Effects of the Payment Services Act on the Austrian Financial Market

On November 1, 2009, the Directive on Payment Services in the Internal Market (Payment Services Directive), which defines the legal framework for the establishment of a single market for payment services in the European Economic Area2 and introduces a new category of payment service providers (known as “payment institutions”), was implemented in Austrian law by means of the Austrian Payment Services Act (Zahlungsdienstegesetz). The essential areas governed by the Payment Services Act are market access and licensing requirements for payment institutions (including the relevant supervisory provisions) as well as the issues of transparency, liability and recourse in the execution of payment services. The definition of payment institutions now allows nonbanks to provide payment services (subject to certain licensing and supervisory provisions), which – as classic banking transactions – were previously the exclusive domain of credit institutions in Austria. From the European Commission’s perspective, this change should facilitate access to the financial market for new payment service providers. Against this backdrop, this article provides an overview of the most important supervisory provisions in the Payment Services Act. The article then assesses the current significance of these newly defined payment institutions for the Austrian financial market and takes a look beyond Austria’s borders to discuss the situation in selected countries.