New EU legislation on payment services brought into effect by Minister for Finance to deliver greater protection for consumers and businesses
The Minister for Finance, Mr Brian Lenihan, T.D., has signed regulations to transpose the Payment Services Directive.
The European Communities (Payment Services) Regulations 2009 (S.I. No. 383 of 2009) will apply from 1 November 2009 and will regulate the provision of specific payment services to all users, with specific rights for consumers and micro-enterprises (broadly, firms with a staff of less than 10 people and a turnover of less than €2 million). Payment services covered include credit transfers, direct debits, standing orders, money remittance, debit and credit card transactions, and certain services provided through mobile phones or other digital and IT devices.
The Minister said, “these regulations provide a new, comprehensive regulatory framework for the provision of payment services, whether in euro or in another Member State’s currency, in Ireland and throughout the European Union.”
Benefits for payment service users
The regulations set out the respective rights and obligations for the users and providers of payment services, including:
- electronic credit transfers that do not involve any currency conversion must be carried out at the latest by the end of the next business day from January 2012. Until then, a maximum execution time of three business days applies. In addition, parties may agree on an extra business day for paper-initiated payment transactions;
- when a payment is credited to an account, a recipient will have full and immediate use of the monies;
- enhanced customer protection through the provision of standardised information on payment services and clear rules on refund where a transaction is wrongly executed; and
- the Directive provides a legal basis for consumers to live and work throughout the EU and to manage all their finances from an existing euro account within the framework of the Single Euro Payments Area.
The Financial Regulator will be responsible for regulating the provision of payment services in Ireland and consumers and micro-enterprises will be able to bring complaints to and seek redress from the Financial Services Ombudsman for breaches of obligations arising under the Regulations.
A new type of payment service provider
Payment services are currently provided by, amongst others, banks, building societies, credit unions and money transmitters. The Payment Services Directive introduces a new category of provider known as a payment institution, which may be authorised to provide payment services within the scope of the Directive in conjunction with existing providers of such services, such as banks, and establishes harmonised EU rules for their authorisation and supervision. The Directive, therefore, lays down the framework for the future development of the payments industry in the European Union.
<<SI 383 of 2009.pdf>>
Notes for Editors:
What does the Directive do?
The Directive establishes:
- who may provide payments services;
- rules for the authorisation and supervision of a new category of financial services provider called payment institutions;
- transparency requirements to ensure that payment service providers give requisite information to their customers; and
- the respective rights and obligations of payment service providers and payment service users for all stages in the ‘life-cycle’ of a payment transaction.
While the Directive introduces a new concept of ‘payment institution’, the rules on transparency and rights and obligations will apply to payment services provided by existing categories of payment service provider, such as banks, building societies, electronic money institutions, An Post, the ECB, national central banks (when not acting in their capacity as monetary authority or other public authorities); and national, regional and local authorities, (when not acting in their capacity as public authorities).
The Directive sets out the information that payment service providers must give or make available to their customers before, during and after a transaction is made, such as the maximum length of time a payment will take to get to the recipient, the currency exchange rate and any charges for currency conversion.
The Directive sets out the obligations of payment services users, such as protecting their PIN number; and the obligations of payment service providers, e.g. ensuring users have a means of contacting their payment service provider in the event of loss of a payment card. It also provides for refund rights for disputed payments, and sets out the circumstances in which the payment service provider will be liable for any unauthorised transactions.
Who will regulate the provision of payment services in Ireland?
The Financial Regulator will be responsible for the authorisation and supervision of payment institutions and will also have responsibility for supervising all payment services providers as regards the rules on transparency and rights and obligations under the Directive.
The Regulations also provide jurisdiction for the Financial Services Ombudsman to adjudicate on complaints from consumers and micro-enterprises (broadly, firms with a staff of less than 10 people and a turnover of less than €2 million) concerning the provision of payment services within the scope of the Directive.
Legal basis for pan-European direct debits
The Directive also provides the legal basis for the introduction of the Single Euro Payments Area (SEPA) direct debit scheme. Under this industry-led initiative, from November 2009 onwards, direct debit originators (such as banks and utilities) will begin to transfer existing direct debit mandates from the existing Irish direct debit scheme to the new pan-European SEPA direct debit scheme. Direct debits will be regulated by the Payment Services Directive from 1 November 2009.