More legal news
12 April 2007 | Antony Barton
Purchases between EU states will be simplified and more economical after finance ministers last month approved the final draft of the Payment Services Directive (PSD).
The PSD is the first step to ensuring every transaction is as inexpensive and secure as national payments. Until now, cashless deals have worked to different rules in each member state. The lack of harmonisation means cross-border payments have taken up to eight days.
If a UK buyer orders supplies from the Czech Republic, for example, it could take three or four days for the money to move between the two, unless a large transfer fee is paid. The money would pass through the buyer's and supplier's separate banking systems, and an intermediary transfer system might be involved.
The PSD would harmonise payment services across EU member states and lay the legal foundations for the Single Euro Payments Area (SEPA).
SEPA would involve a pan-European payment infrastructure with common financial standards and procedures, which would reduce the cost to the European economy of transferring capital.
Paul Revell, senior buyer for financial services group Card Protection Plan, told SM
the removal of barriers that limit payment services and create extra fees was long overdue: "I would expect buyers within SMEs to benefit greatly from these charges being lifted. The burden the fees represent is one of the reasons why they are often reluctant to venture into international trading."
Some liken the move to the transition from cheque-based systems to bankers automated clearing systems. Dale Stokes, commercial director at procurement consultancy MDA, said: "If this is another step forward then clearly it is a welcome move for all procurement people."
The changes should also be of great benefit to suppliers.
Nigel Crunden, marketing manager for business products supplier Office Depot, said the changes should significantly help those that export regularly. "Processing payments quicker in an export market will certainly accelerate the passage of goods around the EU as you have none of the time constraints of waiting for payment before goods can be distributed," he said.
The PSD will be presented to the European Parliament for final discussion and approval between 23 and 26 April.