The emergence of new payment service providers and their impact on the regulatory and market environment

Abstract

In July 2013, the European Commission issued the proposal for a revised Payment Services Directive (PSD2). With the proposed PSD2, the Commission introduces the notion of ‘third party payment service provider (TPP)’. These are described in PSD2 as payment service providers (PSPs) pursuing business activities that are based on access to payment accounts provided by a PSP who is not the ‘account servicing’ PSP, in the form of (a) payment initiation services and/or (b) account information services. The European Payments Council (EPC) believes that substantial amendments to the proposed new set of rules related to the activity of TPPs will have to be agreed in the further dialogue between the European Union (EU) co-legislators, ie the European Parliament and the Council of the EU, to ensure the security of bank customers’ funds and data with payment account access services under the forthcoming PSD2. Moreover, an interim solution would be required to address the current lack of a legal framework regarding the licensing of TPPs until PSD2 is fully implemented in EU member states. The EPC reiterates: ‘Convenience is a priority; security is indispensable. Promoting payment innovation to the benefit of both payers and payees requires combining the two.’