The first Payment Services Directive (PSD1)


What is the first Payment Services Directive (PSD1)?

The first Payment Services Directive (PSD1) was adopted in 2007, to establish the legal foundation for an EU single market for payments, for safer and more innovative payment services across the EU. The objective was to make cross-border payments as easy, efficient and secure as national payments within a Member State.

Since 2007, this Directive has brought substantial benefits to the European economy, easing access for new market entrants and payment institutions, and offering more competition and choice to consumers. It offered economies of scale and helped the Single Euro Payments Area (SEPA) in practice.

The full name of PSD1 is "Directive 2007/64/EC of the European Parliament and of the Council of 13 November 2007 on payment services in the internal market amending Directives 97/7/EC, 2002/65/EC, 2005/60/EC and 2006/48/EC and repealing Directive 97/5/EC (Text with EEA relevance)".

The PSD1 is no longer in force. Date of end of validity: 12/01/2018. It was repealed and replaced by PSD2. The full name of PSD2 is "Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on payment services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and Regulation (EU) No 1093/2010, and repealing Directive 2007/64/EC".

According to the preamble of the PSD1, it is vital to establish at Community level a modern and coherent legal framework for payment services, to ensure a level playing field for all payment systems, in order to maintain consumer choice, which should mean a considerable step forward in terms of consumer cost, safety and efficiency, as compared with the present national systems.

That legal framework should ensure the coordination of national provisions on prudential requirements, the access of new payment service providers to the market, information requirements, and the respective rights and obligations of payment services users and providers.

In order to remove legal barriers to market entry, it is necessary to establish a single licence for all providers of payment services which are not connected to taking deposits or issuing electronic money. It is appropriate, therefore, to introduce a new category of payment service providers, ‘payment institutions’, by providing for the authorisation, subject to a set of strict and comprehensive conditions, of legal persons outside the existing categories to provide payment services throughout the Community. Thus, the same conditions would apply Community-wide to such services.

The conditions for granting and maintaining authorisation as payment institutions should include prudential requirements proportionate to the operational and financial risks faced by such bodies in the course of their business.

In this connection, there is a need for a sound regime of initial capital combined with ongoing capital which could be elaborated in a more sophisticated way in due course depending on the needs of the market.

Due to the range of variety in the payments services area, this Directive should allow various methods combined with a certain range of supervisory discretion to ensure that the same risks are treated the same way for all payment service providers.

The requirements for the payment institutions should reflect the fact that payment institutions engage in more specialised and limited activities, thus generating risks that are narrower and easier to monitor and control than those that arise across the broader spectrum of activities of credit institutions.

In particular, payment institutions should be prohibited from accepting deposits from users and permitted to use funds received from users only for rendering payment services. Provision should be made for client funds to be kept separate from the payment institution's funds for other business activities. Payment institutions should also be made subject to effective anti-money laundering and anti-terrorist financing requirements.


According to Article 1 (Subject matter):

1. This Directive lays down the rules in accordance with which Member States shall distinguish the following six categories of payment service provider:

(a) credit institutions within the meaning of Article 4(1)(a) of Directive 2006/48/EC;

(b) electronic money institutions within the meaning of Article 1(3)(a) of Directive 2000/46/EC;

(c) post office giro institutions which are entitled under national law to provide payment services;

(d) payment institutions within the meaning of this Directive;

(e) the European Central Bank and national central banks when not acting in their capacity as monetary authority or other public authorities;

(f) Member States or their regional or local authorities when not acting in their capacity as public authorities.


2. This Directive also lays down rules concerning transparency of conditions and information requirements for payment services, and the respective rights and obligations of payment service users and payment service providers in relation to the provision of payment services as a regular occupation or business activity.


According to Article 2 (Scope):

1. This Directive shall apply to payment services provided within the Community. However, with the exception of Article 73, Titles III and IV shall apply only where both the payer's payment service provider and the payee's payment service provider are, or the sole payment service provider in the payment transaction is, located in the Community.

2. Titles III and IV shall apply to payment services made in euro or the currency of a Member State outside the euro area.

3. Member States may waive the application of all or part of the provisions of this Directive to the institutions referred to in Article 2 of Directive 2006/48/EC, with the exception of those referred to in the first and second indent of that article.


According to Article 4, ‘payment service’ means any business activity listed in the Annex:

1. Services enabling cash to be placed on a payment account as well as all the operations required for operating a payment account.


2. Services enabling cash withdrawals from a payment account as well as all the operations required for operating a payment account.


3. Execution of payment transactions, including transfers of funds on a payment account with the user's payment service provider or with another payment service provider:

— execution of direct debits, including one-off direct debits,

— execution of payment transactions through a payment card or a similar device,

— execution of credit transfers, including standing orders.


4. Execution of payment transactions where the funds are covered by a credit line for a payment service user:

— execution of direct debits, including one-off direct debits,

— execution of payment transactions through a payment card or a similar device,

— execution of credit transfers, including standing orders.


5. Issuing and/or acquiring of payment instruments.


6. Money remittance.


7. Execution of payment transactions where the consent of the payer to execute a payment transaction is given by means of any telecommunication, digital or IT device and the payment is made to the telecommunication, IT system or network operator, acting only as an intermediary between the payment service user and the supplier of the goods and services.


The first Payment Services Directive (PSD1):

https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32007L0064


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