New EU legislation on payment services brought into effect to deliver greater protection for consumers and businesses

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New EU legislation on payment services brought into effect 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.

Article Published: 29/09/2009