Ask a passer-by in any European city what he or she thinks about the Payment Services Directive and you will be met with a blank stare. Try to explain it and you will be met with a yawn.
That is a shame because it could revolutionise the way every person in the EU goes about his or her business, and save them money into the bargain.
The Payment Services Directive (PSD) is the legal underpinning of a wider dream to create a harmonised payments area that will incorporate all those countries in the EU and European Economic Area. It is a fine idea that will save countless people and businesses time and money, but it faces an uphill battle. The Single European Payments Area (Sepa) was inaugurated late last year, but its uptake has been lacklustre. There is no deadline for Europe's banks to comply, and no one prepared to take responsibility to set the deadline. This has allowed banks to procrastinate. After all, what is in it for them? It will slash revenues from cross-border transactions and cost them millions to implement the technology. It is rather like paying someone to take money from their pockets.
The deadline for banks to be compliant with the PSD falls in November this year. Unlike Sepa, the PSD is not voluntary but legally binding, and those banks that do not comply will effectively be breaking the law. The chairman of the European Payments Council, Gerard Hartsink, is adamant: "The law is the law, there is no escape."
So far, however, Europe's banks have not taken much notice. According to a new survey conducted by The Banker's contributing editor, Chris Skinner, two-thirds of banks believe that the PSD is being interpreted in very different ways across the member states of Europe, and almost half believe the PSD is being implemented inconsistently across Europe. The legislation is badly conceived.
The European Banking Association readily admits the PSD will increase rather than reduce fragmentation in the pan-European payments market since it enables member states to modify some of the obligations of the legislation. This should be seen as nothing more than an unofficial charter for procrastination. Add to that a fundamental unwillingness from some banks to spend money on the technology necessary to comply with new legislation and it becomes hard to see how and when this project will ever reach fruition.
