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The Payment Services Directive – What corporates have been waiting for?

by Alan Verschoyle-King, Managing Director, Head of Treasury Services, EMEA, BNY Mellon

Ask any corporate treasurer what he or she is looking for and the response is likely to be the execution of payments within a clearly defined time-frame and the certainty of funds to aid cash-flow management – imperative in economically unstable times. Europe’s Payment Services Directive (PSD) could, therefore, be the answer to a treasurer’s prayers.  

The PSD is designed to establish clarity and uniformity of payments across the European Economic Area (EEA), by standardising the rights and responsibilities of all payment services providers (PSPs) and service users. This will, hopefully, result in the emergence of new payments solutions to further increase transparency and efficiency – welcome news for treasurers now and in the future.

If cash flow management is now the name of the game, the PSD will greatly assist play. Under the directive, the majority of payments issued and executed in the EEA must be completed in a maximum of three days following instruction and, in full, as specified by the PSD’s ‘full amount’ principle. Certainty of timing and value of funds received are therefore, guaranteed.

But is this too good to be true? Possibly. The potential problem– from the treasurer’s perspective – is the readiness– or lack thereof – of many small and mid-tier EEA banks to provide these improved compliant payments services.

Given the breadth of the legislation’s scope, it is easy to see why some banks have found meeting the PSD’s requirements a tall order. Compliance is a multi-faceted operation that demands fiscal and human resources that many banks, in the wake of the credit crisis, simply do not have.