What is PSD? (Sharon Bowles MEP)

Sharon Bowles MEP <info@sharonbowles.org.uk>

What is PSD?

June 6, 2011 1:26 PM

About the Payment Services Directive (PSD)

Simply put, the Payment Services Directive means that when consumers want to pay for goods or services from another country they can pay more easily, without the barriers and surcharges that are currently in place (i.e. a British couple buying a house inSpain).

The Payment Services Directive (PSD) - proposed in December 2005 - aims to guarantee fair and open access to payments markets and to increase consumer protection. Currently, each Member State has its own rules on payments, and the annual cost of making payments through these fragmented systems is as much as 2-3% of GDP (GDP is the value of all goods and services produced in the economy in a given period of time, usually a quarter or a year).

Currently, payment service providers are effectively blocked from competing and offering their services throughout the EU and removal of these barriers could save the EU economy €28 billion per year overall. The PSD Directive will bring major benefits to all the users of payment services. It will ensure that all Euro, or domestic electronic payments (as well as certain other payments involving euro currency exchange), are completed in a maximum of one day after the payment order is given. It provides the legal foundation for the launch of cross-border direct debit schemes. It should also lead to lower prices and greater choice for users by fostering competition in the market and allowing non-banking institutions to enter the payment markets.

Single Euro Payments Area (SEPA)

The Single Euro Payments Area is an initiative of the European banking industry, represented by the European Payments Council, which is strongly supported by the European Commission and the European Central Bank (ECB). The Commission and the ECB see SEPA as an integrated market for payment services which is subject to effective competition and where there is no distinction between cross-border and national payments within the Euro area. This calls for the removal of all technical, legal and commercial barriers between the current national payment markets.