Under the proposed directive , payment institutions may receive funds from the public for the provision of payment services .

9.4 Finally , Article 10 ( 1 )( c ) of the proposed directive grants payment institutions an explicit right to operate payment systems .

9.1 The proposed directive should make it clear that payment system operators will be entitled to differentiate between different types of payment service providers regarding the conditions to be fulfilled before the latter can gain access to payment systems .

Second , the proposed directive does not address the different categories of risks associated with payment services .

Such a clarification could be achieved , for example , by restricting the payment service activities of payment institutions to those specified in paragraph 7 of the Annex to the proposed directive .

Under Article 2 , the proposed directive applies to an exhaustive list of business activities defined as payment services and listed in the Annex to the proposed directive .

However , the proposed directive is not clear concerning the kinds of activities that such payment institutions may perform .

However , recitals 8 and 9 to the proposed directive state that payment institutions may not take deposits .

The proposed directive is a very welcome initiative , as it establishes a comprehensive legal framework for payment services in the EU .

28 April 2006 The European Central Bank opinion on the proposed directive on payment services in the internal market

First , the proposed directive does not seem to be technologically neutral , as it discriminates between physical and electronic forms of payment . It may therefore create an unwarranted bias towards paper based payment services .

The last indent of Article 1 of the proposed directive provides that central banks acting as monetary authorities and public authorities which provide payment services are not considered to be payment service providers .

Moreover , payment institutions should not be allowed to grant credit in accordance with paragraph 4 of the Annex to the proposed directive .

6.5 Finally , Article 10 ( 3 ) of the proposed directive states that the activities of payment institutions are not to be restricted to offering payment services subject to applicable national and Community law .

In addition , the scope of Article 23 ( 1 ) of the proposed directive should be limited to ensuring non discriminatory access of payment institutions to payment systems .

General observations 1.1 The proposed directive is a very welcome initiative , as it establishes a comprehensive legal framework for payment services in the EU .

4.2 The ECB is of the view that there is scope for improvement in the regulatory treatment of payment institutions under the proposed directive in three main areas .

account .

This is complemented by industry 's initiative for a Single Euro Payment Area ( SEPA ) , aimed at integrating national payment infrastructures and payment products for the euro zone .

Since the objectives of the proposed action , that is to say , the establishment of a single market in payment services , cannot be sufficiently achieved by the Member States because it requires the harmonisation of a multitude of different rules currently existing in the legal systems of the various Member States and can therefore be better achieved at Community level , the Community may adopt measures , in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty .

Proviservices and participation in payment systems .

The acceptance of a compensation offer ( under 8 above ) shall also constitute the irrevocable agreement of the undersigned , in relation to each payment order for which the compensation offer is accepted , to indemnify the ESCB up to the amount received against any further compensation which might be claimed by any other TARGET participant in relation to such payment order .

It therefore seems that the proposed directive applies generally to the operation of payment systems . In particular , Article 7 ( 1 )( b ) of the proposed directive states that identifying a beneficial owner forms part of the customer due diligence requirements , and Article 3 ( 8 ) provides that beneficial owner means , inter alia , the natural person on whose behalf a transaction or activity is being conducted .

4.3 In view of these considerations , there seems to be a mismatch under the proposed directive between the scope of activities of payment institutions and the prudential framework within which such activities are to be carried out .

service provider .

CONTEXT OF THE PROPOSAL Objectives of the proposal

Payment systems

Payment Systems

Payment Systems

Standing order

Payment Method

Payment Accounts

Loan payment

Payment account

Payment date

Payment method

Payment frequency

This implies that the range of activities of payment institutions may go beyond those listed in the Annex to the proposed directive , which gives rise to two concerns .

Processing of the payment Value added services offered after payment

execution of payment transactions through a payment card or a similar device

execution of payment transactions through a payment card or a similar device

3 OT H E R I S S U E S 3 3.1 OTHER ISSUES PAYMENT SERVICES DIRECTIVE SWIFT TRANSPOSITION INTO NATIONAL LAW IS NOW NEEDED The Eurosystem therefore urges Member States to transpose the PSD into national law as soon as possible , so as to pave the way for a successful and timely introduction of SEPA payment instruments .

Customer payment Customer payment ( Straight Through Processing ) Bank to bank payment Cover payments Direct debit payment Delivery notification Sender notification Abort notification

This could be done by amending the proposed directive to ensure that more explicit obligations are imposed on payment institutions as follows ( i ) to earmark funds accepted to specific transactions

The ability of payment institutions to provide payment accounts implies that payment institutions could keep funds for a longer period than is necessary to finalise a payment transaction .