Changes from report parliamentary committee draft to plenary report

RemovedEXPLANATORY STATEMENT

Added(11a) Certain credit transfer initiation solutions may be available allowing payers to place a payment order by inserting only the payment account identifier, or even, as a result of the use of QR codes, services of payment initiation service providers or proxies such as telephone numbers or email addresses, without inserting the payment account identifier at all. PSPs providing such initiation solutions should be liable to the payer for the correct identification of the payee to whom the credit transfer transaction has been requested by the payer. Therefore, PSPs should maintain robust internal procedures supervised by national competent authorities in order to ensure correct identification of the payee.

Removed1. Background

Added(12) Some attributes of the name of the payee to whose account the payer wishes to make a credit transfer may increase the likelihood of a discrepancy being detected by the PSP, including the presence of diacritics or different possible transliterations of names in different alphabets, differences between habitually used names and names indicated on formal identification documents in case of natural persons, or differences between commercial and legal names in case of legal persons. To avoid undue frictions in the processing of instant credit transfers in euro and facilitate the payer’s decision on whether to proceed with the intended transaction, PSPs should indicate the degree of match, including by indicating in the notification that there is ‘no match’ or ‘close match’. In the case of a close match, PSPs should indicate to the payer the name of the payee associated to the payment account identifier provided by the payer.

RemovedInstant payments are a major technological innovation in payments, making it possible for funds to pass from the payer to the payee within ten seconds at any point in the year, including weekends. Though in some Member States the use of instant payments is already widespread, such as in the Netherlands, Estonia and Spain, others have been slower to make use of the technology. At the end of 2021, only 11% of credit transfers in the EU were made via instant payments. The uptake of instant payments would help liberate cash flow that is between accounts, whether during the week or on the weekend, and empower consumers to make use of their funds the second a transfer is complete.

Added(13) Authorising a payment transaction where the PSP has detected a discrepancy and has notified that discrepancy to the PSU can result in the funds being transferred to an unintended payee. In such cases, PSPs should not be held liable for the execution of the transaction to an unintended payee, as laid down in Article 88 of Directive (EU) 2015/2366. PSPs should inform PSUs about the implications for PSP liability and PSU refunds rights of their choice to ignore the notified discrepancy. ▌

RemovedThe support for an Instant Payments Regulation has been in the works for a long time. The Single Euro Payments Area (SEPA) instant credit transfer scheme (SCT Inst. Scheme) launched in November 2017 by the European Payments Council (EPC). Updating and modernising SEPA requires broad reach and accessibility of instant payments. Consumers, business and public administrations should be able to receive cross-border payments in euro as easily as they would receive domestic transfers.

Added(14) It is of critical importance that PSPs effectively comply with their obligations stemming from Union sanctions against persons, bodies or entities that are subject to an asset freeze or a prohibition to make funds or economic resources available to it, or for its benefit, either directly or indirectly, pursuant to restrictive measures adopted in accordance with Article 215 TFEU (listed persons or entities). Union law, however, does not lay down rules on the procedure or tools to be used by PSPs to ensure their compliance with those obligations. PSPs thus apply various methods, based on their individual choice or on the guidance provided by the national authorities concerned. The practice of complying with obligations stemming from Union sanctions by screening the payer and the payee involved in each credit transfer transaction, either national or cross-border, leads to a very high number of credit transfers being flagged as potentially involving listed persons or entities. However, the large majority of such flagged transactions turn out, after verification, not to involve any such persons or entities. Due to the nature of instant credit transfers, it is impossible for PSPs to verify, within short time limits, such flagged transactions instantly and, as a result, they are rejected. That situation creates operational challenges for PSPs to offer instant credit transfers to their PSUs across the Union in a reliable and predictable way. To provide for greater legal certainty, increase the efficiency of PSPs’ efforts to comply with their obligations stemming from Union sanctions in the context of instant credit transfers in euro, and to prevent unnecessary hindering of such transactions, PSPs should thus verify, at least daily, whether their PSUs are listed persons or entities, and should no longer apply transaction-based screening.

RemovedThere are already two existing EU legal acts in the field of payments - the 2015 Directive on payment services in the internal market (PSD2) and the Regulation on cross-border payments - which already apply to IPs and will continue to do so after the entry into force of this proposal.

Added(15) To prevent the initiation of instant credit transfers from payment accounts belonging to listed persons or entities and to immediately freeze funds sent to such accounts, PSPs should carry out verifications of their PSUs as soon as possible following the entry into force of a new restrictive measure adopted in accordance with Article 215 TFEU providing for asset freeze or prohibition of making funds or economic resources available, thus ensuring that PSPs comply with their obligations stemming from Union sanctions in an effective manner.

RemovedInstant payments should have substantial checks built in to combat fraud, money laundering and terrorist financing prevention tools. The current proposal is in line with other EU legislation in these fields. The rapporteur supports an IBAN check that would be provided free of charge. It makes no sense to provide a security feature for a premium price, particularly when the instant payment service is not meant to cost more than a regular credit transfer. The language of non-discriminatory pricing encourages keeping the cost of transfers either free or very low, while allowing maneouvaraibility for businesses to set their own pricing, eventually allowing for markets to regulate themselves. Regarding sanctions, the rapporteur sees that the EU sanctions lists are regularly checked by PSPs regardless, and would encourage a move from a transaction-based approach regarding the check to client-based approach.

Added(15a) In order to make progress towards further harmonisation of industry practices to comply with Union and other applicable sanctions obligations throughout the Union, EBA and AMLA should prepare a joint report on potential methods for enabling PSPs that execute instant credit transfers to verify whether any of their PSUs are persons or entities designated on Union lists or national lists of Member States.

RemovedInstant payments are an interesting innovative technology which also hold the promise of future changes. The success of instant payments in euro would be critical to the rapprochement of the CMU in reducing vulnerabilities in payment systems and to increase the autonomy of existing European payment solutions. IP also consistent with the Commission’s 2021 Communication on ‘The European economic and financial system: fostering openness, strength and resilience’, which reiterated the importance of its retail payments strategy and of digital innovation in finance for strengthening the single market for financial services. Its take up across the EU could well inform the way the digital euro is developed and potentially rolled out across the continent down the line. The Communication cited above confirmed that the Commission and ECB services would jointly review a broad range of policy, legal and technical questions surrounding the digital euro, taking into account their respective mandates as outlined in the EU Treaties. A legislative initiative on digital euro has been included in the Commission work programme for 2023. In this respect, the current instant payments regulation can be viewed as a cornerstone of a broader package of legislation.

Added(16) Failure of one PSP to carry out timely verifications of its PSUs could result in a failure of the other PSP involved in carrying out the same instant credit transfer transaction to freeze funds of a listed person or entity or not to make funds or economic resources available to such person or entity. PSPs that incur penalties for non-compliance with their obligations stemming from Union sanctions due to the failure of another PSP to carry out timely verifications of its PSUs should be compensated for those penalties by that PSP.

Removed2. Procedure in the European Parliament

Added(17) The infringements of this Regulation should be subject to penalties, imposed by the competent authorities of the Member States. Such penalties should be effective, proportionate and dissuasive. To facilitate the mutual trust of PSPs and the relevant competent authorities in the uniform and thorough implementation of a harmonised approach to compliance with PSP obligations stemming from Union sanctions, it is in particular appropriate to harmonise across the Union the minimum levels for penalties for the infringement by PSPs of their obligations to verify whether their PSUs are listed persons or entities.

RemovedThe Committee on Economic and Monetary Affairs (ECON) was appointed as the lead Committee to deal with the proposal under ordinary legislative procedure (COD)

Added(18) PSPs need sufficient time to meet the obligations laid down in this Regulation. It is therefore appropriate to introduce those obligations gradually, allowing PSPs a more efficient use of their resources. The obligation to offer the service of sending instant credit transfers should therefore apply later, preceded by the obligation to offer the service of receiving instant credit transfers, since the sending of instant credit transfers tends to be more costly and complex of the two services to implement and therefore necessitates more time. The service of notifying detected discrepancies between the name and payment account identifier of the payee to the payer is only relevant for PSPs offering the service of sending instant credit transfers. The obligation to offer that service should therefore apply from the same time as the obligation to offer the service of sending instant credit transfers. The obligations related to charges and harmonised procedure to ensure compliance with obligations stemming from Union sanctions should apply as soon as PSPs are obliged to offer the service of receiving instant credit transfers. To allow PSPs located in Member States whose currency is not the euro to efficiently allocate the resources needed for the implementation of instant credit transfers in euro, the obligations laid down in this Regulation should apply to such PSPs as of a later date than to PSPs located in Member States whose currency is the euro with the same gradual approach for introducing various obligations as for PSPs located in the euro area.

Removed3. Draft report

Added(19) Under Article 3 of Regulation (EU) 2021/1230 of the European Parliament and of the Council, charges applied by a PSP located in a Member State whose currency is not the euro in respect of cross-border credit transfers in euro are to be the same as charges applied by that PSP in respect of national credit transfers in the national currency of that Member State. In situations where such a PSP applies higher charges for national instant credit transfers in the national currency than for national non-instant credit transfers in the national currency, and therefore also higher charges than for cross-border non-instant credit transfers in euro, the level of charges that such a PSP would be required to apply under Article 3 of Regulation (EU) 2021/1230 in respect of cross-border instant credit transfers in euro would be higher than charges for cross-border non-instant credit transfers in euro. In such situations, to avoid conflicting requirements and taking into account the key objective of steering PSUs towards instant credit transfers in euro, it is appropriate to require that charges applied to payers and payees for cross-border instant credit transfers in euro do not exceed the charges applied for cross-border non-instant credit transfers in euro.

RemovedYour Rapporteur, Michiel Hoogeveen, believes the outset of the Commission proposal is promising. He sees the take up of instant payments across the EU as important for the strengthening of the CMU and value creation, particularly in the case of instant cross border payments. There is also the exciting possibility of instant payments providing opportunities to fintechs and banks to develop new payment solutions and applications, including security measures, on the back of the greater instant payments roll out.

Added(20) Regulations (EU) No 260/2012 and (EU) 2021/1230 and Directives 98/26/EC and 2014/92/EU should therefore be amended accordingly.

RemovedThe Commission’s proposal includes particularly positive aspects, such as:

Added(21) Any processing of personal data in the context of providing instant credit transfers, or the service detecting and notifying discrepancies between the name and payment account identifier of a payee, as well as verifying whether PSUs are listed persons or entities should be in line with the Regulation (EU) 2016/679 of the European Parliament and of the Council. Processing of the names and the payment account identifiers of natural persons is proportionate and necessary to prevent fraudulent transactions, detect errors and ensure the compliance with restrictive measures adopted in accordance with Article 215 TFEU providing for asset freeze or prohibition of making funds or economic resources available.

Removed- The EU-wide approach to cross-border instant payments in euro, including paper and bulk, on a 24/7/365 basis;

Added(22) Since the objectives of this Regulation, namely to provide the necessary uniform rules for cross-border instant credit transfers in euro at Union level and to increase the overall uptake of instant credit transfers in euro, cannot be sufficiently achieved by Member States because they cannot impose obligations on PSPs located in other Member States, but can rather, by reason of scale, be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve its objectives.

Removed- The amendments to SEPA to bring the current legislation up-to-date;

Added(23) The European Data Protection Supervisor was consulted in accordance with Article 42(1) of Regulation (EU) 2018/1725 of the European Parliament and of the Council and delivered an opinion on [XX XX 2022],

Removed- The non-discriminatory approach to instant payments as compared to other types of credit transfers;

AddedHAVE ADOPTED THIS REGULATION:

Removed- The provision of the IBAN name check as a security feature and the free of charge aspect of it;

AddedRegulation (EU) No 260/2012 is amended as follows:

Removed- Moving the EU sanctions list screening from a transaction-based to client-based approach;

Added(1) Article 2 is amended as follows:

RemovedAfter careful consultation with a variety of institutional and commercial stakeholders, Your Rapporteur identified several areas that could be tweaked to strengthen the Commission’s starting proposal:

Added(a) the following points (1a) to (1da) are inserted:

Removed- There has been clarification with respect to how the process of effecting bulk and paper payments might be made, with the view to stress that the entire process of this type of payment is not expected to be immediate, but rather the payment should be made as soon as possible from the moment all the necessary details have been processed;

Added‘(1a) ‘instant credit transfer’ means a credit transfer which meets all of the following conditions:

Removed- Clarifying the sanctions requirements and encouraging a move from transaction-based checks to client-based ones;

Added(a) the time of receipt of the payment order for such credit transfer is the moment when the payer’s ▌PSP receives the payment order given by the PSU to execute that credit transfer, regardless of the day or hour;

Removed- A call to re-visit the Settlement Finality Directive in an effort to broaden the scope of the PSPs included in the current legislation, thereby reflecting the current payments landscape more accurately.

Added(b) the payment order for such credit transfer is immediately processed by the payer’s PSP, regardless of the day or hour;

Removed4. Way forward

Added(c) the payee’s payment account is credited with the amount transferred within 10 seconds after the time of receipt of the payment order;

RemovedYou Rapporteur emphasizes that his draft report constitutes merely a starting point for ECON’s work on the Instant Payments Regulation. He looks forward to the contributions of the shadow rapporteurs, which he will approach with an open mind and a constructive attitude.

Added(d) the credit value date for the payee’s payment account is the same date as the date on which the payee’s payment account is credited with the amount transferred;

Added(1b) ‘PSU interface’ means a method, device or procedure through which the payer can place a paper-based or electronic payment order to its PSP for a credit transfer, including online banking, mobile banking application, automated teller machine, or▌ any other facility on the premises of the PSP;

Added(1ba) ‘payment account’ means a payment account as defined in Article 4, point (12), of Directive (EU) 2015/2366 of the European Parliament and of the Council*;

Added(1c) ‘payment account identifier’ means a unique identifier as defined in Article 4, point (33), of Directive (EU) 2015/2366 of the European Parliament and of the Council;

Added(1ca) 'name of the payee’ means, in respect of a natural person, the name and surname and, in respect of a legal person, the commercial or legal name;

Added(1d) ‘listed persons or entities’ means natural or legal persons, bodies or entities that are subject to an asset freeze or a prohibition to make funds or economic resources available to it, or for its benefit, either directly or indirectly, pursuant to restrictive measures adopted in accordance with Article 215 TFEU;

Added(1da) ‘legal entity identifier’ or ‘LEI’ means a unique alphanumeric reference code based on the ISO 17442 standard assigned to a legal entity;

Added________________________________________________________

Added* Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on payment services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and Regulation (EU) No 1093/2010, and repealing Directive 2007/64/EC (OJ L 337, 23.12.2015, p. 35).’;

Added(b) point (22) is replaced by the following:

Added‘(22) ‘retail payment system’ means a payment system the main purpose of which is to process, clear or settle credit transfers or direct debits which are primarily of small amount, and that is not a large-value payment system;’;

Added(2) the following Articles 5a to 5d are inserted:

Added‘Article 5a

AddedInstant credit transfer transactions

Added1. PSPs that offer to their PSUs a payment service of sending and receiving credit transfers shall offer to all their PSUs a payment service of sending and receiving instant credit transfers.