Executive Summary
This article looks at the impact and implications of the Payment Services Directive (PSD), which has been transposed into national law across the European Union. The implementation of the PSD requirements marked another step on the road to an integrated Europe-wide payments market. The article considers:
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The objectives of the PSD;
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Its scope and impact;
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The differences between SEPA (Single Euro Payments Area) and the PSD;
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The benefits of the PSD for customers;
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The impact of the PSD on banks.
Introduction
The Payment Services Directive (PSD) provides a legal framework for payment services in the internal market of the EU and the European Economic Area (EEA). It was adopted by European legislators on November 13, 2007, for transposition into national law by the 27 EU member states by November 1, 2009 (about half of the EU countries took a bit longer than foreseen by the official deadline and completed their transposition in 2010) . The three non-EU EEA countries—Iceland, Liechtenstein, and Norway—are also committed to transposing the PSD into their national law; Iceland was the last of these countries to complete its transposition process in November 2010. The EU and EEA countries plus Switzerland together form the Single Euro Payments Area (SEPA) for euro payments.
The PSD is one additional step in the efforts of the European legislators to achieve an integrated payments market. This process started with the introduction of the euro in 1999 (as an electronic currency) and 2002 (notes and coins), the implementation of new payments-related legislation at EU level, such as Regulation EC2560/2001, and the launch in 2008 of the first Single Euro Payments Area (SEPA) instrument for handling credit transfers as well as of the SEPA Cards Framework. In November 2009, SEPA Direct Debit Schemes (Core and B2B) were launched. At the same time Regulation EC924/2009 on cross-border payments in the Community replaced Regulation EC2560/2001 and extended the principle of equal charges for national and cross-border payments in euro to direct debits.
In November 2012, the EU Commission will publish a report reviewing the functioning of the PSD. This review will also focus on whether the scope of the PSD should be expanded with regard to non-EU/EEA currencies and to transactions where only one of the payment service providers involved is located in the EU/EEA. The EU Commission is also working on a proposal for a regulation setting end dates for the migration of national credit transfers and direct debits to SEPA. Thus, the PSD should be seen as one major step, rather than as the final step, in Europe’s drive for harmonization.
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