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among their customers and staff; and
An extension of refund rights of consumers in certain situations.
Under what circumstances will victims of fraud be entitled to a refund?
The proposal enables the granting of refund rights in two situations: for consumers who suffered
damages caused by the failure of the IBAN/name verification service to detect a mismatch between
the name and IBAN of the payee, and for consumers falling victim of a “spoofing” fraud where the
fraudster contacts the consumer pretending to be an employee of the consumer's bank, tricking the
consumer into carrying out some actions causing financial damages to the consumer. Victims of
“spoofing” fraud can be entitled to claim damages from their PSP for the full amount of the
fraudulent transaction, subject to conditions including filing a police report and notification to their
PSP without undue delay. Refund would not be allowed in cases of “gross negligence” by the victim,
including falling victim more than once to the same kind of fraud, and the “spoofing” would have to
be convincing, for example replicating the bank's exact email address or phone number.How will the new IBAN/name verification service work?
The Commission proposal on
instant payments
proposed a new service which identifies, and signals
to the payer before the completion of a payment order, of discrepancies between the name and
unique identifier of a payee for instant credit transfers denominated in euro. To achieve a coherent
framework for all credit transfers, the new proposal will extend this service to all credit transfers in
the EU. This service will have to be provided free of charge to consumers. The PSP of the payee will
be required, at the request of the PSP of the payer, to verify whether the unique identifier (IBAN
number) and the name of the payee as provided by the payer match. Where these do not match, the
PSP of the payer will be obliged to notify the payer of any such discrepancy before the payer finalises
the payment order. The payer remains free to decide whether to authorise a credit transfer where a
discrepancy was detected and notified. The payer will have the right to opt out of the service.
What is being done to improve Strong Customer Authentication?
PSD2 made payments safer for payers through the introduction of SCA, which involves at least a
two-phase authentication of payer's identities. This proposal will:
Clarify in which circumstances certain types of transactions, such as merchant-initiated
transactions, or transactions for which payment orders are placed by the payer with modalities
other than the use of electronic platforms or devices, may be exempt of the obligation to apply
SCA, while also introducing safeguards to ensure that payers remain nevertheless protected
from fraud.
Clarify that, for remote payments, the specific amount and the payee must be explicitly linked
to the transaction which is to be authenticated by the payer.
Simplify the application of SCA in respect of payment account information services. Banks
holding payment accounts will only apply SCA for the first access to payment account data by
open banking account information service providers unless there are reasonable grounds to
suspect fraud. Account information service providers will then be responsible for SCA for
subsequent data accesses.
Strengthen the use for payments of digital passthrough wallets (where a virtual payment card
is stored on the wallet), by requiring that SCA must be performed at the moment of the
enrolment of a payment instrument in the wallet under the responsibility of the PSPs that
issued that instrument.
Require payment services providers to ensure that all users can benefit from methods to
perform SCA which are adapted to their needs and situations and, in particular, that those
methods do not depend on one single technology, device or mechanism, for instance on the
possession of a smartphone.
Consumer rights and information
What new information requirements is the Commission proposing for payment service
providers?
There are three new requirements:
More transparency for credit transfers and money remittances from the EU to third
countries:
For credit transfers and money remittances from the EU to third countries, the
Commission is proposing an obligation to inform the payment service user about the estimated
charges for currency conversion. The method of expressing these charges will be aligned with
current information requirements for intra-EU transactions for card-based transactions, i.e.
expressed as a percentage mark-up over the latest available euro foreign exchange reference
rates issued by the ECB. This provision will allow users to better compare currency conversion
charges, which is necessary to take an informed decision when choosing their PSP. PSPs will
also be required to provide an estimated time for the funds to be received by the payee's
payment service provider in a third country.
More transparency for payment account statements:
PSD2 does not regulate whether the
legal name or commercial name of a payee (such as a merchant) should be used on payment
account statements. This can cause confusion among users who may not recognise the name
which appears on their statement and incorrectly suspect a fraudulent transaction. The
proposal stipulates that PSPs must include in payment account statements the information
needed to unambiguously identify the payee, such as a reference to the payee's commercial
trade name.
More transparency for ATM charges
:
In order to increase the transparency of ATM charges
for payment service users, PSPs will be obliged to provide users with information on all
applicable charges made by other ATM operators in the same Member State, so that the userknows in advance what total charges will be applied, regardless of the ATM used.
How will the Commission ensure that consumers are adequately protected when funds are
blocked on a payment card?
When a payment card is used for a payment of an initial, estimated amount (for example at a petrol
station, a hotel or a car rental), funds are normally blocked on the card by the payer's PSP after
consent has been given by the payer. The blocked funds are unavailable to the user for spending
until released, which can cause financial difficulties. Evidence collected by the Commission shows
that the blocked funds may be disproportionate or unreasonably high compared with the final
amount, when known. The release of unused blocked funds can take up to several weeks or even
require an explicit request from the payer to be released. The Commission is proposing changes to
speed up the pay-out of unused blocked funds and to require that the blocked amount be
proportionate to the expected final amount.
What does the proposal do to improve the availability of cash?
Currently, a retailer may provide cash to a customer without being licensed and supervised as a PSP,
but only in association with a purchase (“cashback”). In order to further increase access to cash, the
proposal allows retailers, if they wish, to offer a cash provision service even in the absence of a
purchase by a customer, without having to obtain a license or being an agent of a Payment
Institution. This is associated with some conditions, such as a cap of €50 per withdrawal (to
guarantee fair competition with ATMs and to ensure that shops do not rapidly run out of cash) and an
obligation to disclose any possible fees charged.
The distribution of cash via ATMs generally requires a license, but there is an exclusion in PSD2 for
certain ATM operators, which has proven difficult to apply in practice. It is therefore proposed to
more explicitly allow certain ATM operators (those which do not service payment accounts) to