Overview

An efficient market for payment services in Europe should guarantee:

  • the same rules all over the EU

  • clear information on payments

  • fast payments

  • consumer protection

  • a wide choice of payment services

The EU is aiming to create a single payment area

  • which lets citizens and businesses make cross-border payments as easily and safely as they would in their own countries

  • where cross-border payments are subject to the same charges as domestic payments

EU rules on payment services

The EU set up common rules for payments with the adoption of the first payment services directive (PSD 1). The directive became law in 2009 and is still in force. It covers all types of electronic and non-cash payments, such as

  • credit transfers

  • direct debits

  • card payments

  • mobile and online payments

The payment services directive establishes the same set of rules on payments across the whole European Economic Area (European Union, Iceland, Norway and Liechtenstein). It helps consumers to make cross-border payments easily and safely.

The directive also introduces a new category of payment service providers other than banks – the so-called 'payment services'. This should increase competition and choice for consumers.

Under the directive, payment services providers must

  • give adequate information to consumers

  • ensure fast and efficient service

  • compensate the consumer if services are not provided correctly

These rules also lay the groundwork for the single euro payments area, which allows consumers and businesses to make payments under the same conditions across the euro area.

Revision of EU legislation

In 2015 the EU adopted a new directive on payment services (PSD 2) to improve the existing rules and take new digital payment services into account. The directive will become applicable in 2018. It includes provisions to

  • make it easier and safer to use internet payment services

  • better protect consumers against fraud, abuse, and payment problems

  • promote innovative mobile and internet payment services

  • strengthen consumer rights

  • strengthen the role of the European Banking Authority (EBA) to coordinate supervisory authorities and draft technical standards

The directive is part of a legislative package that also included a regulation on multilateral interchange fees. Together, the regulation and the second payment services directive,

  • limit the fees for transactions based on consumer debit and credit cards

  • ban retailers from imposing surcharges on customers for the use of these types of cards