A critical analysis of the payment services directive and its practical application

Abstract

Literature concerning the regulation of payment services was consulted to understand the desire of the European Commission (hereafter, the Commission) to enact the Payment Services Directive (hereafter, the PSD), as well as the official documents, which led the Commission to draft the PSD proposal. The proposal for the PSD and the final text of the PSD were analysed and recurring patterns were noted and it was evident that certain changes, which were suggested, were either not endorsed or were taken up with a contrary result. An analysis was also made on the transposition and implementation by consulting the official report on this particular process of the PSD in the Member States. Once again recurring patterns were found and it was found that the excessive amount of derogations provided by the PSD, contributed to the challenges encountered. A study conducted on behalf of the Commission was consulted in order to analyse the practical implications of the PSD. A case study was conducted on a licensed payment institution in Malta to assess whether such problem areas were indeed apparent in practice. To further substantiate the impact of the PSD, statistical data was obtained from the Central Bank of Malta which, provided data published by the ECB. The outcome of the PSD was compared to the outcome of the earlier legal initiatives, which led to the drafting of the PSD in the first place. While certain areas showed to have been improved, other problematic areas were seen to have made reappearance in the PSD. Some issues also reappeared in the proposed PSD2.