Today finance ministers in the Economic and Financial Affairs Council (ECOFIN), unanimously adopted a general approach on a compromise text for the Payment Services Directive (PSD). The aim of the PSD is to make cross-border payments within the EU – by credit card, debit card, electronic bank transfer, direct debit or any other means – as easy, cheap and secure as domestic payments within one Member State, and to provide the necessary legal foundation to make the Single Euro Payments Area (SEPA) possible.

It will greatly reinforce the rights and protection of all the users of payment services (consumers, retailers, SMEs...). The compromise text for the PSD will now be considered by the European Parliament.

Internal Market and Services Commissioner Charlie McCreevy said: “This is a decisive milestone towards making the Single Euro Payments Area a reality. This is a good compromise and contributes to the twin objectives of market opening and consumer protection. Easy and quick cross-border payments will bring massive savings to the EU economy and real, practical benefits to consumers. The introduction of the first SEPA instruments is now less than 10 months away. This unanimous agreement sends signals that will be well received by all those, and there are many, who believe in SEPA and have already invested massively in it. I now look forward to the European Parliament’s deliberations and hope that final adoption of this crucial Directive will follow as soon as possible.

Payment Services Directive (PSD)

The Payment Services Directive, which the Commission proposed in December 2005 (IP/05/1514), 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 between these fragmented systems is 2-3% of GDP. Service providers are effectively blocked from competing and offering their services throughout the EU. Removal of these barriers could save the EU economy upwards of €28 billion per year overall. The Directive will bring major benefits to all the users of payment services. It will ensure that electronic payments are completed in a maximum of one day after the payment order is given. It lays the ground 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, that is strongly supported by the 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.