PSD II: Modernizing the EU Payment Services Landscape Through Effective Competition and Consumer Protection

Abstract

On July 24, 2013, the European Commission (“the Commission”) issued a legislative proposal to update the existing Payments Services Directive (“PSD I”), which has been in force since 2007. The new legislative package includes a revised Payment Services Directive, along with a new Regulation on Multilateral Interchange Fees (both referred to as “PSD II”) and intends to establish a new reliable regulatory framework for payment services. PSD I needed to be updated in order to modernize retail payments, as also provided by the Commission Single Market Act II, promote innovation in the market, reduce transaction costs and increase protection for consumers, while removing barriers to entry for new payment services providers (“PSPs”) strengthening, thus, effective competition in the relevant market. When adopted, PSD I was a very innovative initiative setting the foundations for the establishment and development of a unified European payments market. In fact, PSD I, as transposed in the different EU Member States achieved relatively quickly more secure efficient and easier domestic and cross-border payments. The payments market, although still in its infancy attracted new entrants and considerable investment to the direct benefit of consumers throughout the EU.

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