Patrick Brandt
Partner, Head of Financial Regulation Advisory, A&L Goodbody
Louise Hogan
Associate, Financial Regulation, A&L Goodbody
In Ireland, there is increasing customer demand for digital payment options and instant payments. Upcoming legislative changes should continue to facilitate the innovation and adoption of new payment offerings.
Upcoming legislative changes include the revised Payment Services Directive and Payment Services Regulation (together PSD3) and the rollout of mandatory instant payment offerings.
Implications of PSD3 for Irish payments
The PSD3 proposal will continue the general move towards regulation being set at a European level. This should minimise some of the current regulatory divergence between Member States in the implementation of the existing payment services regime.
For certain exemptions, this may mean a narrower interpretation from an Irish perspective. For example, the commercial agent exemption will again be narrowed to require a real margin to negotiate. This will likely require certain market operators to revisit their existing arrangements and either become authorised or engage a third-party partner.
About 62% of European PSPs are currently part
of the SEPA Instant Credit Transfer Scheme.
Impact on non-bank payments and e-money
PSD3 will also continue to improve access to payment systems for non-bank payment services providers (PSPs) to ensure a level playing field and present greater opportunities for non-bank providers. Provision will also be made for the safeguarding of users’ funds with central banks. This will provide an alternative to banks, which have seen increased de-risking of regulated clients. Additionally, e-money will be consolidated within the payment services framework.
These measures will be welcomed by industry and should provide greater clarity and opportunity for innovation. Of slight concern will be the re-authorisation of existing non-bank PSPs, which is likely to be a substantive task. However, it should not cause any disruption to services in practice.
Enhancing payments access
Another significant development is the SEPA Instant Payments Regulation. Although instant payment offerings have recently grown, access across Member States remains uneven. About 62% of European PSPs are currently part of the SEPA Instant Credit Transfer Scheme, but coverage in Ireland remains limited.
The Instant Payments Regulation will require all PSPs currently offering SEPA transfers to offer instant payments, without additional cost. This will be a welcome development for both businesses and consumers, doing away with significant settlement delays for SEPA credit transfers.