Legislation

Two pieces of legislation from the EU Commission are specifically targeted at progressing SEPA through standardized legislation across the SEPA countries. The first, Regulation 2560/2001/EU kick-started the SEPA initiative, and is fully in operation (even though sometimes ignored). The second, the proposed Payment Services Directive has been agreed by the EU finance ministers in March 2007, and should pass all stages soon.

Regulation 2560…… Click here for full text (4 pages)
Regulation 2560 regulates bank charges for electronic cross-border transactions (card transactions, credit transfers, direct debits) under €50,000, denominated in euro within Europe.  The charge for these transactions must not exceed the charge for a similar domestic transaction.

Proposed Payment Services Directive….. Click here for full text and here for FAQ

The Payment Services Directive is intended to harmonise legislation in relation to payment services across the 31 SEPA countries. The SEPA Direct Debit cannot be introduced in many countries until the Payment Services Directive is transposed into national law in each country.

The Payment Services Directive was finally passed through the EU Parliament and became effective in Nov 2007.  The directive will be transposed into national legislation in all SEPA countries by Nov 2009.  There are 23 optional provisions leave a certain margin of discretion to the Member States.  Click here for list.  The consultation period for the transposition into Irish law ended in May 2008, ant the relevant Irish legislation is scheduled for Q2, 2009.  The Directive is in two parts.

The first part introduces the concept of a “payment institution” which would be a licensed institution offering payment services, but is not a bank.

The second part sets out certain pan-European rules, including maximum clearing times, user rights, information requirements, etc. in relation to payments.  “Framework contracts” will replace what we currently know as “terms and conditions”

Following is a brief summary of certain key elements:-

Scope (Geographical)            Transactions which have at least one leg (Payer or payee) in a SEPA country

Scope (Currency)                    Any currency

Execution time                         One day (from 2010 onwards)

Payment Institutions               Banks are likely to challenge this on the basis that it introduces a non-level playing field as regards criteria for participation

Liability                                    Heavy liabilities on service provider.  Liability of user is limited to €150

Transaction authorization       Rules on authorization and on cancelling of authorization