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| the payment services directive arouses discussion |
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How has the Payment
Services Directive been
received in France?
Read further for an
overview of reactions. |
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The European bank card has just reached
a new milestone. In December
2005, the European Commission
presented a Draft Directive on Payment
Services in the internal market. This new
legal framework aims to lay down the main
principles that will govern relations between
banks and customers in SEPA. This
essential text for the construction of SEPA
will result in the migration from
national
payment systems to European payment
systems. For Denis Beau (Read the complete interview), Assistant Manager, Payment Systems and Market Infrastructure
at the Banque de France, "the
Draft Directive is welcome; it aims to overcome
the legal barriers characterising
the current fragmentation of payment
systems. It defines the transparency of
conditions, rights and obligations in the
area of payment services. Nonetheless,
the provisions need to be clarified, notably
with regard to the certification of payment
institutions, a new category of service
provider. It would be preferable for the
Directive to stipulate that they should be
controlled by the banking authorities and
explicitly make provision for central banks
to monitor payment systems."
• Ensure payment irrevocability
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75
M
the annual number of customers
of French brands in the EU. |
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For Denis Beau, the definition of payment
irrevocability needs to be clarified. For
Jean-Marc Mosconi, General Delegate
for Mercatel, it is a priority. The French
merchant sector is highly attached to this
rule. However, the Draft stipulates that
payment is “irrevocable upon acceptance
by the service provider”.
This breach, open to various interpretations,
presupposes that the cardholder
may contest the transaction if he or she
is not happy with the product. Irrevocability
of card payment orders must therefore
be defined less ambiguously.
• The same text for cards and credit transfers
Is it a good idea to address in the same
text payment means as different as
payment cards and transfers? Denis Beau
sees no difficulty in grouping together the
rights and obligations for these two means
of payment, providing the conditions for
implementing the payment orders are
clearly defined. For Martine Briat, Director
Legal and Banking Affairs at Cartes
Bancaires, the fact that the conditions are
not clearly defined means it is impossible
to have any clear visibility of the future of
payment cards in Europe. Lumping together
all means of payment risks creating
cumbersome procedures and additional
costs. The transposition of this Directive
into national law will not be without problems
either: it seems that all the provifeature sions for payment cards in the French
Monetary and Financial Code will have to
be modified. For this reason, Cartes Bancaires
must continue to monitor and analyse
the Draft Directive very closely.
• French retail sector very supportive
The Draft Directive will create a legal
framework that will foster the creation of
an integrated payments market. For Jean-
Marc Mosconi, "this should lead to greater
European competition, economies of
scale and greater efficiency". A new situation
from which the French retail sector is
poised to benefit considerably. French
brands attract over 75 million customers
a year on the European market. Electronic
payment is very well developed in the
sector. Furthermore, adds Jean-Marc
Mosconi, "very early on, we invested
heavily with these developments in mind.
For example, the migration to EMV is
virtually complete."
Interview: Denis
Beau
• What is the overall perception of the PSD project at the Banque de France?
Because it aims to bring down the legal barriers characterising the current fragmentation of bank payment systems, the Draft Payment Services Directive is welcome. In particular, its Title III on the transparency of conditions governing payment services, and its Title IV on the rights and obligations of the service and use of payment services are particularly important for the success of the SEPA project to create pan-European bank payment instruments that will be available starting in 2008, and which are scheduled to replace existing national payment systems by the end of 2010.
• In your opinion, will this Draft match practices in France, notably in terms of security?
This Draft includes principles that are already contained in the French legal framework and which aim to guarantee users’ access to payment systems with a high level of security and protection in the event of fraud. For example, in the area of card payment services, this covers regulation of access to the market, irrevocability of payments, limited financial responsibility in the event of theft or loss before cancellation, and the absence of all financial responsibility in the event of fraud.
Nonetheless, this project contains provisions that are a source of concern regarding their security impact, and they need to be modified or clarified. In particular, these provisions concern the certification conditions for payment establishments, a new category of payment service provider that it is proposed be created, the conditions for access to payment systems, the definition of payment irrevocability and the summary consumer information for payments of under 50 euros.
• In your opinion, can payment methods as different as bank cards and transfers be covered in the same text?
It is better that way, and there is nothing to prevent rights and obligations as they relate to the use of payment services being grouped together in the one text, providing that the actual payment conditions are clearly and precisely defined taking into account any specific features of the various payment instruments used. In this respect, some useful clarifications could be made to the Draft Directive with regard to acceptance and irrevocability conditions of payment orders.
• Will the new Payment Services providers referred to in the text be under the control of the Banque de France?
The Draft Directive is still rather vague on the issue of competent authorities for the certification and supervision of payment establishments. These authorities must simply be "either public authorities, organisations recognised by national law or by the public authorities expressly authorised for this purpose under national law". So, nowhere does it stipulate that they need to be banking authorities.
This lack of precision is also present with regard to the articulation between competent authorities and authorities in charge of monitoring payment systems and means, i.e., the Eurosystem’s Central Banks. It is simply stated that "the mission of the competent authorities should not affect the control of payment systems, which is the responsibility of the European System of Central Banks” and a simple exchange of information is planned between the competent authorities and “the central banks, the European System of Central Banks, and the European Central Bank acting in their capacity as monetary authorities and, if applicable, other public authorities responsible for monitoring payment and settlement systems".
To ensure the uniform implementation of the framework for the certification and supervision of payment service providers, it would be preferable that the Directive stipulate that it is the banking authorities that are responsible for this registration and this supervision. Further, to ensure efficient coordination between the banking authorities, the role of the Central Banks in monitoring payment systems not only when they are registered, but thereafter as well, should be spelt out in detail.
• In your opinion, what amendments need to be made to this Draft?
All amendments to the Draft Directive should firstly aim to reduce the exclusions from its field of application which seem too broad (notably those concerning payment services proposed by telecommunications operators, paper securities and micro-payments), to strengthen the certification conditions for payment institutions in order better to equate their prudential status with their activity risk, and finally to clarify and stipulate a series of provisions relative in particular to the distribution of roles between the various certification, supervision and monitoring authorities for payment services and payment irrevocability. |
| • Interview by
Nicolas Humbert |
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expertise |
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Martine Briat,
Director of Legal
and
Banking Affairs at
Cartes Bancaires. |
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"Differentiate between
provisions applicable to cards"
"The European Commission’s Draft
Directive defines the legislative
rules
to protect users of payment
services. Cartes Bancaires is
currently examining this text to
differentiate the provisions that are
applicable to cards, credit transfers
and direct debits, and is analysing
the compliance of CB contracts with
the articles of the Draft Directive." |
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expertise |
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Pervenche Beres,
President, Committee on Economic and Monetary Affairs, European Parliament. |
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What is your view of the Draft PSD (strong points, main progress, uncertainties, etc.)?
The Draft PSD has one thing in its favour: it exists. Impact studies carried out tend to show that the creation of a single payment area in euros will have a positive effect for consumers, consumption and growth. However, everything will hinge on how we implement it. At this stage in the process, it would be unwise to try and draw any definitive conclusions.
In 2004, the European Parliament requested that a legal framework be created for a single payment area, and it will make sure that its comments made at that time are duly taken into account. In particular, the Parliament had emphasised that the provisions of Community Law must be formulated in such a way that they do not undermine the efficiency of the systems and practices already in place at the national level, and that it would be better that European harmonisation adopt prudential standards rather than lowering them.
When will the Directive be examined by the Parliament?
The Committee on Economic and Monetary Affairs held an initial exchange of views on 13th March last. We should have a discussion about the presentation of a Draft Report on 18th April. The deadline for submitting amendments could then be set at 8th May, and the discussion of any amendments by the Committee could take place on 30th May, and a vote by the Committee on 20th June. The Report could then be adopted in a plenary session in July or autumn.
In your opinion, is it possible to address in the same text payment means as different as bank cards and transfers?
Obviously, it all depends on how the various payment means are handled.
In terms of Europe, what needs
to be addressed in a Directive on Payments?
Various studies have revealed that the European Union needs to harmonise to
a certain extent the rules applied to payments in order to create a single payment area in euros the benefits of which will be significant. It is important, nonetheless, to respect the principles of subsidiarity and proportionality.
Is this text regarded unanimously in the European Parliament?
The first exchange of viewpoints has shown that the debate will be lively, notably in those areas where the Committee’s proposals do not follow the suggestions of the EPC (European Payment Council). It will all depend on how the debate progresses from there.
When might the Parliament vote on this issue?
It could be in July or autumn.
What steps are European countries taking to adapt to this PSD, and how are they preparing for the inevitable changes that will be needed?
Each State will no doubt have its own strategy. In theory, it will all depend on the results of the negotiations and the content of the final text. In any event, the European Parliament will be the first institution to adopt the Commission’s proposal. |
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