Member states’ representatives have approved proposals from the Council of the European Union to improve the payment services environment in the EU to reduce payment fraud, promote technological innovation, better protect consumers, and increase transparency on fees.
Once agreed by the Council of the EU and the European Parliament, the proposals will create a new payment services regulation and amend the existing payment services directive (PSD2) to create a more modern framework in this field.
The new proposals aim to put a comprehensive anti-fraud framework in place. This could help tackle increasingly common new forms of payment scams, including ‘spoofing fraud’, which happens when a fraudster pretends to be a customer’s payment service provider to gain trust and trick the user into carrying out financial actions.
Should the new rules be put into place, payment service providers would have to share fraud-related information with each other and implement a system where IBAN numbers can be checked against a corresponding bank account name before transferring money to it.
The new rules also introduce more transparency for ATM transactions, which will have to show all fees due and exchange rates before a transaction takes place. The Council has introduced further provisions to enhance transparency on payment card scheme fees and rules. Overall, EU consumers and businesses will have a better overview of applicable fees and will therefore be able to make better choices.
“Consumers deserve a fraud-resistant, transparent and safe payment services environment,” said Andrzej Domanski, Polish minister for finance. “At the same time, we need to encourage innovation in the sector. These new rules will deliver on both fronts.”
Are the new proposals flawed?
Some concerns have arisen regarding the new proposals. The Computer & Communications Industry Association (CCIA Europe) warns that several unresolved issues could backfire and has urged the Council to stand firm on its position during the upcoming negotiations.
CCIA is concerned that the unconditional refund right for merchant-initiated transactions (MITs) is disproportionate and would mandate merchants to automatically proceed with all refund claims, even when the claims are abusive.
Because the Council left these provisions unchanged, CCIA says it risks incentivising abuse of the system, which would lead to increased costs for merchants.
The Association also says that the one-year deadline for the European Commission to report on digital wallets is an issue, as part of the PSD3 review, as it risks duplicating existing or upcoming EU rules.
Leonardo Veneziani, policy manager at CCIA Europe, said: “Member States will have to stand firm during negotiations with Parliament, in particular to avoid the introduction of a flawed liability regime.
“Moreover, several key issues still need to be resolved, as the new EU framework for payment rules otherwise might undermine innovation, negatively impacting merchants, payment providers, and consumers alike.”
