Saturday, November 26, 2005

Commission proposal on payments is leaked....

Info-Europa appears to be well informed on the new legal framework for payments. It appears that the commission has adapted the framework last minute to shorten payment execution time to one day.

"The directive* defines a new category of payment service provider, namely payment institutions," reads the directive. "There has been last minute discussions among Commissioners on euro payments and there is a serious consideration that it will be go from three days to one," added the source.

The maximum execution time for payment transfers inside the Euro zone was originally thought to be three days and discussions among Commissioners are bringing it back to one day. This comes a week before the Commission is due to endorse the directive and send it to the European Parliament* and Council for approval.

Non-credit institutions will be granted market access across by including them in the scope of the directive. Providers of all payment services that do not involve taking deposits or issue e-money will be subject to new rules. The prudential regime will involve closer participation from regulators and less capital requirements. "Capital requirements and other quantitative solvency requirements are deemed to be disproportionate to the risks facing payment institutions," reads the draft.

It will be up to the national member states to appoint a regulatory body that will ensure that all payment providers fulfil their obligations, disclosure of information, follow their recommendations and warnings, and get authorisation. The authorisation given by this local regulator will be valid to operate across the EU*.

All payments that do not exceed 50,000 EUR* will be subject to rules of transparency and liability of the provision of services. The directive replaces the 25 different sets of rules which include information requirements, framework contracts, and common provisions. The liability rules focus on the rights and obligations of users - that is ensuring customers that the full payment will arrive within the execution time, with clear costs and guaranteed delivery.

The Commission was contacted and had no comment on the leacked information.