EU Payment Services Directive Update

The Treasury has announced that legislation paving the way for the EU Payment Services Directive (PSD) will come into force in the UK on 2 March 2009.

The directive will affect all firms providing payment services, and their customers and will include banks, e-money issuers, money transfer operators and non-banking card issuers. It affects domestic and cross border payments and will introduce a number of statutory EU rules concerning providing clearer information about the way in which payments are delivered.

Significantly, this legislation will help UK based, non bank businesses to compete within the EU payments market. This will be via a regulated license, issues by the FSA. Small firms operating in the UK will now only need to register with the FSA and comply with relevant anti money laundering requirements.

The Financial Services Secretary to the Treasury, Lord Myners states: "This legislation will drive competition in the market for payment services, leading to greater efficiency, transparency and more innovation, bringing further benefits and certainty to UK consumers and businesses making everyday payments. It will also enhance consumer protection, with the new rules for payment service providers."

With legislation introduced in March, the EU PSD regulatory regime is set to be in place on 1 November 2009.

Further information is available within the FSA briefing notes available at: http://www.fsa.gov.uk/pages/About/What/International/psd/pdf/industry_briefing.pdf