UK government launches consultation on payments services directive

UK government launches consultation on payments services directive

The UK Treasury is launching a consultation into the implementation of the payment services directive (PSD), which aims to increase competition by removing obstructions to the creation of an EU-wide internal market for payments.

The PSD, which was passed by the European Parliament earlier this year, would introduce a licensing regime to allow non-bank payment service providers - such as money transfer operators - to operate across borders. In addition, all payment service providers will have to comply with new "conduct of business rules"

The Directive will also introduce information and liability requirements to provide greater legal certainty for payment services users and providers in the event of a transaction going wrong, or of a card being lost or stolen, as well as agreed timescales for executing a transaction.

Kitty Ussher, Economic Secretary to the Treasury, says the main aim of the PSD is to support the single market in financial services.

"In implementing this Directive in the UK we will be seeking to balance consumer protection with a proportionate, principles-based regulatory framework," says Ussher. "In the consultation published today, we are looking to achieve an approach which will support further competition, choice, efficiency and innovation in the payments market, including opening up markets for UK firms."

Ussher is also calling on customers affected by the collapse of UK money transfer outfit First Solutions earlier this year to participate in the consultation.

"Significantly, the money transfer sector, along with other payment service providers, will become subject to regulation under the Directive," she says.

The Directive must be transposed into national laws by 1 November 2009 - almost two years after the banking industry introduces the first payment instruments dictated by the European Commission's push for a single euro payments area (Sepa).

The regulatory framework has already been criticised by The European Savings Banks Group (ESBG) - an international banking association representing about one third of the retail banking market in Europe - which claims the text of the PSD undermines electronic payments at the expense of hard cash.

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