PSD: Payment Services Directive or Payment Services Distress?
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30 May 2009
I have recently attended a European conference on the Payment Services Directive (PSD), the legal foundation for the creation of an EU-wide single market for payments. As stated on the European Commission’s site, the PSD “aims at establishing a modern and comprehensive set of rules applicable to all payment services in the European Union. The target is to make cross-border payments as easy, efficient and secure as 'national' payments within a Member State”. Impressions from the conference Although all the major European PSD experts were in the room, there still was plenty of uncertainty, confusion, and open items I supposed were to be already resolved. The PSD has principally focused on consumer protection. For this market sector it is not too problematic for banks to adapt their rules to the Directive’s mandatory guidelines. Different story is when it comes to corporations. The PSD does not provide clear provisions and guidelines on how to deal with issues that have emerged since the Directive principles have been brought to the public. Bank representatives have argued about the difficulty of implementing some provisions into local legislation. In all response I heard, more than once, legislators saying that “the law is the law, and cannot be changed”. Looks like regulators and banks have for all this time worked in parallel without sharing views and without committing themselves to find the right compromise. This impression was further on validated after I heard regulators in the room lament they were “surprised” of the negative comments they heard from banks. Would banks have “raised the issue before, things could have been worked out”. Bottom line Although all parties claim this not to be the case, the Payment Services Directive is still perceived as a compliance exercise. The European Commission is completely missing the point of providing a clear business case for adoption. On their side, banks are still in a guilty “wait-and-see” mode. In either case, distress seems to be the right sentiment that surrounds the PSD program.