Tuesday, 30 July 2013

Paying your dues - a new package on Payment Services

On July 24, the European Commission published a new, revised version of the Payment Services Directive as well as a proposal for a Regulation on interchange fees for card-based payment transactions. This package is supposed to update and harmonise the existing Payment Service Directive from 2007. The role of the PSD is to increase competition among payment institutions, thereby offering more payment choices to consumers. Consumers are also supposed to benefit from these measures due to more attention being given to transparency of payment services to consumers (better information on fees, e.g.), as well as enforcement of consumer rights (e.g., refund rights, liability of payment institutions). 

The new PSD2 takes into account certain new types of payment services, such as internet payments where consumers are often enabled to pay instantly for their online shopping without the need to use a credit card (interestingly, still ca 60% of EU population does not possess a credit card - FAQ), but instead paying directly to the online trader through the payer's online banking module, e.g., iDeal in the Netherlands, Sofort in Germany, Trustly in Scandinavia. Such providers would fall under the EU rules upon the adoption of the revision of the PSD.

The mentioned Regulation would also contribute to better consumer protection by taking away a possibility of the traders to surcharge consumers for using their payment cards.The interchange fee levels will be capped at 0.2% and 0.3% for debit and credit cards which is below the level of interchange fees in most Member States currently. This cap could result also in lowered retail prices. (New rules on Payment Services for the benefit of consumers and retailers)

Additionally, the new rules would strengthen consumer protection against fraud by capping the maximum amount of payment that consumers could be obliged to pay in case of an unauthorised payment from 150 to 50 Euro. Consumers would also be granted an unconditional refund right, even when a payment would be under dispute, unless the trader had already fulfilled his contractual obligations and the goods have been consumed.

The European Commission advises readers to keep apart the previously discussed proposal for a Directive on Payment Accounts from the PSD2 (Proposal for a new Directive on Payment Accounts). While the PSD2 targets fee transparency, aiming at consumers' awareness of full terms and conditions linked to payment services (e.g., possibilities of refund, execution of payment), Payment Accounts Directive focuses on core services linked to a payment account, e.g., the annual fee for a debit or credit card, but also separate aspects of payments services and fees. Honestly, to me the difference does not sound that obvious and I wonder why are these two instruments kept separate.

The proposal will now have to be accepted by the Parliament and by the Council.

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