Legal and Regulatory Framework for Electronic Money ...€¦ · Legal and Regulatory Framework for...
Transcript of Legal and Regulatory Framework for Electronic Money ...€¦ · Legal and Regulatory Framework for...
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Legal and Regulatory Framework for Electronic Money Instruments
EU Payment services directive and e-money directive
as a tentative benchmark
Prof. M.C. Malaguti PSDG Legal Expert
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Overview of the PSD
• It establishes who may provide payment services
• It imposes transparency requirements in the provision of the service
• It sets out the relative rights and obligations of service provider and service user
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Who can provide the service?
Credit institutions Whose business is
to receive repayable funds from the public,
whether in the form of deposits
or in other forms such as the continuing issue of bonds
E-money institutions Receipt of funds from the public in exchange for
electronic money. Store-value
(credit balance). Redeemability not an issue
Payment institutions Forbidden from taking deposits
or other repayable funds; customers funds
can be taken until end of day
following reception; credit granted under limited
conditions
Yet, no need for a payment account: money remittance
SOME HYPOTHESIS
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Bank
customers
MNO A
B
C C account
B account
Bank
customers MNO
A
B
C
Customers Funds stored
Bank
customers
MNO A
B
C C account
Pooling account
M-banking with agents
Bank
customers
MNO A
B
C C account
Pooling account
merchant
BACK TO THE PSD
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Authorization regime
Supervisory regime
Safeguarding measures for users
Granting fair access of PI to payment
systems
pricing
Applicable conditions
Rules for unauthorized payment
transactions
Rules on irrevocability
Rules on refunds
Rules on execution time
Rules on defective execution
Pillar I
Authorization and supervision regime for
PI
Pillar II
Transparency requirements applicable to all PSPs
Pillar III
Rights and obligations of PSU and PSPs in a payment transaction
Protection of users Competitive EU market
Slide from Ceu Pereira
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Regulatory choices:
Pillar I
Authorization and supervision regime for
PI
Authorization regime
Supervisory regime
Safeguarding measures for users
Granting fair access of PI to payment
systems
Qualitative/quantitative
More/less burdensome
Higher/lower barriers to entry
Scope of authorized activities
Maximum/minimum harmonization
Degree of interference with some payment systems’ rules
Slide from Ceu Pereira
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Regulatory choices:
Pillar II
Transparency
Charges
Other contractual terms
Value dates
Derogations for new payment methods
More/less information
free of charge or not
Make available/provide
Support: paper or other?
No hidden tariffs
Maximum/minimum harmonization
Which derogations can be justified
Slide from Ceu Pereira
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Regulatory choices:
Pillar III
Rights and obligations of the parties
unauthorized payment transactions
irrevocability
refunds
execution time
defective or non execution
Derogations for new payment methods
Degree of sharing of cost between users/PSPs
Level of service
More / less users' protection
Which derogations can be justified
Slide from Ceu Pereira
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Agents and Outsourcing of operational functions
• Outsourcing operational functions may not be undertaken in such a way to impair materially the quality of the internal control and monitoring capacities of relevant authorities
• Relationship and obligations of the PI shall not be altered
SOME QUICK CONCLUSIONS
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Legal and regulatory approaches for an
innovative retail payment space
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Functional approach
• Risk-based approach • Outsourcing • Agents networks
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Structure of the market
• Access to clearing and settlement • Interoperability • Foreclosure of the market
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Protection of users
• Transparency • Security of communication network • Protection of funds of customers
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