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Retail Payment Systems and Services


General Information

Retail payments include consumer and corporate payments, constituting the bulk of payment transactions within the economy, but exclude high-value payments generated within the interbank space.

While it is cash that constitutes legal tender, and is thus the basis for the monetary system, its drawbacks are becoming increasingly evident in the modern economy. In particular, its use entails that it must be carried to a payee, it is inefficient to process and handle, and it escapes the banking system and thus is prone to use in money laundering and terrorist financing. Retail payments are instead increasingly being carried out by non-cash payment instruments, including credit and debit cards, credit transfers and direct debits. While cheques have been the traditional non-cash payment instrument in Malta, electronic payment services are gradually bringing the costs and inefficiencies of cheque processing to light.

Efficient and reliable payment services are essential for the smooth functioning of the economy. The introduction of the euro should provide an important contribution to Malta's retail payment infrastructure. However, while the euro area is a single currency area in respect of cash, work is still in progress in respect of other payment instruments and services. Citizens and businesses alike can only benefit fully from the European Union’s principles of free movement of goods, services, capital and people if they are able to transfer money rapidly, reliably and cheaply from one part of the euro area to another.

The objective of the eurosystem in respect of retail payment services is to create a single payments market for the euro, and therefore to deliver domestic and cross-border payments in euro efficiently and on the same terms. There are three key policy goals addressed: promoting transparency of the operation of payment systems and services, monitoring the determination of fees and charges, and promoting market access, competition and efficiency.

Within this context, the European banking industry is in the process of creating a Single Euro Payments Area (SEPA). SEPA is a self-regulatory initiative conducted under the oversight of the European System of Central Banks. The Central Bank of Malta (the Bank) has also been involved in the domestic introduction of the International Bank Account Number (IBAN), a set standard for bank account numbers that uniquely identifies a customer’s bank account held at a bank anywhere in the world.

Along with overseeing retail payment systems, the Bank may regulate payment services and payment instruments by means of Central Bank of Malta Directives. It also has the authority to promote the establishment of a bank clearing system for retail payments and to provide facilities for that system. The Central Bank of Malta, together with six credit institutions, has set up and is a member of the Malta Clearing House.



Current Legislation

Legislation in respect of retail payment services includes EC Regulation 924/2009 on cross border payments in the Community. This Regulation has replaced EC Regulation 2560/2001. It eliminates differences in charges for cross border and national payments in euro and applies to all electronically processed payments, including credit transfers, direct debits, cash withdrawals at cash dispensers (ATMs), debit and credit card payments and money remittance in euro, up to the value of EUR50,000 in all the EU Member States. This legislation has also superseded CBM Directive No. 3 on Cross Border Credit Transfers.

The Payment Services Directive 2007/64/EC (PSD) lays down rules on the execution of payment transactions where the funds are electronic money as defined in Article 1(3)(b) of Directive 2000/46/EC. Furthermore, the PSD 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. The PSD has superseded CBM Directive No. 4 on Electronic Payment Services.

The Bank has also published the following Directives under the Central Bank of Malta Act in respect of retail payment services:

Directive No. 1: The Provision and Use of Payment Services

Directive No. 2: Payment and Securities Settlement Systems

Directive No. 3 on Cross border Credit Transfers has been superseded by EC Regulation 924/2009

Directive No. 4 on Electronic Payment Services has been superseded by Directive 2007/64/EC

 

Link to Malta Clearing House

Link to SEPA

Link to IBAN

Link to PSD

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