Thanks to new EU rules, European consumers can now benefit from electronic payments that are cheaper, easier and safer. Since 13 January 2018, the revised payment services directive (PSD2) applies throughout the EU. The revamped rules are intended to modernise Europe's payment services so they keep pace with a quickly evolving market. The new legislation could save EU consumers as much as €550 million a year thanks to the prohibition of surcharging, and it will mean consumers are better protected when making payments. Here is a quick snapshot of the main benefits the new rules will bring EU consumers.

Banning 'surcharges'

PSD2 bans additional charges for payments with most consumer debit and credit cards, both in shops and online. 'Surcharging' is common in some Member States, particularly for online payments and in specific sectors such as the travel or hospitality industries. The ban on 'surcharging' will apply to domestic as well as cross-border payments. In practice, it will cover about 95% of all card payments in the EU.

Payment services companies

New market players will be able to offer innovative services to their customers, while strict safety rules will have to be respected (see previous article). 'Payment initiation services providers', for instance, can help consumers make online credit transfers and inform the recipient as soon as the payment has been initiated. This means that goods can be dispatched and services can be accessed immediately. 'Account information services providers', meanwhile, allow consumers and businesses to get an overall view of their financial situation. For examples, it enables them to group different payment accounts they may have with one or more banks or to categorise their spending under different headings (food, rent, leisure, etc.).

Stricter security requirements

The new rules introduce strict security requirements for electronic payments and for the protection of consumers' financial data. The new security standard will be what is known as 'strong customer authentication' (see also previous article). These stricter requirements should help reduce the risk of fraud for all new – and more traditional – means of payment, especially online payments. They should also contribute to protecting the confidentiality of users' financial data, including personal information.

Enhancing consumer rights

PSD2 also improves consumer rights in a number of areas. For instance, the new rules reduce the liability for unauthorised payments. The maximum loss they incur in the case of an unauthorised money transaction will decrease from €150 to €50 (except in cases of fraud or gross negligence by the payer). The legislation also introduces an unconditional, 'no questions asked', refund right for direct debits in euro (during an 8-week period from the date the funds are debited). And consumers will benefit from greater protection in the context of pre-authorised card payments, where the final amount is not known in advance (eg car rentals or hotel bookings). In these cases, the payee will only be able to block funds on the payer's card account if the cardholder has approved the exact amount that can be blocked.

Vice-President responsible for Financial Stability, Financial Services and Capital Markets Union, Valdis Dombrovskis, called the legislation "another step towards a digital single market in the EU". He added that it will "promote the development of innovative online and mobile payments, which will benefit the economy and growth".

Unfortunately, not all EU countries have transposed the directive into their national legislation. Moreover, payment service providers still have 18 months to adapt to some important technical standards that will further reduce the risk of payment fraud and ensure secure communication between banks and the providers of innovative payment services. The European Commission and the European Banking Authority are calling on Member States to implement the directive and the regulatory technical standards as soon as possible, so that all EU consumers can fully benefit from the new rules.

Read more on PSD2 and payment services