Bid to redraw European payments landscape faces delays

Rebecca Brace
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While the contentious proposed EU cap on banks’ card fees has drawn much attention, the Payment Services Directive is also courting controversy, with respect to the ability of third-party providers to offer payment initiation services and refund obligations for Sepa direct debits.

She adds that when such providers access the consumer’s accounts, given they use the consumer’s personalized credentials, there is no way for the banks to determine who has actually initiated the payment order.

“At the same time, the TPP accessing the user’s account can see everything the user can see and this is not very transparent from a user’s perspective,” says Wandhöfer.

From a corporate point of view, another of the notable developments within the PSD2 proposal relates to Sepa direct debits. Previous legislation has stated that, in the case of authorized transactions, customers have the right to a conditional refund up to eight weeks after making a payment – for example, if the authorizing did not specify the amount or the amount was unexpectedly high.

According to the PSD2 proposal, an unconditional refund right is proposed, in line with the Sepa direct debit (SDD) rulebook. However, this new refund right applies only provided that “the payee has already fulfilled the contractual obligations and the services have already been received or the goods have already been consumed by the payer”.

“Now, in many cases, the position is that if corporations are delivering something like gas or airtime on a phone, the user has to pay – unless there is a problem with the bill,” says Wandhöfer. “This could be great news for corporates, who have tended to be unhappy about actual practices involved in the eight-week refund right.”

However, as Wandhöfer points out, the text of the proposal has some ambiguity on this point, as one of the key sentences in this Article (67) is incomplete.

Given the PSD2 proposal’s early draft format – the document contains several tracking mark-ups and some key terms are not defined – and the other unpublished regulations it references, it is unlikely this will be waved through quickly. As such, some of the measures set out in the proposal might be subject to change.

Although the document gives an indication of the future development of the European payments landscape, unresolved issues, with respect to the ability for TPPs to be able to offer payment initiation services and refund obligations for SDD, suggest the directive faces many delays before implementation.

As a result, banks will have plenty of time to lobby against the contentious cap on card-interchange fees.