11th National Selection Conference of the European Youth Parliament Ukraine
ECON
Committee on Economic and Monetary Affairs
Chairperson: Maria GERMANOVICH (BY)
Chairperson: Maria GERMANOVICH (BY)
New payment methods revolution: while the digitalisation of payment systems seems inevitable and cryptocurrencies go largely unregulated across the EU, what stance should the EU take, considering their economic benefits and public concerns?
The European payment market has undergone rapid transformation in recent years due to changes in payment habits, new business rules and new legal frameworks and regulation. Transforming Payment Systems in Europe offers insight into the ways in which new payment systems can create a single digital market to foster further integration in Europe.
Current measures and legislation
Payment Systems
1. The Directive on Payments Services (PSD)
The objective of PSD, adopted in 2007, was to create a single market for payments within the European Union. The legislation:
2. PSD2 – the revised Payment Services Directive
The revised Payment Services Directive (PSD2 – EU Directive 2015/2366) was proposed by the European Commission in 2013, and the objective was to create a level playing field by:
Third party access to accounts and the bank directly and the ability to consolidate account information in 1 portal will disrupt payment services in Europe. Innovative companies will be eager to occupy this space and respond to consumer frustrations with existing incumbent providers. The challenge though, will be how consumers respond to new technology based providers and how these newcomers are able to meet the expectations of both the consumers and the European regulatory bodies. At the same time the newcomers must ensure the highest levels of security are implemented – after all they will potentially be handling YOUR payments and have access to YOUR account.
Cryptocurrencies
There is currently no EU legislation on virtual currencies, which does not mean they are completely unregulated in Member States. Rather, patchworks of national legislation, compatible to a varying degree, exist in some Member States, while others have no legislation at all. In many Member States, nothing more than a series of opinions and warnings has been issued by central banks or regulators. Germany has the most elaborate rules, and considers virtual currencies as units of account, thus not conferring them legal tender status. For certain operations authorisation requirements exist, which may include the acquisition of a banking licence. In France actors may be required to hold a licence as payment service providers. In the United Kingdom virtual currency businesses are not obliged to register or obtain authorisation, although a number of them do so on a voluntary basis.
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Further Research:
1. A digital single market for Europe, European Commission https://ec.europa.eu/commission/sites/beta-political/files/2-years-on-dsm_en_0.pdf
2. Payment services, European Commission https://ec.europa.eu/info/business-economy-euro/banking-and-finance/consumer-finance-and-payments/payment-services/payment-services_en
3. Virtual currencies. Challenges following their introduction, European Parliament, March 2016 http://www.europarl.europa.eu/RegData/etudes/BRIE/2016/579110/EPRS_BRI(2016)579110_EN.pdf
4. Virtual currency schemes – a further analysis, European Central Bank, February 2015 http://www.ecb.europa.eu/pub/pdf/other/virtualcurrencyschemesen.pdf
Current measures and legislation
Payment Systems
1. The Directive on Payments Services (PSD)
The objective of PSD, adopted in 2007, was to create a single market for payments within the European Union. The legislation:
- Created the rules and guidelines for modern payment services in the European Union
- Simplifies payments and payment processing across the European Union
- Aims to promote competition by opening payments up to new entrants
- Advocates payment efficiency, innovation and reduced costs
- Provided the legal platform for the Single Euro Payments Area – SEPA
2. PSD2 – the revised Payment Services Directive
The revised Payment Services Directive (PSD2 – EU Directive 2015/2366) was proposed by the European Commission in 2013, and the objective was to create a level playing field by:
- Standardizing, integrating and improving payment efficiency in the European Union
- Offering better consumer protection
- Promoting innovation in the payments space and reducing costs
- Incorporating and providing clarity on the use of emerging payment methods such as mobile payments and online payments
- Create an equal playing field for payment service providers - enabling new companies to get into the payments space
- Harmonize pricing and improve security of payment processing across the European Union
- Incorporate new and emerging payment services into the regulation
Third party access to accounts and the bank directly and the ability to consolidate account information in 1 portal will disrupt payment services in Europe. Innovative companies will be eager to occupy this space and respond to consumer frustrations with existing incumbent providers. The challenge though, will be how consumers respond to new technology based providers and how these newcomers are able to meet the expectations of both the consumers and the European regulatory bodies. At the same time the newcomers must ensure the highest levels of security are implemented – after all they will potentially be handling YOUR payments and have access to YOUR account.
Cryptocurrencies
There is currently no EU legislation on virtual currencies, which does not mean they are completely unregulated in Member States. Rather, patchworks of national legislation, compatible to a varying degree, exist in some Member States, while others have no legislation at all. In many Member States, nothing more than a series of opinions and warnings has been issued by central banks or regulators. Germany has the most elaborate rules, and considers virtual currencies as units of account, thus not conferring them legal tender status. For certain operations authorisation requirements exist, which may include the acquisition of a banking licence. In France actors may be required to hold a licence as payment service providers. In the United Kingdom virtual currency businesses are not obliged to register or obtain authorisation, although a number of them do so on a voluntary basis.
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Further Research:
1. A digital single market for Europe, European Commission https://ec.europa.eu/commission/sites/beta-political/files/2-years-on-dsm_en_0.pdf
2. Payment services, European Commission https://ec.europa.eu/info/business-economy-euro/banking-and-finance/consumer-finance-and-payments/payment-services/payment-services_en
3. Virtual currencies. Challenges following their introduction, European Parliament, March 2016 http://www.europarl.europa.eu/RegData/etudes/BRIE/2016/579110/EPRS_BRI(2016)579110_EN.pdf
4. Virtual currency schemes – a further analysis, European Central Bank, February 2015 http://www.ecb.europa.eu/pub/pdf/other/virtualcurrencyschemesen.pdf
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