Docstoc

Dia 1

Document Sample
Dia 1 Powered By Docstoc
					                        European legislation & Payment Systems
De Nederlandsche Bank   Statistics



                        Ayse Zoodsma-Sungur

                        4th Macedonian Financial Sector
                        Conference on Payments and
                        Securities settlement Systems

                        Ohrid
                        21 June 2011                De Nederlandsche Bank
                                                                Eurosysteem
Agenda

   Background to the PSD
   Types of PSP‟s
   Scope of the PSD
   Application Process
   PSD Conduct of Business Rules
   Crediting and Value Dating
   E-Money Directive


                                    De Nederlandsche Bank
                                                Eurosysteem
Background to the
Payment Services Directive (PSD)

   Legislative proposal for PSD adopted on 1
    December 2005 with political agreement
    reached in April 2007. The PSD was finally
    adopted on 13 November 2007.

   In NL PSD is implemented into national law
    by 1 November 2009 and in most countries



                                           De Nederlandsche Bank
                                                       Eurosysteem
Background to the
Payment Services Directive (PSD)
                                                 2
In the Payment Services Directive stated intent:

   remove legal barriers to creation of SEPA;

   SEPA will remove differences between
    domestic and cross-border payments.




                                            De Nederlandsche Bank
                                                        Eurosysteem
Background to the
Payment Services Directive (PSD)
                                                3
PSD has three main objectives:

  enhance  competition;
  increase market transparency; and
  standardise rights and obligations of
   providers and users




                                           De Nederlandsche Bank
                                                       Eurosysteem
Types of Payment Service Providers


Directive set out different types of payment
 service provider:

   credit institutions, e-money institutions,
    payment institutions, the ECB and other
    central banks, government departments and
    local authorities

   Impact of the PSD will vary depending on
    the type of payment service provider
                                         De Nederlandsche Bank
                                                     Eurosysteem
Types of Payment Service Providers
                                                   2


   Prohibition on the provision of payment
    services by persons other than payment
    service providers




                                              De Nederlandsche Bank
                                                          Eurosysteem
Scope of the PSD

   Territorial Limits – Conduct of business rules
    (i.e. information requirements and provider
    and user rights and obligations only apply
    where both the payer provider and payee
    provider are located in the EEA.

   Currency Limits – Conduct of business rules
    only apply where the payment services are
    carried out either in Euro or in the currency of
    an EEA State that has not adopted the Euro
                                              De Nederlandsche Bank
                                                          Eurosysteem
    Scope of the PSD                            2

The Regulations only apply to the payment
  services listed below 5 main categories:

   Services enabling cash deposits and
    withdrawals from a payment account;

   Execution of payment transactions;

   Issuing and acquiring of payment instruments;


                                          De Nederlandsche Bank
                                                      Eurosysteem
Scope of the PSD
                                                3


   Money remittance services;

   Execution of payment transactions where
    consent to execute a payment transaction is
    given by means of an IT device and payment
    is made to the operator acting only as an
    intermediary between the user and supplier of
    the goods and services.
                                           De Nederlandsche Bank
                                                       Eurosysteem
Activities that are not in the Scope of the
PSD
                                           4
Certain activities do not constitute payment services,
 these in summary include:

   cash transactions without an intermediary or payment
    transactions through a commercial agent
   money exchange business consisting of cash to cash
    operations where funds not held on a payment
    account
   payment transactions based on paper based
    cheques, vouchers; traveller's cheques etc.



                                                  De Nederlandsche Bank
                                                              Eurosysteem
Activities that not in the scope of the PSD

                                                  5
   services provided by technical service
    providers, which support the provision of
    payment services, without them entering into
    possession of the funds

   services based on instruments that can be
    used to acquire goods or services only in the
    issuers premises or through a limited network
    of providers or for a limited range of goods or
    services

                                             De Nederlandsche Bank
                                                         Eurosysteem
Activities which do not constitute Payment
Services                                3

   payment transactions carried out between
    payment service providers, or their agents or
    branches for their own account

   execution of payment transactions executed
    by means of an IT device where goods or
    services are delivered to and used through an
    IT device provided the operator does not only
    act as an intermediary between the user and
    supplier of the goods and services

                                            De Nederlandsche Bank
                                                        Eurosysteem
Activities that are not in the scope of the
PSD
                                      5
 payment transactions within a payment or
  securities settlement system or relating to
  securities, including dividends, income or
  other distributions
 payment transactions between group
  companies
 services by providers to withdraw cash by
  means of an ATM acting on behalf of a card
  issuer

                                         De Nederlandsche Bank
                                                     Eurosysteem
Scope of the PSD Business Activity
Restrictions

The Regulations specify the business activities
 that payment institutions may be involved in.
They may also provide operational and related
 ancillary services such as:

  ensuring payment transaction execution;
  foreign exchange services;
  storage of data; and



                                          De Nederlandsche Bank
                                                      Eurosysteem
Scope of the PSD Business Activity
Restrictions                                         2

   May undertake non-payment service activities
    but cannot issue e-money or accept deposits.

   May grant credit subject to certain conditions.


 safe-keeping      activities.



                                             De Nederlandsche Bank
                                                         Eurosysteem
Application Process –
How to obtain authorisation and
Registration
Payment service providers, who are neither
 banks nor e-money issuers and not otherwise
 excluded under the negative scope
 provisions, must be either:

  authorised  as a payment institution; or
  registered as a small payment institution
   subject to the qualification criteria


                                          De Nederlandsche Bank
                                                      Eurosysteem
Application Process –
How to obtain authorisation and
Registration                                     2

   Agents of authorised payment institutions and
    small payment institutions in the country, and
    agents of authorised payment institutions in
    the EEA, must register with the NCB




                                            De Nederlandsche Bank
                                                        Eurosysteem
Conduct of Business Rules –
Information Requirements


Part 5 of the Regulations sets out certain
 information requirements that apply to all
 payment service providers providing payment
 services.

   In applying the information requirements the
    Regulations make a distinction between:



                                            De Nederlandsche Bank
                                                        Eurosysteem
Conduct of Business Rules –
Information Requirements                     2


 –a payment transaction which is part of a
  series of successive payment transactions
  which is to be covered by a payment service
  agreement referred to as a "framework
  contract"
 –a payment transaction which is a single
  payment transaction

                                        De Nederlandsche Bank
                                                    Eurosysteem
Conduct of Business Rules –
Information Requirements                    2


   In each case the Regulations set out
    information to be provided before the contract
    is entered into, at the time the payment order
    is made and after execution of the transaction

   Providers can agree a “corporate opt-out”
    where the customer is not a consumer, a
    micro enterprise, or a charity with an annual
    income of less than £1 million

                                             De Nederlandsche Bank
                                                         Eurosysteem
Framework Contracts – Prior Information



   Before the contract is concluded (or
    immediately after the execution of the
    transaction if concluded at a distance where it
    is not practicable to do so) the provider must
    make available certain specified information
    in Schedule 4 (Regulation 40)

   Where the contract is also a regulated
    agreement under the certain exemptions
    apply to Regulation 40 (Regulation 34)

                                             De Nederlandsche Bank
                                                         Eurosysteem
Framework Contracts – Prior Information
                                      2

   Any information provided or made available
    under Part 5 must be provided or made
    available in an easily accessible manner (e.g.
    on paper, by e-mail or text) in English or
    another agreed language and in a clear and
    comprehensible form (Regulation 47(1))




                                            De Nederlandsche Bank
                                                        Eurosysteem
Rights and obligations

 Information requirements - single payment transactions
 Information to the payer
       prior              after receipt
     Information needed          Transaction Identifier, payee
        Execution time             Amount of the payment
           Charges                     Charges payable
     Reference exchange              exchange rate used
             rate                   Date of receipt order

    Information to the payee
             Reference, payer
                 Amount
                 Charges
              Exchange rate
             Credit value date                                   De Nederlandsche Bank
                                                                             Eurosysteem
Rights and obligations

Obligations for the user
 Act according to the contract
 Reasonable safety measures
 Direct notification of loss/theft
 And more..




                                      De Nederlandsche Bank
                                                  Eurosysteem
Crediting and Value Dating

   The payer‟s provider must ensure that the
    amount of the payment transaction is credited
    to the payee‟s provider‟s account by the end
    of the business day following the time of
    receipt of the payment order (D+1)
    (Regulation 70)

   Until 1 January 2012 the payer and the
    payer‟s provider may agree a D+3 standard

                                           De Nederlandsche Bank
                                                       Eurosysteem
Crediting and Value Dating                          3

   The credit value date for the payee‟s payment
    account must be no later than the business
    day on which the amount of the payment
    transaction is credited to the account of the
    payee‟s payment service provider (Regulation
    73(1))




                                           De Nederlandsche Bank
                                                       Eurosysteem
PSD summing up

PSD provides harmonisation of:
 Market access: besides credit institutions and
  electronic money institutions also payment
  institutions
 Rights and obligations
 Implementation in national legislation




                                          De Nederlandsche Bank
                                                      Eurosysteem
Payment Trends in the EU

  •         Number of transactions per type of payment instrument (billions)

 20000

 18000

 16000

 14000
                                                                               debit and credit cards
 12000
                                                                               credit transfers
 10000                                                                         direct debits
                                                                               cheques
 8000
                                                                               E-money cards
 6000

 4000

 2000

       0
            2000   2001   2002   2003   2004   2005   2006    2007   2008

      Source ECB
                                                                                     De Nederlandsche Bank
                                                                                                  Eurosysteem
E-Money

   Definition of E-money

   Main Areas of E-money
    Box 1, Box 2




                            De Nederlandsche Bank
                                        Eurosysteem
Definition of E-money


 E-money can be defined as any amount of
  monetary value represented by a claim issued
  on a
 prepaid basis, stored in an electronic medium
  (for example, a card or computer) and
  accepted




                                         De Nederlandsche Bank
                                                     Eurosysteem
Definition of E-money
                                                   2

   as a means of payment by undertakings other
    than the issuer, predominantly for small-value

   transactions (for example, the settlement of
    modest transactions over the Internet and of
    parking or telephone charges and payment
    for public transport services)



                                            De Nederlandsche Bank
                                                        Eurosysteem
Definition of E-money
                                               2

Now a short definition of e-money:

Electronic money is monetary value as
  represented by a claim on the issuer which is:
 Stored on an electronic device

   Issued on receipt of funds
   Accepted as a means of payment by persons
    other than the issuer

                                          De Nederlandsche Bank
                                                      Eurosysteem
Box 1 - Main areas of e-money


E-money in a virtual environment

The most successful schemes still fall
 essentially into the category of pre-funded,

   personalised online payment schemes,
    involving the transfer of funds stored in an
    online account (excluding traditional bank
    deposits). Accounts are typically accessible
    via Internet browser,

                                            De Nederlandsche Bank
                                                        Eurosysteem
Box 1 - Main areas of e-money
                                                 2

e-mail and/or, in some cases, via mobile phone
  text messaging (SMS).

Examples pre-funded personalised online
 payment schemes include

   Paypal, Digicash and Moneybookers etc.




                                          De Nederlandsche Bank
                                                      Eurosysteem
Box 1 Main areas of e-money
                                                3

E-money in a standard retail environment

 Two main categories exist according to the
  storage device used:
 Card-based e-money („electronic purses‟)
  which relies on a device containing
 hardware-based security features (typically in
  the form of a microprocessor chip embedded



                                           De Nederlandsche Bank
                                                       Eurosysteem
Box 1 Main areas of E-money                          4

in the plastic card). The card is used for
  authentication rather than account
  information.

   Aside from conventional e-purses, smartcards
    for public transport are the second most
    widely used




                                             De Nederlandsche Bank
                                                         Eurosysteem
Box 1 Main areas of e-money                      5


   Software-based e-money (sometimes referred
    to as „digital cash‟ or „network money‟) which
    employs specialised software on a personal
    computer, typically allowing electronic value
    to be transferred via telecommunication
    networks and the Internet.

   The value held by a customer is stored
    centrally on a server under the control of the
    issuer and customers access their purses
    remotely.
                                             De Nederlandsche Bank
                                                         Eurosysteem
Box 2. Categories of smartcards


 Single-purpose card: usually in the form of a
  magnetic stripe card to record the amount of
  funds stored therein. It is designed to facilitate
  only one type of transaction, for example,
  telephone calls, public transportation, parking
  facilities, etc.
A distinguishing feature is that the issuer and
  the service provider are usually the same
  entity.

                                             De Nederlandsche Bank
                                                         Eurosysteem
Box 2. Categories of smartcards
                                                   3

   Closed-system or limited-purpose card:
    generally used at a small number of points of
    sale within a well-identified location, such as a
    university campus or a football stadium.

   Multipurpose card: can perform a variety of
    functions with several vendors.



                                              De Nederlandsche Bank
                                                          Eurosysteem
Box 2. Categories of smartcards
                                                    4

According to the technology they incorporate

   Contact card: a microprocessor chip is
    embedded in the card and the card must be
    inserted into a smartcard reader which
    physically comes into contact with the chip‟s
    pad to transmit/receive data.

   Contactless smartcard: the card must pass
    close to a smartcard reader to register a
    transaction so that the embedded antenna in
    the card can communicate with a receiving
    antenna in the reader.                     De Nederlandsche Bank
                                                           Eurosysteem
Box 2. Categories of smartcards
                                                         5

   Hybrid card: is one that has both contact and
    contactless capabilities, often used for
    transport applications.
    The contact mode is used to load the card with value
    and the contactless mode is used to reduce the value
    as services are consumed.

   Proximity card: communicates through an antenna
    similar to contactless smartcards
    except that it is a read-only device; no information
    can be written in the chip‟s memory.

                                                    De Nederlandsche Bank
                                                                Eurosysteem
E-money Regulatory Objectives

   Market Confidence

   Public Awareness

   Consumer Protection

   Reduction of Financial Crime

   Facilitating innovation

                                   De Nederlandsche Bank
                                               Eurosysteem
The status of the new directive


 It is maximum harmonising – not minimum
  harmonising
 Applies many provisions of the Payment
  Services Directive (PSD), mutatis mutandis
 ELMIs are now defined as financial
  institutions



                                      De Nederlandsche Bank
                                                  Eurosysteem
Authorisation and Registration


 Authorisation of ELMIs and registration of
  small issuers: 2EMD applies Article 5 of
  PSD
 Optional exemptions from prudential rules
  under consideration for small issuers
 Exemptions for limited scope schemes
 Passporting for ELMIs follows Art 25 PSD
 No passports for small issuers




                                       De Nederlandsche Bank
                                                   Eurosysteem
Prudential Changes

• Initial Capital for ELMIs reduces from €1
  million to €350,000

• Investment rules have been replaced by
  safeguarding

• The new EMD safeguarding rules are subtly
  different from those of PSD

• ELMIs can now carry out mixed business
                                              De Nederlandsche Bank
                                                          Eurosysteem
Final Remark


   Review of 2EMD is envisaged by
    November 2012 in line with PSD review




                                       De Nederlandsche Bank
                                                   Eurosysteem
Questions?




             De Nederlandsche Bank
                         Eurosysteem

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:3
posted:8/13/2011
language:English
pages:48