Denis Naughten (Roscommon-South Leitrim, Fine Gael)
Link to this: Individually | In context

Question 297: To ask the Minister for Finance when he will enact the payment services directive into Irish law; if it is intended to include provisions covering direct debit charges and penalties for consumers not using such a payment mechanism; and if he will make a statement on the matter. [1832/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

The Payment Services Directive (PSD) provides the necessary legal framework to support the development of the Single Euro Payments 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 and my Department is currently working on draft legislation to enable Ireland to apply the PSD's provisions by that date.

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. There is an optional provision in Article 52(3) of the Directive which allows Member States to forbid or limit the right to request such surcharges for the use of a particular payment instrument. However, as is made clear in a Recital to the Directive, this can only be done if two conditions are satisfied, namely, that such intervention is necessary in order to encourage competition and to promote the use of efficient payment methods.

My Department consulted relevant stakeholders last year on the draft text of the transposing regulation, which did not propose to avail of the PSD derogation. There was a generally positive response in regard to the draft regulations proposed treatment of Article 52(3).

In assessing the potential impact on competition of the proposal, there is the consideration that, in the event that traders were unable to reflect the cost to them of accepting payment using a particular instrument, they might choose to pass on the costs involved to all consumers, regardless of the payment instrument used, leading to a general increase in the price level. Alternatively, they might choose not to accept payment using such an instrument, which could result in increased use of paper-based payment instruments, a development which would run counter to the Government's objective of encouraging the use of electronic payment methods.

The Deputy may wish to note that work on the transposition of the Directive is ongoing in my Department and I have not yet made a final decision in relation to the draft regulation's treatment of Article 52(3). If a substantive case can be advanced that would be likely to be legally sustainable in favour of availing of the discretion to promote competition and the use of efficient payment methods, I would of course be prepared to review the matter.