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The Payment Services Directive: Why the European payments industry needs to prepare for significant implementation challenges
As part of the European Commission's Lisbon Agenda, efforts to support financial market integration in the European Union have reached another milestone with the adoption of the Payments Services Directive (PSD, 2007/64/EC) in December 2007. The PSD, designed to support the banking industry's self-regulatory initiative of the single euro payments area (SEPA), constitutes a comprehensive and detailed set of conduct of business rules in the area of payment service provision. Furthermore, the PSD introduces a new category of non-bank payment service providers in order to inject more competition into the European payments market. Despite the European Commission's efforts to improve the regulatory environment within the framework of its Better Regulation Policy, the PSD unfortunately falls short of meeting Better Regulation standards. The degree of detail and complexity of the provisions creates significant regulatory challenges, which need to be carefully assessed by all existing and future players and regulators in the European payments market. In advance of member state transposition of PSD provisions into national law, this paper attempts an initial critical analysis, providing guidance on content, interpretation and implementation concerns. The understanding of the PSD is crucial in relation to the rules on harmonisation of refund rights and unique identifier primacy, which constitute the legal basis for the pan-European implementation of SEPA Credit Transfers and direct debits. It must be kept in mind, however, that, beyond SEPA all existing electronic payment products in all EU member state currencies are equally affected, thus requiring every payment service provider in Europe to ensure compliance.
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Ruth Wandhöfer is Managing Director and Head of Global Regulatory & Market Strategy, Citibank. She chairs several influential industry bodies and is a member of the European Commission Payment Systems Market Expert Group and founding member of the Global Blockchain Business Alliance. She is a FinTech Fellow at Imperial College Business School and fellow lecturer at Queen Mary London School of Law. A 2015 recipient of the ‘Women in Banking and Finance Award for Achievement’ and named on the 2016 global ‘Women in Fintech Powerlist’ of Innovate Finance, she has written two books: EU Payments Integration (2010) and Transaction Banking and the Impact of Regulatory Change (2014).