The Treasurer’s Guide to Trade Finance

Chapter 5 Future developments

European Union Payments:

the next steps

Simon Newstead,

Head of Transaction Services Market Engagement,

Markets and International Banking, RBS

For the European corporate treasurer, the impact of current and forthcoming EU

payments legislation is likely to be significant.

In particular, three parallel initiatives

stand out: the Single European Payments

Area (SEPA), the review of the 2009

Payment Services Directive, and the EU

consultation over the future landscape

for payment cards, internet and mobile

payments. Individually, each initiative has

the potential to make a major impact on

corporate treasury and trade activities.

Collectively, they have the potential to have

a transforming effect on key aspects of the

EU payments market.

SEPA

The implementation of SEPA now has a

mandatory migration end-date of 1 February

2014, thanks to EU Regulation 260/2012.

This means that all legacy retail credit

transfer and direct debit payment schemes

for the euro will have to be phased out and

replaced by SEPA schemes.

As an EU Regulation, SEPA is legally

binding across all EU member states

(unlike an EU directive, which first has to

be translated into local legislation). Given

the importance of a common understanding

of the Regulation’s requirements, banks

in Europe have been working through

the European Banking Federation to

develop a common view of best practice

interpretations, with a view to maximising

the harmonisation and efficiency benefits on

offer to all stakeholders.

Member states have a degree of

flexibility under the Regulation regarding

the timing of certain elements of the

migration process, such as being able to

grant an additional transition period until 1

February 2016 for certain ‘niche’ payment

schemes. All countries were required

to confirm how they intend to use these

various options by 1 February 2013, after

which time the remaining details on the

pathway to implementation will be much

more certain.

Review of PSD

The review of the Payment Services

Directive (which was adopted in 2009) had

originally been expected to be completed

in November 2012, but it looks like this is

now more likely to be completed in the first

quarter of 2013. From a corporate treasury

perspective, this review is important

because the legislation is much broader in

scope than SEPA (for example, it covers

payments in all EU/EEA currencies),

while at the same time acting as the legal

basis which underpins SEPA. This review

could potentially result in some significant

amendments to current rules and practices,

including what payment types are covered.

Payment cards, internet and mobile

payments

The third parallel initiative is the European

Commission’s recent consultation (green)

paper on the use of payment cards

and internet and mobile payments. The

European Commission is trying to identify

the potential barriers to innovation,

efficiency and competition in these specific

areas before potentially bringing forward

targeted legislative proposals some time