Payment Services Directive

The Payment Services Directive (PSD) came into force on 1 November 2009 with the goal of making payments across Europe more efficient and easier to understand. The Directive is intended to make cross-border payments as simple and secure as payments within the same country.

A standard payments process:

The Directive provides a regulatory framework for payments throughout the European Economic Area (EEA). It applies to bank and non-bank Payment Service Providers (PSPs) in the European Union (EU), Norway, Iceland and Liechtenstein. The Directive sets out regulations on account information and payment transactions in euro, sterling and other EU and EEA currencies. Cheques, drafts and other documents drawn on a PSP are not covered by the PSD.

Benefits for customers:

• Consistency – a standardised service for payments across Europe, supported by a common legal framework
• Improved protection – provide consistent rights and obligations for businesses and consumers making and receiving payments
• Clearer approach – through common understanding of each party’s rights and obligations
• Enhanced information – provided in the contract terms and conditions as well as increased transparency on the payments themselves

What happens next?

From 1 January 2012 the Directive requires that UK sterling domestic payments and payments in euro within the EEA must reach the beneficiary’s PSP no later than the business day after the payment instruction is received by the payer’s PSP.

In readiness the UK banks are working to ensure that all accounts which can receive Bacs Credits can also receive Faster Payments, which fully comply with the Directive’s new timescale.