EU Parliament moves forward with payment services reforms

The revisions to the Payment Services Regulation were approved with 39 votes in favour, 1 against, and 3 abstentions. The regulation aims to enhance harmonisation across the EU regarding payment and electronic money services, applicable to banks, post office giro institutions, and payment institutions.

MEPs emphasised the importance of verifying unique identifiers, such as the IBAN, for credit transfers at no cost to the customer. Additionally, they advocate for robust customer authentication methods involving multiple elements and risk assessments to prevent fraud. Payment service providers (PSPs) failing to implement adequate fraud prevention mechanisms would be liable for compensating customers for losses resulting from fraud. Furthermore, technical service and IT solution providers could face liability for damages caused by failures within their contractual scope, while online platforms could be held accountable for fraudulent content not promptly removed.

The updated text extends the right to refunds in cases of 'spoofing' beyond instances involving fraudulent impersonation of a customer's bank to include other types of organisations. MEPs also call for Member States to invest in education on payment-related fraud through media campaigns or educational initiatives in schools.

A focus on data security 

MEPs stressed that the processing of personal data for payment services should only occur with customer consent. Customers should have the ability, via a dedicated dashboard, to opt-out of data sharing with third parties both for existing and future data access permission requests, and to withdraw access to their data. 

Customers should also be fully informed about all charges before initiating a payment transaction in a clear and accessible manner. This includes details on currency conversion charges and any fixed fees for cash withdrawals. The Payment Services Directive was adopted with 37 votes in favour, 1 against, and 6 abstentions. The directive aims to create a level playing field for all PSPs, ensure secure and efficient digital payments, and improve access to cash, particularly in remote areas.

Improved access to cash 

To ensure better access to cash, especially in rural areas, retail stores offering cash withdrawals independently from purchases (up to EUR 100) would be exempt from certain regulations. Similarly, ATMs solely facilitating cash withdrawals without servicing payment accounts would undergo a simplified registration process. 

MEPs also support the entry of new players into the EU payment services sector under strict authorisation conditions applicable Union-wide. Definitions within the legislation, including that of 'payment account,' have been adjusted to accommodate the evolving retail payment market. 

Entities intending to provide payment services or electronic money services must apply for authorisation, submitting a comprehensive business plan and outlining security, data protection, and governance arrangements. Minimum initial capital requirements ranging from EUR 50,000 to EUR 350,000 apply, depending on the services provided.