Payment Services Directive pushed through by Parliament

The European Parliament has adopted rules for a European-wide payment-services system, aiming to make cashless payments using devices such as mobile phones cheaper and easier and pave the way for a single EU payments area by 2010.

On 24 April 2007, a clear majority of MEPs approved, without further changes, the compromise text of the Payment Services Directive worked out between Rapporteur Jean-Paul Gauzès and member-states’ representatives.

In addition to allowing the establishment of a EU-wide payments area, the Directive aims to enhance competition by opening markets, providing harmonised market-access requirements for non-bank payment service providers and introducing a set of information requirements.

In practice, the new Directive will make it possible for consumers to make payments with their mobile phones or pay their electricity bill in supermarkets in the future.

The agreement followed intensive discussion by member states over the regulatory requirements for non-bank service providers, such as capital requirements and registration conditions. The compromise formula allows non-banking institutions to be able to offer credit but only within a limited 12-month period.

In a joint statement, the Commission  and the European Central Bank (ECB) called the adoption by the Parliament "a decisive step towards the realisation of SEPA" and stated that the Directive will serve as a basis for a single "domestic" euro payments market. The two institutions see consumer protection, enhanced competition and innovation as the main benefits of the opening-up of the market.

Mia de Vits of the European Parliament Socialist Group said that the introduction of a single electronic-payments market needs to be in the interest of consumers. "That is why we have insisted that banks inform their clients on the cost of their transactions," she added.

Sharon Bowles,  shadow rapporteur on the directive for the European Parliament ALDE Group commented: "With the clock ticking, a quick resolution for the Payment Services Directive was essential. I have been astonished at how difficult it has been to emerge from the dark ages on payment times, capital regimes and electronic money."

Visa Europe’s President and CEO Peter Ayliffe applauded the Parliament's adoption of the Payment Services Directive, saying that without it the industry would have had difficulties meeting its 2010 SEPA target. He added: "As a strong believer in the benefits a truly internal market in payments would bring, I would have hoped for a greater level of harmonisation."

EuroCommerce  Secretary-General Xavier Durieu congratulated MEPs and said: "It will open the very much closed market of payment systems to competition and force banks to be more transparent: every European citizen and business will benefit from it."

Guido Ravoet, Secretary-General of the European Banking Federation (EBF) declared: "Banks are finally given the legal basis on which they can fully develop and implement the Single Euro Payments Area."

European SME Association UEAPME Director for Economic and Fiscal Policy, Gerhard Huemer, welcomed the adoption, but also stressed that especially small enterprises would not opt for SEPA "if the system will concentrate on providing better and cheaper cross-border services but increase the costs of national payments at the same time".

The adoption follows “trialogue” negotiations between the Council Presidency, the Parliament and the Commission on 22 March, which decided to swiftly pass through the directive. Finance ministers unanimously approved a general approach on the Payment Services Directive on 27 March 2007.

The new Payment Services Directive, known as the New Legal Framework, is intended to create a more efficient and competitive payments market. This should bring benefits to consumers and allow major banking-cost savings. 

The New Legal Framework is also crucial for the establishment of a Single European Payments Area (SEPA) by 2010. SEPA is to introduce an EU-wide payments infrastructure and aims to improve credit- or debit-card use for consumers across Europe, making it as cheap and easy to use payment cards and perform credit transfers across the EU as it is at home.

  • The text of the Payment Services Directive will now be forwarded to the Council for final adoption.
  • The Directive is expected to enter into force by November 2009.
  • The Single European Payments Area (SEPA) is set to be launched on January 2008 and shall replace national systems from January 2010.

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