- PAYMENT SERVICES. EC-Serbia Explanatory Screening meeting Chapter 4 FREE. 13 October 2014

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1 EC-Serbia Explanatory Screening meeting Chapter 4 FREE MOVEMENT OF CAPITAL - PAYMENT SERVICES 13 October 2014 Directorate General Internal Market and Services Retail Financial Services and Consumer Policy (H3)

2 A new regulatory ecosystem PSD (Payment Services Directive 2007/64/EC) E-Money Directive (Directive 2009/110/EC) + cross-border payments Regulation 924/ SEPA migration end-date Regulation 260/2012

3 Low (payments) Medium (repayable funds) High (deposits) Payment Institutions E-Money institutions Credit institutions (Articles 4(4) & 5 to 27 PSD) (Art. 2(1) Directive 2009/119/EC) (Article 4(1) Directive 2006/48/EC)

4 The vision: a single licence The vision: a single licence Payment Institutions Payment services Electronic Money Institutions + Issue e-money Credit Institutions + Deposits

5 Objectives of the new regulatory ecosystem promote electronic payments enable new, innovative and secure payments and electronic money services to be designed ensure access to newcomers to the payments and electronic money market foster real and effective competition between all market participants limit regulatory burden & costs apply the same rules all over Europe increase consumer protection

6 Payment Services Directive 2007/64/EC legal foundation for SEPA entered into force on 1 November 2009 Established a harmonised legal framework for the development of pan-european payment services and infrastructures

7 PSD versus SEPA Conduct of business rules PSD SEPA Geographical EU + EEA (31) EU+EEA + CH, MC, SM Currencies Euro + Member States currencies Euro Stakeholders Space Payment Services Providers under Art. 1 Payment Services Providers - Payment Services Users Mainly banks Interbank Services Payment services (annex) CT, DD, cards

8 PSD Title 2: New Players Introduction of "payment institutions" Passporting regime Prudential rules and safeguarding for authorisation Implement FATF SR VI Improve competition

9 PSD Title 3: Information requirements Increased transparency increased transparency Improve consumer protection and choice improve consumer protection and choice Promote consumer confidence No charge for providing required information promote consumer confidence

10 PSD Title 4: Rights and obligations Facilitate SEPA Legal certainty, clarity and harmonisation for providers and users Greater efficiency Maximum executing time and value dating Limited liability in case of loss or theft Refund Right

11 Time for Review PSD2 proposal Proposal for a new PSD2 published in July 2013 Currently negotiated in the EP and the Council Main changes: Scope (one leg, all currencies) New services covered (payment initiation services, account information services, third party card issuers) Security of electronic payments, incident reporting Reinforced consumer protection

12 Scope of the EMD Activity of issuing electronic money 5 categories of electronic money issuers: credit institutions electronic money institutions post office giro institutions the European Central Bank and national central banks (when not acting in their capacity as monetary authority) Member States or their regional or local authorities (when acting in their capacity as public authorities).

13 Main Main features of the EMD TITLE I: SCOPE & DEFINITIONS Negative scope: limited network & some m-payments New definition of "e-money issuer (5 categories) TITLE II: PRUDENTIAL REGIME FOR E-MONEY INSTITUTIONS PSD qualitative rules apply Lighter quantitative regime (e.g., initial capital reduced from EUR 1M to EUR ) TITLE III: C.O.B. RULES Improved redeemability rules (fee allowed in some cases) Prohibition of interests Clear & wide enough definition of e-money, covering both physical & non-physical e-money Hybrids now possible Ring-fencing of customer funds TITLE IV Increase of thresholds to apply SCDD

14 Issuance & distribution IN OUT E-Money issuance within the EU/EEA & its distribution & redemption through agents within the EU/EEA E-Money issuance outside the EU/EEA & its distribution & redemption through agents within the EU/EEA

15 PSD and EMD information on our website A report on the transposition of the PSD and EMD in all Member States Use of options by Member States Passporting guidelines including information on the national public registers, competent authorities for authorisation and supervision, competent authorities for handling complaints, ADR bodies in the Member States Q&As

16 Regulation (EC) No. 924/ Charges for payments in euro Applies to payments in euro in all EU and EEA Basic principle: charges for payment transactions offered by a payment service provider (e.g. bank) have to be the same for the euro payment of the same value, whether the payment is national or cross-border To be read together with Regulation (EU) No. 260/2012 introduces important amendments 17/11/2014

17 Regulation (EC) No. 924/ Member State decisions and obligations OPTIONAL CURRENCY EXTENSION Possibility to extend the Regulation to national currencies of the EU Member States "narrow" extension based on Article 14 "wide" extension based on Article 3(3) SUPERVISION & CONSUMER PROTECTION Competent Authority (CA) and out-of-court redress body to be designated and notified to the Commission CA to ensure compliance, deal with complaints and cooperate in solving cross-border disputes MS to adopt penalties for breaches of Regulation BOP REPORTING RULES (Article 5) Statistical reporting obligations on PSPs and related to customer transactions to be abandoned by 1 February 2016 Possibility to collect readily available payment data retained 17/11/2014

18 Regulation (EC) No. 924/2009 and Single Euro Payment Area common misunderstandings Geographic scope Charges (equalisation) Currencies Application of rules by PSPs Instruments 17/11/2014 Regulation 924/ EU + 3 EEA YES, main purpose of the Regulation Euro + optionally national currencies (SEK, RON) Obligatory All electronically processed payments independently of the technical format SEPA banks from 28 EU + 3 EEA + CH, MC, SM NO, the agreement only concerns the interbank space Euro only Voluntary (do not confuse with rules of Regulation 260/2012) Only SCT and SDD (+ Card Framework)

19 Regulation (EU) No 260/2012 or (so-called) SEPA migration Regulation Scope and objectives: Applies to credit transfers and direct debits in euro, creates a single market for these payment instruments, with the same rules and technical standards applicable across 28 MS, Full migration to pan-european payment schemes for credit transfers and direct debits without distinction national cross-border payment Applicable to euro payments in all EU MS + relevant for EEA countries, Regulation entered into force on 31 March 2012 with migration deadline 1 February 2014, extended to 1 August 2014 Improved efficiency and more competition in the EU payments market, estimated savings for EU economies at some 20 billion euros each year 17/11/2014

20 Regulation (EU) No 260/ main features (1) - SEPA credit transfers/direct debits are mandatory for payments in euro from 1 August 2014 (for euro payments in non-euro area MS transitional period by 31 October 2016) Uniform technical standards for SEPA credit transfers/direct debits: IBAN, BIC and SEPA data format (ISO XML) Principle of 'reachability' and 'interoperability' for payment systems Principle of 'accessibility' (payer/payee doesn't have right to dictate in which MS respectively payee/payer holds a payment account) 17/11/2014

21 Regulation (EU) No 260/ main features (2) - Extension of existing requirement of equal pricing for cross-border and domestic euro payments to payments above EUR (read together with Regulation (EC) No 924/2009) Removal of balance of payments statistical national reporting obligations above EUR by 1 February 2016 (read together with Regulation (EC) No 924/2009) Several MS options for transitional period until 1 February 2016: BBAN IBAN conversion facilities; niche products; one-off direct debits; delayed usage of standard message format ISO XML; delayed BIC elimination Transitional period for non-euro area MS for some provisions until 31 October 2016: end-date for migration to SEPA credit transfers/ direct debits; technical standards; reachability; interoperability 17/11/2014

22 Regulation (EU) No 260/ Member State obligations and decisions - MS have to designate competent authorities responsible for ensuring compliance with the Regulation MS have to lay down rules on penalties for breaches of the Regulation MS have to establish adequate/effective out-of-court complaint and redress procedures and set in place an out-of court complaint body and redresss body MS have to decide on usage of MS options provided for in the Regulation 17/11/2014

23 Thank you for your attention! Further information: Directorate-General for the Internal Market and Services Financial Institutions Retail Financial Services and Consumer Policy Rue de Spa 2, B-1049 Brussels 17/11/2014