><ul><li>A specification of the ...
Framework contracts (1) <ul><li>Precontractual information (Article 42): </li></ul><ul><ul><li>The PSP </li></ul></ul><ul>...
Framework contracts (2) <ul><li>Changes in conditions (Article 44):  </li></ul><ul><ul><li>Notification no later than 2 mo...
Rights and obligations <ul><li>PSP’s may agree not to apply some provisions for payments in case of (Article 53): </li></u...
Obligations PSU <ul><li>Notification of loss, theft or misappropriation of payment instrument or its unauthorised use with...
Obligations PSP  <ul><li>Provision of personalised security features </li></ul><ul><li>Refrain from sending an unsolicited...
Liability PSP (1) <ul><li>Evidence on authentication and execution of payment transactions on PSP (Article 59) </li></ul><...
Liability PSP (2) <ul><li>In case of non-execution or defective execution (Article 75): </li></ul><ul><ul><li>Strict liabi...
Liability PSU (1) <ul><li>In case of the unauthorised transactions (Article 61):  </li></ul><ul><ul><li>limitation to EUR ...
Implementation in The Netherlands <ul><li>Proposal for Act introduced in March 2009 after consultation market parties: </l...
Supervisory rules <ul><li>Licence requirement from the Dutch Central Bank (Section 2:3a (1) Wft) </li></ul><ul><li>Does no...
Civil law rules <ul><li>Introduction title 7B in Dutch Civil Code: payment transaction </li></ul><ul><li>PSD has been impl...
Questions? Arie J.E. van den Bergen Tel: (+31) 10 440 6470 Fax: (+31) 10 440 6433 [email_address] nl   8 May 2009
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Payment Services Directive

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This presentation provides an overview of the Payment Services Directive, which aims to create a harmonised framework within the EU for payment services. Among other things, the licence requirements, transparency requirements and rights and obligations of payment service providers are discussed.

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Payment Services Directive

  1. 1. 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
  2. 2. Subjects <ul><li>Introduction </li></ul><ul><li>Scope (Title I) </li></ul><ul><li>Licence requirements (Title II) </li></ul><ul><li>Transparency requirements (Title III) </li></ul><ul><li>Rights and obligations (Title IV) </li></ul><ul><li>Implementation in The Netherlands </li></ul><ul><li>Conclusions </li></ul>
  3. 3. Introduction <ul><li>May 1999: Financial Services Action Plan (FSAP): </li></ul><ul><li>Objectives: </li></ul><ul><ul><li>Completion of single wholesale market (Prospectus Directive, MiFID) </li></ul></ul><ul><ul><li>Open and secure markets for retail services (Electonic Money Directive, Payment Services Directive, SEPA) </li></ul></ul><ul><ul><li>Continued stability of EC financial markets (Basel II) </li></ul></ul>
  4. 4. PSD <ul><li>Adopted on 13 November 2007 </li></ul><ul><li>Implementation deadline: 1 November 2009 </li></ul><ul><li>Creates a fully harmonized framework for the area of payments in all EU member states (Article 86) </li></ul><ul><li>Mixture of public law (Title II) and private law provisions (Title III and IV) </li></ul>
  5. 5. Full harmonization? <ul><ul><li>Applicability to micro enterprises (Articles 30(2) and 51(3)) </li></ul></ul><ul><ul><li>Burden of proof with respect to information requirements (Article 33) </li></ul></ul><ul><ul><li>Definition of low-value payment instruments (Articles 34(2) and 53(2)) </li></ul></ul><ul><ul><li>More favourable provisions to payment service users (Articles 45(6), 47(2), 48(3) and 52(3)) </li></ul></ul><ul><ul><li>Reduction of liability (Article 61(2)) </li></ul></ul><ul><ul><li>Maximum execution time for national payment transactions (Article 72) </li></ul></ul><ul><ul><li>Transitional provision for legal persons who have commenced the activities of payment institutions before 25 December 2007 (Article 88) </li></ul></ul><ul><ul><li>More beneficial national terms to payment service users possible (Article 86(3)) </li></ul></ul>
  6. 6. Scope (1) <ul><li>Limited to ‘payment services’ listed in the Annex within the EU (Article 2(1)): </li></ul><ul><ul><li>Cash deposits </li></ul></ul><ul><ul><li>Cash withdrawals </li></ul></ul><ul><ul><li>Payment transactions by transfer of funds </li></ul></ul><ul><ul><li>Payment transactions by credit line </li></ul></ul><ul><ul><li>Issuing and/or acquiring of payment cards </li></ul></ul><ul><ul><li>Money remittance services </li></ul></ul><ul><ul><li>Payment transactions by means of any telecommunication, digital or IT device </li></ul></ul><ul><li>Common objective: transfer of funds to the payee and not the deposit of money from the payment service provider (see recital 11) </li></ul>
  7. 7. Scope (2) <ul><li>Six categories of payment service providers (PSP’s) (Article 1): </li></ul><ul><ul><li>Credit institutions </li></ul></ul><ul><ul><li>Electronic money institutions </li></ul></ul><ul><ul><li>Post office giro institutions (no licence requirements!) </li></ul></ul><ul><ul><li>Payment institutions ( new ) </li></ul></ul><ul><ul><li>The ECB and national central banks and national authorities </li></ul></ul><ul><ul><li>Member states or their regional and local authorities </li></ul></ul>
  8. 8. Scope (3) <ul><li>PSD not applicable to e.g. (Article 3): </li></ul><ul><ul><li>Cash-to-cash payment transactions, without any intermediary intervention (a) </li></ul></ul><ul><ul><li>Exchange of currency (f) </li></ul></ul><ul><ul><li>Paper cheques, promissory notes and paper-based vouchers (g) </li></ul></ul><ul><li>Definition of payment system (Article 4(6)): </li></ul><ul><ul><li>A funds transfer system with formal and standardised arrangements and common rules for processing, clearing and/or settlement of payment transactions </li></ul></ul>
  9. 9. Licence requirements <ul><li>Application should include e.g. (Article 5): </li></ul><ul><ul><li>An programme of operations (a) </li></ul></ul><ul><ul><li>A business plan for the first 3 years of operation (b) </li></ul></ul><ul><ul><li>A description of the applicant’s governance arrangements and internal control mechanisms (e-f) </li></ul></ul><ul><ul><li>A description of the applicant’s structural organisation (g) </li></ul></ul><ul><ul><li>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) </li></ul></ul>
  10. 10. Capital requirements <ul><li>Initial capital (Article 6): </li></ul><ul><ul><li>In case of money remittance: EUR 20,000 </li></ul></ul><ul><ul><li>In case of p ayment transactions by means of telecommunication: EUR 50,000 </li></ul></ul><ul><ul><li>In case of other payment services: EUR 125,000 </li></ul></ul><ul><li>Ongoing capital/own funds (Article 8): </li></ul><ul><ul><li>Three different ways of calculation </li></ul></ul><ul><li>Own capital may not fall below the amounts of initial capital and ongoing capital (Article 7) </li></ul>
  11. 11. Safeguarding requirements <ul><li>Payment institution must safeguard funds received as follows (Article 9): </li></ul><ul><ul><li>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; </li></ul></ul><ul><ul><li>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 </li></ul></ul><ul><ul><li>Insurance policy or comparable guarantee from an insurance company or a credit institution </li></ul></ul><ul><li>To be decided by Member States/competent authorities </li></ul>
  12. 12. Authorisation <ul><li>Robust governance arrangements required, including (Article 10(4)): </li></ul><ul><ul><li>A clear organisational structure with well-defined, transparent and consistent lines of responsibility </li></ul></ul><ul><ul><li>Effective procedures to identify, manage monitor and report risks </li></ul></ul><ul><ul><li>Adequate internal control mechanisms </li></ul></ul><ul><li>A licence may be withdrawn in certain circumstances only (Article 12) </li></ul>
  13. 13. Ancillary services <ul><li>Provision of ancillary services allowed, including (Article 16): </li></ul><ul><ul><li>Ensuring the execution of payment transactions, foreign exchange services, safekeeping activities </li></ul></ul><ul><ul><li>The operation of payment systems </li></ul></ul><ul><ul><li>Business activities other than the provision of payment services </li></ul></ul><ul><ul><li>Holding payment accounts used exclusively for payment transactions </li></ul></ul><ul><ul><li>Granting of credit exclusively in connection with the execution of a transaction and payable within a short period not exceeding 12 months </li></ul></ul>
  14. 14. Other requirements <ul><li>Use of agents, branches or outsourcing (Article 17) </li></ul><ul><li>Liability of payment institutions for any acts of their employees, agent, branch or outsourcing entity (Article 18) </li></ul><ul><li>Record-keeping: 5 years (Article 19) </li></ul>
  15. 15. Supervision <ul><li>Passport procedure (Article 25): </li></ul><ul><ul><li>Home country control </li></ul></ul><ul><ul><li>Cross border services or banch office/agent </li></ul></ul><ul><ul><li>Notification period: one month </li></ul></ul><ul><ul><li>Home Member State (Article 4(1)): </li></ul></ul><ul><ul><ul><li>registered office of PSP </li></ul></ul></ul><ul><ul><ul><li>If the PSP does has no registered office under its national law, the Member State in which its head office is situated </li></ul></ul></ul><ul><li>Waiver of PSD provisions for ‘microbusinesses’ (Article 26) </li></ul>
  16. 16. Transparency requirements <ul><li>Distinction between: </li></ul><ul><ul><li>Single payment transactions: </li></ul></ul><ul><ul><ul><li>not covered by a framework contract (Article 35(1)) </li></ul></ul></ul><ul><ul><li>Framework contract </li></ul></ul><ul><ul><ul><li>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)) </li></ul></ul></ul>
  17. 17. Single payment transactions <ul><li>Precontractual information (Article 37): </li></ul><ul><ul><li>A specification of the information or unique identifier to be provided by the payment service user </li></ul></ul><ul><ul><li>The maximum execution time </li></ul></ul><ul><ul><li>All charges payable, including (if applicable) a breakdown </li></ul></ul><ul><ul><li>The actual or reference exchange rate </li></ul></ul><ul><ul><li>Any other relevant information </li></ul></ul><ul><li>Discharge by supplying a copy of draft single payment service contract or draft payment order (Article 36(3)) </li></ul>
  18. 18. Framework contracts (1) <ul><li>Precontractual information (Article 42): </li></ul><ul><ul><li>The PSP </li></ul></ul><ul><ul><li>The use of the payment service </li></ul></ul><ul><ul><li>Charges, interest and exchange rates </li></ul></ul><ul><ul><li>Communication </li></ul></ul><ul><ul><li>Safeguards and corrective measures </li></ul></ul><ul><ul><li>Changes in and termination of framework contract </li></ul></ul><ul><ul><li>Redress </li></ul></ul><ul><li>Discharge by supplying a copy of draft framework contract (Article 41(3)) </li></ul><ul><li>Information on individual payment contracts under framework contract (Articles 46-48) </li></ul>
  19. 19. Framework contracts (2) <ul><li>Changes in conditions (Article 44): </li></ul><ul><ul><li>Notification no later than 2 months before proposed date of application </li></ul></ul><ul><ul><li>Provision of information/conditions specified in Article 42 </li></ul></ul><ul><ul><li>Changes in interest/exchange rates </li></ul></ul><ul><li>Termination (Article 45): </li></ul><ul><ul><li>Payment service user may terminate at any time, unless maximum of one month notice agreed </li></ul></ul><ul><ul><li>Free termination after 12 months </li></ul></ul><ul><ul><li>Minimum notice period PSP: two months </li></ul></ul><ul><ul><li>Proportional payment charges </li></ul></ul>
  20. 20. Rights and obligations <ul><li>PSP’s may agree not to apply some provisions for payments in case of (Article 53): </li></ul><ul><ul><li>Individual payment transactions not exceeding EUR 30; or </li></ul></ul><ul><ul><li>Individual payment transactions with a spending limit of EUR 150 or storing funds not exceeding EUR 150 </li></ul></ul><ul><li>Consent for transactions required, may be withdrawn until payment order irrevocable (Article 54) </li></ul>
  21. 21. Obligations PSU <ul><li>Notification of loss, theft or misappropriation of payment instrument or its unauthorised use without undue delay (Article 56(1)) </li></ul><ul><li>Notification of unauthorised or incorrectly executed payment transactions without undue delay (Article 58) </li></ul><ul><li>PSP may block payment instrument in case of suspicion of unauthorised or fraudulent use (Article 55(2)) </li></ul>
  22. 22. Obligations PSP <ul><li>Provision of personalised security features </li></ul><ul><li>Refrain from sending an unsolicited payment instrument </li></ul><ul><li>Enabling notification PSU in case of theft, loss or unauthorised use </li></ul><ul><li>Preventing use of payment instrument after notification of theft, loss or unauthorised use (Article 57) </li></ul><ul><li>Execution payment transaction (Article 69): </li></ul><ul><ul><li>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) </li></ul></ul><ul><ul><li>By payee’s PSP to payer’s PSP: Within the time limits agreed </li></ul></ul>
  23. 23. Liability PSP (1) <ul><li>Evidence on authentication and execution of payment transactions on PSP (Article 59) </li></ul><ul><li>In case of unauthorised payment transactions (Article 60): </li></ul><ul><ul><li>obligation PSP to refund and restore debited payment account </li></ul></ul><ul><ul><li>further financial compensation under applicable law </li></ul></ul>
  24. 24. Liability PSP (2) <ul><li>In case of non-execution or defective execution (Article 75): </li></ul><ul><ul><li>Strict liability, unless: </li></ul></ul><ul><ul><ul><li>PSP can prove that payee’s PSP received the amount of the payment transaction (Article 75(1)) </li></ul></ul></ul><ul><ul><ul><li>In that case: liability for the correct execution of payment transaction </li></ul></ul></ul><ul><ul><ul><li>PSU has violated notification requirements in case of theft, loss or unauthorised use (Article 58) </li></ul></ul></ul><ul><ul><ul><li>In case of incorrect unique identifiers provided by the PSU (Article 74(2) and (3)) </li></ul></ul></ul><ul><ul><ul><li>In cases of abnormal and unforseeable ciurcumstances (Article 78) </li></ul></ul></ul>
  25. 25. Liability PSU (1) <ul><li>In case of the unauthorised transactions (Article 61): </li></ul><ul><ul><li>limitation to EUR 150 </li></ul></ul><ul><ul><li>unless PSU acts fraudulently or fails to fulfil his notification obligations under Article 56 </li></ul></ul><ul><ul><li>Liability may be further reduced by member states </li></ul></ul><ul><ul><li>No liability after notification of loss, theft or unauthorised use, or if PSP does not provide appropriate means for notification </li></ul></ul>
  26. 26. Implementation in The Netherlands <ul><li>Proposal for Act introduced in March 2009 after consultation market parties: </li></ul><ul><ul><li>Implementation of supervisory rules in: </li></ul></ul><ul><ul><ul><li>Act on the Financial Supervision (Wft) </li></ul></ul></ul><ul><ul><ul><li>Act on the money transfer offices (Wgt) </li></ul></ul></ul><ul><ul><li>Implementation of civil law obligations in Book 7 Dutch Civil Code </li></ul></ul><ul><li>Expected entry into force: 1 November 2009? </li></ul>
  27. 27. Supervisory rules <ul><li>Licence requirement from the Dutch Central Bank (Section 2:3a (1) Wft) </li></ul><ul><li>Does not apply to licensed banks/electronic money institutions (Section 2:3a (2) Wft) </li></ul><ul><li>Safeguarding requirements to be determined by governmental decree (Section 3:29a Wft) </li></ul>
  28. 28. Civil law rules <ul><li>Introduction title 7B in Dutch Civil Code: payment transaction </li></ul><ul><li>PSD has been implemented as literal as possible </li></ul><ul><li>4 Sections: </li></ul><ul><ul><li>General provisions (Section 7:514-521) </li></ul></ul><ul><ul><li>Consent to payment order (Section 7:522-531) </li></ul></ul><ul><ul><li>Execution of the payment transaction (Section 7:532-548 </li></ul></ul><ul><ul><li>Final provisions (Article 7:549-551) </li></ul></ul>
  29. 29. Questions? Arie J.E. van den Bergen Tel: (+31) 10 440 6470 Fax: (+31) 10 440 6433 [email_address] nl 8 May 2009

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