ABBL
Association des Banques et Banquiers, Luxembourg
The Luxembourg Bankers' Association
Luxemburger Bankenvereinigung
FAQ on the Law of 10 November 2009 on Payment Services
Introduction
The Luxembourg law transposing the payment services directive (PSD) entered into force on 1 November 2009 and provides the legal and operational framework for the creation of a single market for payments within the European Economic Area (the EEA is the EU, together with Iceland, Liechtenstein and Norway).
Supplementing the initiative for the single euro payments area - SEPA - in the banking area, its scope and objectives go much further. The main purpose of the PSD is to provide better and uniform protection for all payment service users (both consumers and enterprises), to ensure greater overall transparency of the payments market and to strengthen competition.
The PSD therefore stipulates the criteria in terms of transparency and information to be provided by the banks to users, together with the rights and obligations of each of the parties before entering into the contractual relationship, in contracts and during the execution of payment transactions. The PSD also sets out maximum time limits for the performance of a transaction, together with the procedures for application of value dates to accounts. These new rules will result in a change in the management practices of the Luxembourg banks.
Finally, the PSD also helps to strengthen competition on payment services markets by opening these markets up to new specialized or hybrid operators who offer payment services alongside their primarily commercial activity (examples include mass retailers, telephone network operators and Internet companies).
In Luxembourg, the CSSF is the authority responsible for supervising these new payment service providers, while the Luxembourg Central Bank will be in charge of assuring the security of the payment systems and instruments.
Milestones
| 1 December 2005 | Commission proposal on a Payment Services Directive (PSD) |
| 13 November 2007 | Adoption and publication of the Payment Services Directive in the EU Official Journal |
| 1 November 2009 | First deadline for the introduction of the Single Euro Payment Area (SEPA) instrument for direct debits & First deadline for the implementation of the Payment Services Directive in EU member states |
| 24 November 2009 | European Payment Council and the Mobey Forum sign an agreement to support the uptake of mobile payments |
| 30 November 2009 | Retailers and consumers groups give SEPA a guarded welcome |
| Mid 2010 | Second deadline for the implementation of the Payment Services Directive in EU member states |
| 31 December 2010 | Deadline for the replacement of current credit cards with SEPA-compliant cards |
| 2013 | Predicted new deadline for SEPA-complaint cards |
Source: EurActiv (c)
1. What are the aims of the PSD which is at the origin of the Luxembourg law on payment services?
- To harmonize legislation on payment services throughout the EEA.
- To make cross-border payments as simple, efficient and secure as domestic payments.
- To guarantee better consumer protection.
- To permit increased competition through the arrival of new operators (payment establishments).
2. What payment services are covered by the new legislation?
- Transfers
- Single and recurring direct debits
- Payments made by (debit) card
including withdrawals from ATMs
- Cash deposits at a bank counter or at that of another establishment.
3. Which countries and currencies fall within the scope of application of the PSD?
The 30 countries belonging to the European Economic Area (EEA), i.e.:
• The 27 Member States of the European Union
• Iceland
• Liechtenstein
• Norway
The euro and non-euro currencies of the EEA countries.
4. Which particular operators are affected by the PSD?
• Payment service providers who are no longer confined exclusively to credit establishments, but now also include any payment establishment authorized by the CSSF to provide payment services. These entities – referred to as payment establishments – may be mobile telephone operators, supermarkets, transport companies, businesses which provide money transfer services etc.
• Private consumers.
• Companies (to which some rules of the PSD may possibly not apply).
5. What will change in respect of cash and cheques?
The new legislation essentially regulates electronic payments, while also making provision for a few specific cases in which cash and cheques are handled.
Cash withdrawals from a Luxembourg ATM:
No change.
Cash withdrawals from an ATM in another country:
No change, except for regulated information about exchange rates and any charges which may apply.
Cash deposits at a counter:
Credited to the account on the date on which the funds are received and after verification if the currency of the funds paid in is the same currency as that of the bank account and the client is a consumer.
Cheques:
No change.
6. What changes will apply to transfers, direct debits and payment cards?
In general, the Luxembourg banks were already applying, either in full or in part, the conditions imposed since 1 November 2009 by the new law.
Transparency of the information:
The general terms and conditions must clarify a number of points including the following:
- payment instruments covered by the PSD
- applicable costs
- conditions and frequency of sending information to the client
- information prior to execution of a transaction
Time limits for execution:
The time limit for execution of a transaction will be not more than D+1 from the date on which the order is received by the payment service provider; but a transitional period until 2012 will allow a maximum of D+3 (D being the day on the which the payment order is received, which must be a working day). The execution days are bank working days. A transfer order presented on Friday before the end of the working day will therefore be processed on Monday (D+ 1) or Wednesday (D+3) respectively.
This time limit may be increased by one more working day if the order is presented in paper form.
Value date:
Where a transfer is received by a client, the value date for crediting to the beneficiary’s account is equivalent to the date on which the payment service provider effectively received the amount in question.
Where a transfer is effected by a client, the value date for debiting the account of the person giving the instruction must not predate the transaction.
Charges:
Prior to the execution of a payment, the client will be informed of any charges which he will have to pay.
The full amount of the transaction is transferred: the charges will not be deducted from the amount to be transferred.
Harmonization of the rules on opposition:
- Transaction authorized in advance by the client:
A challenge is possible in certain cases within a time limit of 8 weeks from the date of debiting to the account (e.g. direct debit for which the amount is not known in advance and which exceeds a reasonable value).
- Transaction not authorized or incorrectly executed:
A challenge can be signified within 13 months of debiting to the account; the service provider makes a refund to his client immediately free of all charges.
Wider choice of payment establishments approved by the CSSF
7. What obligations will be placed on the consumer?
Bank cards
The technical and operational working of your payment card will not change with the entry into force of the new law on payment services.
As in the past, you must keep and use your payment card (debit or credit) securely and comply with the general terms and conditions for its use:
“Never keep your bank card and its PIN code in the same place!” (if your card and the PIN code are both lost or stolen, the amount of the transactions effected fraudulently would not be refunded to you).
In some cases, depending on your payment service provider, an excess of 150 euros may be payable by you on the amount of the transactions effected before you declared the loss or theft of your payment card. This possible restriction is explicitly stated in the general terms and conditions for use of the card.
Call centres to declare theft or loss were put in place by the banks long ago. Please memorize the numbers on which these services can be reached.
Transfer
With the introduction of the IBAN in 2003, the Luxembourg banks anticipated one of the major changes introduced by the PSD and SEPA.
By now, Luxembourg clients are accustomed to the exclusive use of bank account numbers in the IBAN format and of the banking establishments’ BIC code.
However, transposition of the PSD into domestic law does introduce one change, i.e.:
to effect a transfer, the beneficiary’s bank is no longer obliged to check the concordance between the beneficiary’s name and the IBAN account number; only the account number is used. This means that the client who gives the instructions has greater responsibility in respect of the information concerning the beneficiary’s account number which he enters on his transfer order.
The new law imposes the same rules of operation as for any other payment instrument, in particular in respect of the time limits for opposition.
Domiciliation (direct debits)
Domiciliation consists in debiting the account of a client (the debtor) at the request of the creditor and on the basis of consent (mandate) given by the debtor to the creditor.
The direct debit system in use in Luxembourg (DOM) is confined to transactions denominated in euros.
The new law on payment services imposes the same rules of operation as for any other payment instrument, in particular in respect of the time limits for opposition:
- 8 weeks for an authorized transaction (i.e. a mandate exists) but of which the amount was not known in advance and which exceeds what the debtor might reasonably have expected.
- 13 months is the transaction is not authorized (no mandate) or incorrectly executed.
8. Can my service provider refuse to perform a payment transaction?
Yes.
In which particular cases?
• inadequate funds on the bank account or balance not available (for example, following a pending credit card transaction or an amount attached on the account),
• payment order incomplete or contains incorrect information,
• no authorization given by you for a direct debit.
Please note: any such refusal will be notified by your payment service provider stating the reasons. Costs may be charged if a refusal is notified.
9. How can I challenge a payment transaction which was unauthorized or incorrectly performed?
From the time when you become aware that a payment transaction has been effected from your account without your authorization, you are allowed 13 months after the date on which your account was debited to refer the matter to your payment service provider.
If the payment was made by card, this time limit is stipulated in the general terms and conditions for use of the card.
10. What changes will apply to the charges for making transfers?
The PSD does not define the amounts of charges which service providers may collect to execute a payment.
This information about the amount of the charges applied to each payment instrument is defined in the general terms and conditions.
Each payment service provider must require his clients to bear his own costs.
11. What changes have been made in respect of transfers made to other countries (outside the EEA)?
The time limits for executing transfers made outside the EEA or in a currency which is not that of an EEA country are not stipulated in the PSD.
Articles
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24/01/2012
Conformément à la Directive sur les Services de Paiements (PSD), depuis le 1er janvier 2012, le délai maximum d’exécution des opérations de virements réalisées au sein de l’Union européenne a été considérablement réduit.
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20/10/2010
The report highlights several key developments that have taken place in the last year around the Single Euro Payments Area (SEPA) and Payment Services Directive (PSD), revealing nearly all European Economic Area (EEA) Member States have now transposed PSD into national law1. The report also reveals that while SEPA Direct Debits (SDD) were launched in November 2009 for both consumers and corporates, usage at this stage remains very low. At the same time, usage of SEPA Credit Transfers (SCTs) has continued to grow but is still behind expectations.
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13/10/2010
The Eurosystem, which comprises the European Central Bank (ECB) and the 16 national central banks of the euro area (NCBs), has today published the final versions of the “Oversight Framework for Credit Transfer Schemes” and the “Oversight Framework for Direct Debit Schemes.” The new frameworks will help strengthen the soundness and efficiency of credit transfers and direct debits schemes by highlighting risks that could have an overall impact on the confidence of users of the instrument.
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17/08/2010
The ABBL and Ineum Consulting have updated their Guide for Payment Services Providers, "The Transposition of the PSD - Payment Services Directive in Luxembourg". Version 1.3 of the Guide takes into account the recent modification of the European Commission's transposition plans. -
17/08/2010
“The Luxembourg SEPA Implementation and Migration plan“ details the Luxembourg banking community’s migration plan towards SEPA.
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19/07/2010
This edition focuses on the Commission services’ Working Paper “SEPA Migration End-Date” published in June 2010. The paper outlines a forthcoming proposal for a Regulation or Directive establishing end dates for compliance of euro payment schemes with “essential requirements”. Contrary to its misleading title, this paper reflects political pretence rather than a concept for regulatory action that would ensure migration to SEPA as requested by the European Parliament, the ECOFIN and the European Central Bank. EU legislation based on the Commission services’ current considerations would derail the entire SEPA project and obliterate the benefits for bank customers associated with SEPA. -
16/07/2010
On 13 July 2010, the Payment Services Directive went live in Greece. The Greek law for the implementation of PSD was finally voted and published in the Greek Government Gazette on 13.7.2010 (issue A no 113/13.7.2010). -
02/03/2010Transposition of the Payment Service Directive in Luxembourg: a Guide for Payment Services Providers
The main objective of this guide is to assist the reader in understanding the issues and impacts on banking processes of the transposition of the PSD (Payment Services Directive), in particular on those aspects of the law which are open to interpretation.
Available in French and English
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20/11/2009
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...for Marc Hemmerling, Head of Organisation, Technology & Payment Systems at the ABBL.1. What is the difference between the PSD (Payment Services Directive) and SEPA (Single Euro Payments Area)?
The PSD is often mentioned in the same breath as SEPA. However, while both are indeed related, the two need to be distinguished. SEPA is an initiative by the European banking sector with the aim to introduce advanced payment systems in Euro to the end consumer. This goal will be achieved by implementing efficient and Europe-wide inter-operable intra-bank solutions. With SEPA, the distinction between national and cross-border payments is essentially abolished. It covers credit transfers, Direct debit and card payments. The PSD, on the other hand, defines the legal framework on which SEPA bases itself... -
01/11/2009
Le 1er novembre 2009 une nouvelle loi sur les services de paiement entre en vigueur au Luxembourg. Elle a pour objet de transposer la Directive Européenne sur les services de paiement (2007/64/CE) du Parlement Européen et du Conseil adoptée le 13 novembre 2007. La loi sur les services de paiement s’inscrit dans un souci d’augmenter la transparence. Tous les prestataires doivent dorénavant respecter des obligations précises d’information de la clientèle. Par ailleurs la loi prévoit des modalités d’exécution strictes qui fixent notamment des délais maxima pour l’exécution des paiements, la mise à disposition des fonds et l’application des dates valeur. Cette loi enlève également tout doute quant à la légitimité d’éventuels frais imposés par un commerçant lorsque son client paie par carte: une telle pratique est interdite au Luxembourg.
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