Paving the way for the future of payments: New Instant Payments Regulation published and Payments Package amendments adopted by the European Parliament (March 2024 update)

Instant Payments

On 19 March 2024, Regulation (EU) 2024/886 (the Instant Payments Regulation) was published in the Official Journal of the EU. It will enter into force on 8 April 2024 but the various obligations will apply gradually depending in particular on the type and location of the payment service provider (PSP). PSPs in the Eurozone will have shorter implementation deadlines than those outside and payment or electronic money institutions will have more time to comply with the new obligations than banks and other PSPs.

Payment services package

The European Parliament's Economic and Monetary Affairs Committee has adopted amended versions of the proposed third Payment Services Directive (PSD III) and Payment Services Regulation (PSR).

Some of the key amendments to PSD III include:

1. Shorter timeframes for assessing license applications, agent notifications and EU passport notifications;
2. Optional exemption from all or part of the licensing requirements for PSP in case of payment transactions involving electronic money tokens for trading/settlement services, if the PSP is already authorized as a crypto-asset service provider in an EU Member State under MiCAR (CASP); 
3. More flexible transitional provisions for existing payment and electronic money institutions.

Some of the key amendments to PSR include:

1. Changes to the exclusions: increased thresholds for the electronic communications exclusion, exclusion of payment transactions involving electronic money tokens for trading/settlement services, if the PSP is already authorized as a CASP, and modifications to the limited network and intragroup exemptions;
2. Disclosure obligations for payees;
3. Currency conversion requirements for PSPs (including pre- and post-transaction disclosure);
4. Longer notice period of three months for PSPs to terminate a framework contract;
5. Increased thresholds for the derogations for low value payment instruments and electronic money;
6. A revised list of situations in which a credit institution can refuse to open or close a payment account for a payment institution, which is no longer exhaustive, and a notice period of four months for closing a payment account (unless there is fraud or illegal activity);
7. Changes to the rules on the data access interfaces for payment initiation and account information service providers (TPPs) and on the dashboard for users to monitor and manage data access by TPPs;
8. Changes to several liability provisions (including those for technical service providers and payment scheme operators);
9. Longer period of 18 months for a payment service user to file a claim with their PSP;
10. Changes to the rules on when a PSP can refuse to execute a payment order or make funds immediately available to a payee;
11. Changes to the requirements for transaction monitoring mechanisms and fraud data sharing;
12. Applicability of certain requirements to providers of electronic devices, electronic communications service providers and online platforms;
13. Lower quantum for the possible administrative fines.

The European Parliament is expected to vote on both texts on 10-11 April 2024.