The regulatory framework for payments in Europe
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Transcript of The regulatory framework for payments in Europe
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The regulatory framework for The regulatory framework for payments in Europepayments in Europe
Céu Pereira, Céu Pereira, Permanent representation of Permanent representation of Portugal to the EUPortugal to the EU
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Financial ServicesAction Plan
Lisbon agendaSEPA
Single Currency
Financial Integration
Permanent Representation of Portugal to the EUPermanent Representation of Portugal to the EU
The EU: still a fragmented market!!!!The EU: still a fragmented market!!!!
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Permanent Representation of Portugal to the EUPermanent Representation of Portugal to the EU
“The legend of Sir Leon Brittan’s book”
The story is that Sir Leon Brittan as an EU trade Commissioner in the early 90’s, ordered a book costing around £10 but the charges came to £20
Alternative theory: bureaucrats fed-up paying bank charges when moving money back and forth from Brussels
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……but the real catalyst for changebut the real catalyst for change: :
the Euro changeoverthe Euro changeover
Regulation 2560/2001 brings obligation to Regulation 2560/2001 brings obligation to apply same price for cross-border and national apply same price for cross-border and national transfers in the EU since 2002transfers in the EU since 2002
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……....a single currency but still a fragmented marketa single currency but still a fragmented market
Regulation 2560/2001 had kick-starting effectRegulation 2560/2001 had kick-starting effectBut it left banks to bear the extra costsBut it left banks to bear the extra costs
Some national payments are quite efficientSome national payments are quite efficientBut huge differences between countries of a factor 1 to 8But huge differences between countries of a factor 1 to 8
Efficiency of cross-border payments is substantially lowerEfficiency of cross-border payments is substantially lowerBut should be at par with the best performing national marketsBut should be at par with the best performing national markets
Well-functioning national markets existWell-functioning national markets existBut remain fragmentedBut remain fragmented
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SEPA= Single Euro Payments Area=SEPA= Single Euro Payments Area=
An area where it is as easy, convenient, safe and An area where it is as easy, convenient, safe and efficient to make payments within or efficient to make payments within or between national borders in Europebetween national borders in Europe
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SEPA in facts and figures:SEPA in facts and figures:
A private initiative supported by EU institutions A private initiative supported by EU institutions and governmentsand governments
For Euro paymentsFor Euro payments In 27+4 countriesIn 27+4 countries Will be offering SEPA instruments from 2008Will be offering SEPA instruments from 2008 Expects to reach critical mass by 2010Expects to reach critical mass by 2010
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EPC’s SEPA TimelineEPC’s SEPA Timeline
Design & preparation
Implementation & deployment
Co-existence & gradual migration
Programme activities
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DesignSpecification
Implementation
Pilots
National migration
Early adopters
Programme management, planning, communication, monitoring
Launch
Milestones
1. 2008 EPC instruments available to citizens
2. 2010 Critical mass migrated so SEPA is irreversible
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The Payment Services Directive: a legal framework for The Payment Services Directive: a legal framework for SEPASEPA
Creation of a new category of financial institutions: Creation of a new category of financial institutions: payment institutions, with specific regulatory payment institutions, with specific regulatory frameworkframework
Comprehensive transparency requirements in order Comprehensive transparency requirements in order to enhance consumer protectionto enhance consumer protection
Framework defining rights and obligations for the Framework defining rights and obligations for the different parties, underpinning the SEPA projectdifferent parties, underpinning the SEPA project
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The pre-legislative and the legislative process The pre-legislative and the legislative process of the Payment Services Directive:of the Payment Services Directive:
5 years to consult stakeholders and MS5 years to consult stakeholders and MS
A bit more of 1 year of negotiation between A bit more of 1 year of negotiation between Council and ParliamentCouncil and Parliament
2 years of transposition by MS2 years of transposition by MS
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Member States
Parliament
Commission
Stakeholders
Council
legislativePre-legislative
MS Council
Commission
European Parliament
Stakeholders
Several layers in the process……..
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A multiplicity of actors…
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The PSD: an interesting case-studyThe PSD: an interesting case-study
Unprecedented scope and scaleUnprecedented scope and scale
““Start from scratch”Start from scratch”
Momentum and support by the industryMomentum and support by the industry
Legislate for the future payment instrumentsLegislate for the future payment instruments
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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
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Main drivers for PSD:Main drivers for PSD:
Increase competitionIncrease competition
Increase transparencyIncrease transparency
Reinforce consumer protectionReinforce consumer protection
Promote automation and STPPromote automation and STP
Promote innovative Promote innovative
and safe payment instrumentsand safe payment instruments
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Regulatory choices:Regulatory choices:
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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
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Regulatory choices:Regulatory choices:
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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
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Regulatory choices:Regulatory choices:
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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
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At the end…At the end…
More competitionMore competition More efficiencyMore efficiency More transparencyMore transparency More consumer protectionMore consumer protection More automation, STP, innovative productsMore automation, STP, innovative products Level playing fieldLevel playing field EU integrated marketEU integrated market
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What’s next?...What’s next?...
Fully-functioning EU payments market will still require as next steps:Fully-functioning EU payments market will still require as next steps:
Transposition of legislationTransposition of legislationImplementation by the industryImplementation by the industryCritical mass…..Critical mass…..
The Portuguese Presidency of the EU in the second semester of 2007 will support SEPA becoming a The Portuguese Presidency of the EU in the second semester of 2007 will support SEPA becoming a realityreality
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Thank you for your Thank you for your
attentionattention……Questions welcome!Questions welcome!
[email protected]@reper-portugal.be
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Financial ServicesAction Plan
Lisbon agendaSEPA
Single Currency
Financial Integration
Permanent Representation of Portugal to the EUPermanent Representation of Portugal to the EU