Countdown to Payment Services Directive

There are only eight months remaining for payment service providers to prepare for the Payment Services Directive (PSD), a new European law that will impact UK payments, particularly those made into and out of current accounts. The new legislation which comes into effect on 1 November 2009 will be the first piece of European legislation to impact domestic sterling payments as previous laws have focussed on cross-border and euro payments. The underlying aim of the new legislation is to enhance competition and transparency across the EU, and to ensure that the level of consumer protection is sufficient and harmonised.

The main implications for customers are that across Europe the PSD will standardise information requirements on payments, the time it will take for payments to be processed and the rights and obligations for both customers and their payment service providers for cross-border and national payments. From 1 January 2012, sterling and euro payments that are within the scope of this new legislation will need to be processed by the end of the next business day. In the period from November 2009 until January 2012, payment service providers can agree with their customers that payments will take up to three business days. What this all essentially means is that cross-border payments within Europe will operate as easily and efficiently as national payments.
The PSD also places certain responsibilities on customers, such as taking responsibility for providing the correct details for the account you wish to pay into and for reporting any suspected unauthorised transactions to your payment service provider without undue delay (and no later than 13 months after the transaction). This latter change though will not affect the terms of the Direct Debit Guarantee which will continue to operate in the UK as it does today.

Rosalind Sellers, Payments Council public affairs manager, said: We have worked hard to ensure that UK customers receive a good deal from this legislation and that they wont be overburdened by what may seem like more legal changes to their terms and conditions. Therefore, our target throughout discussions with UK regulators has been to achieve complete clarity on what the specific detail of the legislation means for both UK payment service providers and their customers, which is why were pleased that The Payment Services Regulations 2009 were recently laid before Parliament and hope that the FSA will be finalising their formal approach and policy documents promptly. Although this legislation is undoubtedly important for UK customers, in practice it will have far more impact in those European countries where customer protection is not up to the high standard already afforded to UK customers thanks to The Banking Codes.