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In your view, which of the following initiatives will have the greatest impact on the European payments market?

European Commission proposal for revised Payment Services Directive (PSD2)
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Work programme of Euro Retail Payments Board, chaired by European Central Bank
SecuRe Pay Forum recommendations for security of internet payments; for payment account access services; for security of mobile payments
Guidelines and technical standards issued by European Banking Authority pursuant to mandate provided by proposed PSD2 (Articles 86, 87)
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EPC Newsletter
Issue 4 - October 2009

Legal and Regulatory Issues

Ready or not...SDD roll-out possible in case of delayed national PSD implementation

30.10.09 BY Ruth Wandhöfer

INTRODUCTION AND SUMMARY

All 27 EU Member States are required to transpose the Payment Services Directive (PSD) into their respective national legislation by 1 November 2009 (the three non-EU EEA states - Iceland, Liechtenstein and Norway - also have to transpose the PSD, but the precise deadline for them is still being clarified). However, according to the latest information published by the European Commission and supplemented by reports from individual banking communities it is estimated that up to 14 countries could miss this deadline: Belgium, Cyprus, Estonia, Finland, Greece, Italy, Latvia, Liechtenstein, Lithuania, Poland, Portugal, Slovakia, Spain and Sweden. As previously reported in this Newsletter, the introduction of the SEPA Direct Debit Schemes (SDD) requires a uniform EU-wide legal framework. The European Commission recently confirmed, however, that roll-out of SDD services as of 2 November 2009, the launch date of the schemes, is possible in a country which has not yet implemented the PSD as long as the scheme rules do not conflict with existing laws. Ruth Wandhöfer analyses the situation.

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Update on PSD transposition

Whilst, as stated above, up to 14 Member States might miss the 1 November 2009 deadline to transpose the provisions of the PSD into national law, the majority of these countries remain ambitious to complete transposition by the end of 2009 or early 2010 the latest. Sweden has defined 1 April 2010 as the target date; in Finland the law implementing Titles III and IV will come into force on 1 May 2010; in Belgium the transposition legislation has been finalised, however, the relevant authorities stipulated a three month grace period granting industry time to become fully compliant.

SDD roll-out in countries that have not yet implemented the PSD

The EPC aligned the launch date of the SEPA Direct Debit Schemes with the deadline for EU Member States to transpose the Payment Services Directive into national law due to fact that EU-wide roll-out of the SDD Schemes requires common rules in particular as regards the authorisation and revocation of direct debits. The question is at this point whether payment services providers are still able to go ahead with the roll-out of SDD services in those countries where the provisions of the PSD are not in effect as of 2 November 2009.

The European Commission Services recently advised that "Swedish payment service providers will still be able to adhere to the SEPA Direct Debit Scheme if they wish to do so, as long as the scheme rules do not conflict with existing laws in Sweden. SDD may therefore be offered in Sweden and cross-border on a temporary contractual basis, before the directive is implemented". The Commission Services provided this information at a point in time when it was known that Sweden would miss the transposition deadline. In consequence, it is assumed that this information also applies to other Member States that will miss the 1 November 2009 deadline for the transposition of the PSD.

In this context, it is important to note that any payment services provider offering SDD Core and / or SDD Business to Business direct debit services is subject to the relevant SEPA Direct Debit Scheme Rulebook. The SEPA Core Direct Debit Scheme Rulebook and the SEPA Business to Business Direct Debit Scheme Rulebook, naturally, are fully aligned with the PSD.

Practical advice is in the pipeline

With a view to facilitate SDD-roll out by payments services providers from 2 November 2009 onwards in a country still awaiting transposition of the PSD, the Swedish Bankers' Association recently published a "best practice" guide detailing the application of several principles established by the PSD in relation to cross-border payments during the period until the PSD transposition has been completed.

The banking industry's PSD Exper t Group is currently considering whether a similar approach might be possible in some of the other countries where national legislators are missing the transposition deadline. In addition, the PSD Expert Group plans to issue an addendum to its recently published PSD guidance document highlighting the progress of adoption, prevalence of derogations from the original PSD text per Member State and the status of "best practice" guides available in countries that are late adopters. It is envisaged to make this addendum available by end November 2009. The latest version of the PSD Expert Group's guidance document is available on the EPC web site (see link below).

Whilst industry's efforts to deal constructively with late PSD transposition are laudable national legislators are called upon to finalise related processes as soon as possible.

Ruth Wandhöfer chairs the PSD Expert Group and is a member of the EPC Plenary.

Related Article:

Refunds and Returns revisited. Questions and Answers on the correlation between the PSD and the SDD Schemes

Related File:

PSD Expert Group Guidance Document

Related Link:

PSD website of EC

http://ec.europa.eu/internal_market/payments/framework/index_en.htm

Article85




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