Taken as a whole the ACT very much welcome the Directive and its objective of harmonising the legal framework for payments in Europe. Its coverage is good and successfully manages to identify the sorts of topics that need to be included so as to facilitate the development of the actual payments systems and processes by the commercial sector.
From the corporate user’s point of view clarity on pricing and terms and conditions is important, as is certainty about time cycles and value dating for transfers. Both these aspects are reasonably well covered EXCEPT that Titles III and IV do not apply to transactions over EUR50,000 which creates a thoroughly confusing picture. If there are benefits in clarity and harmonisation of processes then there should be no reason why larger transactions should not benefit from this. However we accept that to the extent that liability is involved this could be treated differently for the larger transactions.
There are numerous points of clarification or drafting points, but there are certain key points which very definitely need to be addressed and which are potentially contentious since the customer view may well differ from the banks’ and PSP’s view.
Key points
- Over liability for unauthorised transactions (Art 49 and 50) where there is a carve out so that companies do not benefit from the rule that the PSPs bear the liability. Strangely Article 48 does still apply for corporates and in it it says that use of a payment verification instrument of itself is not sufficient to establish that the payment was properly authorised which does give some protection to corporates, but is not conclusive. A possibility would be to argue that there should be no carve out for corporates from 49 and 50, so that corporates do benefit from all their provisions, but that in respect of 48,49 and 50 PSPs and their corporate customers may agree different rules
- The general rules in Titles III and IV only apply to payments under EUR 50,000. We believe this should be massively higher or no limit at all. However to persuade the PSPs to agree to this we accept that the rule in Art 50 that the customer is only liable up to EUR 150 would need to be changed so that it was not applicable to corporates or at least much raised, or that in Article 50 there was a limit of EUR50,000.
- We need to be absolutely sure that transactions within a group are not treated as payment transactions triggering corporates to need to become a Payment Institutions and subject to regulatory requirements
- We would appreciate clarification that corporates or institutions that are not PIs can benefit from direct access to ACHs (cf Article 23) as is the case at present with corporates and Bureau operating with BACs in the UK
- Articles 28 and 36 appear to be trying to ensure that certain information is transmitted with the payment sufficient to identify the payment, but is is not clear whether this is merely a PSP sequential numbering or a more useful customer supplied reference like an invoice number or remittance indentifier. It is essential that the customer specified information is carried to allow automated reconciliations and STP (Straight Through Processing).
- Certain timecycles are given for refunds and refusals in particular circumstances. We wonder if this directive provides an opportunity to set more definitive rules about finality on a payment so that payers and payees know exactly where they stand and at what point in time they can be sure a transaction will not be altered. On the positive side there are lots of good things like removing deductions for charges which will greatly help ease of STP and automated reconciliations, and banning float period and value dating as a way of charging will help to improve the predictability over transactions, save of course that as drafted larger payments will not have this benefit.
