Leo Varadkar (Dublin West, Fine Gael)
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Question 55: To ask the Minister for Finance the status of the EU payments services directive; if it will enable him to outlaw card payment surcharges; and if he will make a statement on the matter. [20512/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The Payment Services Directive (PSD) provides the necessary legal framework to support the development of the Single Euro Payment Area (SEPA), a major payments industry initiative aimed at eliminating any remaining difference between domestic and cross-border payments within the eurozone. This Directive comes into effect on 1 November 2009. My Department is currently preparing legislation to apply the provisions of the PSD into Irish law. Stakeholders were invited to respond to a public consultation, which closed on the 16th May. Responses to that consultation are currently being studied in my Department.

Article 52(3) of the Directive prohibits payment service providers from preventing merchants applying a surcharge or offering a reduction for the use of a given payment instrument. This is to ensure that the costs of efficient and inefficient payment instruments are transparent. Otherwise, all consumers would bear the costs of inefficient payment instruments as merchants would pass on charges in the form of a generally higher price level. This Article does allow Member States to forbid or limit the right to request charges. However, this can only be done if two conditions are satisfied, namely, that such a measure is consistent with the need to encourage competition and promote use of efficient payment instruments.

In the context of its ongoing work on the transposition of the Directive my Department will be assessing the implications of Article 52 (3). It would, however, be a priority to ensure that the use of efficient payment instruments is not disadvantaged. As the Deputy will be aware, the greater use of more efficient electronic payments could yield significant competitive benefits to the Irish economy.