Tuesday, April 24, 2007

Payment Services Directive agreed in European Parliament

The EU-websites are sometimes incomprehensible to browse, but ALDE has some news detail to confirm that today the Payment Services Directive was approved in the first reading of European Parliament. With the ALDE comment:
This is not a price regulation directive, but it should make payments cheaper through greater competition and through greater transparency.

The official press announcement of EP can be found here and is a bit worrying:
MEPs have adopted a legal framework designed to make cashless payments – such as card transactions, bank transfers and direct debits – simpler and cheaper, paving the way for the creation a single Euro payments area. A deal with the Council means the legislation will enter force at this first reading stage, giving the banking industry the time it needs to meet its 2010 target.
The European payments industry – banks, clearing organisations and others – have committed themselves, with the EU’s support, to changing all of this by 2010. The single euro payment area project should mean that bank transfers, direct debits and similar payments will be made through a new European system, with domestic and cross-border transactions being made in the same way at the same speed. It will also mean payment card systems converging on a common standard, so that cards from all over Europe will be accepted all over Europe, without extra fees or technical barriers.

What worries me is the conception of a new European system. We may need quite some time explaining and educating that there is not going to be a new European system as such. In the old days banks used to build those 'systems' and clearing houses for domestic markets. But nowadayes banks agree on core standards and interoperability agreements, leaving the market to determine at which processor and through which technical system and clearing house the payments will go.

Another concern is timing. Banks will in the next years have to change systems to new European standards for credit-transfer and direct debit. But the PSD is supposed to be implemented in member states at the end of 2009. So the two efforts will coincide. With the implementation of PSD-changes taking precedence (as a firm legal obligation) over the self-planned gradual change-over to European products, we may expect the actual roll-out of panEuropean products to go less quickly than initially planned.

Which is in itself not a problem for the market. We should recognize that the 2010 deadline quoted by parliament was formulated somewhere in 2002 (most likely chosen on the basis of the assumption that in 2008 the PSD would already be implemented). So my guess is that we will have a wide panEuropean availability of new products, based on EPC-standards, by 2012.