While the euro area is already a single currency area in respect of cash, work is now underway to transform it into a single area also for payment services – in particular card payments, credit transfers and direct debits, the Central Bank of Malta said.

Such a development, it said, is essential as most payments in Europe today are electronic.

Directive (EC) 2007/64, known as the Payment Services Directive (PSD), will lay down the legal foundations to make this possible, and the bank said it is publishing a consultative document intended to inform Malta’s transposition of the directive and to guide its future initiatives in relation to payment services.

Developments in the bank’s retail payment services policy, coupled with transposition of the PSD and implementation of the Single Euro Payments Area (SEPA), will considerably change the payment services market landscape in Malta and will affect the business processes of all enterprises which process their own payments or the payments of others.

The aim of the PSD is to ensure that payments within the EU become as easy, efficient and secure as domestic payments within a Member State by providing the legal foundation to make the SEPA possible. SEPA is a Europe-wide project driven by banks, and supported by the European Commission and the European Central Bank, intended to turn payments within the euro area into domestic payments by 2010. This will mean that payments (including ATM withdrawals) between Malta and other euro area countries will be as easy, subjected to the same charges, and carried out under the same conditions, as payments within the Maltese islands.

In its role as regulator of payment systems, including retail and wholesale payment systems and instruments, the central bank said it wished to ensure that the implementation of the PSD (which allows the national legislator substantial discretion) is carried out in a way that is of most benefit to businesses and consumers in Malta. While cash payments and cheques do not fall within the scope of the PSD, the bank said it wishes to view retail payment services as a whole in order to continue to formulate a holistic and consistent policy. The bank invited comments from the public also in this regard.

The consultative document is available on the Central Bank of Malta’s website (www.centralbankmalta.org). Replies are to be submitted before 31 March.