On 24 August 2009, the European Banking Industry PSD (Payment Services Directive) Expert Group ("PSD-EG") published guidance for the implementation of the Payment Services Directive (PSD). Member States need to implement the requirements of the PSD into their national legislation by 1 November 2009.

The PSD-EG was set up in 2007 by the European Banking Federation in cooperation with the European Association of Cooperative Banks, the European Payments Council and Visa and Mastercard.

Through dialogue with the Directorate General and the EU Council of Finance Ministries, the PSD-EG aims to ensure consistent and harmonised implementation of the PSD across EU Member States.

The guidance produced by the PSD-EG is aimed at banks and is intended to provide high level assistance with both the interpretation and the practical application of the PSD.

The guidance looks at the PSD section by section - in broad terms offering basic interpretations and best practice guidance. It starts by explaining the structure of the PSD and the functions of its main constituent parts and points out that although it is a “full harmonisation” Directive, it contains separate levels which give Member States the scope to implement certain provisions differently or even leave them out.

It also points out some differences in scope between the initiative to provide legal support for the Single Euro Payments Area (SEPA), one of the regulatory objectives for the PSD and the PSD itself.

Most of the payment transactions covered by the PSD envisage both customers’ payment service providers (PSPs) being located within the EU/EEA and the payment being made in euros or another Member State’s currency. However, the exception to this are provisions on value-dating which are contained in Article 73 and apply where only one PSP is within the EU/EEA and the transaction is made in a Member State currency. This is known as a “Leg-out transaction”.

The guidance notes that some Member States are considering extending the leg-out concept to further articles in the PSD and/or to non-EEA currencies as part of their national implementations. The PSD-EG notes that this potentially creates significant planning uncertainty for PSPs, partly as the Member States are not all considering the same approach, but also given the short timeline remaining before November 2009.

The guidance also sets out best practice guidance on the interpretation of the PSD’s definitions including “payment account” and “payment instrument”. It then covers the information requirements of Title III (Information requirements) of the PSD in respect of the obligations of PSPs to customers, and Title IV (Payment Transaction Processing and Rights and Obligations). The PSD-EG states that it will update its guidance as is necessary.

View Guidance for the implementation of the Payment Services Directive, 24 August 2009