Payment Services Directive

The Payments Services Directive (PSD) came into force across the EU and EEA countries on November 1. The directive aims to establish a modern and harmonised legal framework necessary for the creation of an integrated payments market, which would enable payments to be made quicker and easier throughout the EU.

The PSD has two objectives: to generate more competition in payment markets by removing market entry barriers and guaranteeing fair market access, and to provide a simplified and harmonised set of rules regarding information requirements and rights and obligations linked to the provision and use of payment services.

The directive has a wider scope, covering payments made in any EU currency and is not limited to the euro. It applies not only to banks but to all providers of payment services, be they supermarkets, money remitters or, in some cases, telecom or IT providers.

It is important to explain a few technical terms for the sake of clarity. The PSD regulates 'payment services', which include cash placements on a payment account, cash withdrawals from a payment account, execution of payment transactions, and issuing/acquiring payment instruments.

Cheques or cash are not considered as payment services in terms of the PSD.

An account is deemed to be a payment account where a customer can place, transfer and withdraw funds without any additional intervention or agreement of the account provider. However, an account that does not enable a customer to place funds on it freely or one that does not enable a customer to transfer or withdraw funds from it freely is unlikely to be a 'payment account'.

Current and conventional savings accounts automatically qualify as payment accounts. If, on the other hand, a savings account exhibits restrictive features relating to withdrawals, then it is unlikely to be considered as a payment account. As another example, fixed term deposit accounts are not generally considered as payment accounts.

The meaning and scope of a framework contract or arrangement will be covered next week.

This information has been provided by Anna Cutajar Paris, from the Consumer Complaints Unit, Malta Financial Services Authority. For more information about this subject and for more consumer issues on financial matters, call the Consumer Complaints Unit on freephone 80074924 or visit www.mfsa.com.mt/consumer.