New alternatives for payment

Amendments to the Payment Services Act will enter into force on 13 January 2018. Not only banks but also third parties will be allowed to offer payment initiation and account information services. Provided that consumers give their consent, third parties will be able to access their accounts and account transactions. Service providers maintaining payment accounts – banks in effect – must enable restricted access, free of charge, to consumers’ payment accounts by licenced and registered third parties. A bank cannot require that there is a contractual relationship between the bank and third-party service providers.

The amendments to legislation are necessitated by the Second EU Payment Services Directive, which will be applied as of 13 January 2018. Depending on factors such as the duration of the time it takes to obtain a permit to operate, changes to practices will begin manifest themselves gradually on market.

The new regulations on payment services seek to open the market controlled by banks to more effective competition, to harmonise the practices between the various member states, and to bring emerging new payment services under the scope of regulation and, thereby, to enhance the safety of payment and consumer protection. New regulation on payment and account information services is regarded to contribute positively to the options available to consumers.

New payment service providers are expected to enter the market

Using interfaces opened by banks, payment service providers may, by request of consumers, initiate a payment order regarding a payment account maintained by another service provider (Payment Initiation Service, PIS).

In practice, consumers may transfer money from their accounts via payment service providers other than their own banks. Payment services may, for example, refer to built-in payment services in online trade –services in which customers may, for example, authorise an online trader to directly charge their purchases to their bank accounts without using a payment card or internet banking, provided that the seller has been authorised to act as a payment service provider.

Account information service providers may, for their part, provide information, gathered via the Internet, on consumers’ payment accounts maintained by other service providers (Account Information Service, or AIS), and, on the basis of such information, build various additional services, such as those facilitating the management of people’s personal finances.

For example, in the future, consumers may possibly be able to view all their account information under a single service, even in the case that their accounts were with different same bank. It is expected that consumers will be increasingly offered digital financial services customised for their personal finances and needs.

Consumers’ excess will be lowered, with the charging of extra fees for the use of most commonly used cards being prohibited

Responsibility based on the negligence of a user of the payment service in cases which involve misuse of a means of payment will be limited, with the consumers’ excess being lowered from the previous 150 euros to 50 euros. However, as previously, the limitation to the responsibility of the payment service user will not applied to cases in which unauthorised use can be attributed to the user’s intentionality or gross negligence.

In the future, the payee will not have the right to charge fees for the acceptance of the most common means of payment cards, the intercharge fees of which are provided for in the Regulation on the interchange fees for card-based payment transactions. It follows from the current payment practices that the prohibition will lead to a situation in which the payee is not entitled to charge fees for the use of the most popular credit cards, such as Visa and MasterCard. Neither is the payee entitled to charge fees when the payment is made in a form of a SEPA credit transfer or direct debiting.

The Payment Services Act will be increasingly extended to apply to payments made using a mobile phone that are charged in connection with invoicing the subscription. Provisions on pre-authorisation for transactions the monetary amount of which is open were also added to the Payment Services Act.

Strong authentication is becoming standard in payment transactions

As a general rule, service providers are obligated to use strong authentication to authenticate customers in electronic payment transactions. However, the regulations concerning this, as well as new regulation standards, will enter into force later, in autumn 2019 according to the current estimates. However, a service provider that does not apply strong authentication is normally responsible for the unauthorised use of a means of payment starting from 13 January 2018.

The Consumer Ombudsman monitors compliance with the Payment Services Act in collaboration with the Financial Supervisory Authority.