Your card, rights under the Payment Services Directive

Customers should be aware that apart from the framework contract which governs the relationship between banker and customer in relation to their payment account (such as savings and current accounts), other terms and conditions apply in respect of 'payment instruments'.

The term 'payment instrument' is applied to a diverse range of forms of payment (cheques, payment cards, payment orders, etc.). In the widest sense payment instruments are all means that allow the user (or payer) to make a cashless transfer of funds or cash withdrawal.

There are paper or documentary payment instruments, and electronic instruments, which are a modern phenomenon and have been created on the basis of technological developments and advanced communications. The former include cheques, or money orders, while electronic instruments include payment cards, electronic payment orders (like direct debits or credit transfers) and electronic money.

One of the main objectives of the Payment Services Directive (PSD), which has been in force in all member states - including Malta - since last November, is to ensure maximum consumer protection in connection with payment services and instruments.

Not all payment instruments fall within the directive's umbrella of protection. Cheques, which in many member states (except Malta) are becoming less used, are excluded, for the simple reason that the processing and execution of payments based on paper payment instruments is too expensive and slow.

On the other hand, payments made by payment cards, direct debits and credit transfers are growing in popularity, as they are considered cost-effective and modern. Such means of payments are covered by the PSD.

The PSD provides a detailed description of the information and conditions provided to the consumer (payment services user or payer) in respect of such payment instruments (cheques are excluded) and which must cover:

1. Use of payment service;

2. Information on charges, interest rates and exchange rates;

3. Means of communication, manner and frequency;

4. Safeguards and corrective measures relative to payment instruments;

5. Changes in and termination of framework contracts; and

6. Redress procedures in the event of a complaint.

Protection applicable to payers and how the directive expresses the need for safeguards and corrective measures vis-à-vis payment instruments will be covered this week.

For more information and consumer issues on financial matters, call the Malta Financial Services Authority's Consumer Complaints Unit on freephone 8007 4924 or visit http://mymoneybox.mfsa. com.mt